Corporate Social and Financial Performance: A Canonical Correlation Analysis‪.‬

INTRODUCTION The relation between a firm's financial performance and its corporate social performance (CSP) has been investigated for more than half of a century (Preston & O'Bannon, 1997), yet the nature of the relationship remains unresolved. One view suggests that greater CSP will manifest in superior financial performance, in part because managers who are more socially responsible are perceived as being more likely to generate profits (Alexander & Bucholz, 1978). A contrary view suggests a negative relation between financial performance and CSP. Although reasons are somewhat varied, at the root is Friedman's (1970) argument that "managerial attention to interests other than those of investors is a breach of trust" (Preston & O'Bannon, 1997, p. 420).