Does it pay to be socially responsible? Empirical evidence from the GCC countries

This study aims to examine the relationship between corporate social responsibility (CSR) and the financial performance (profitability and market value) of firms listed in the Gulf Cooperation Council (GCC) countries’ stock markets.

The sample of the study consisted of all the listed companies in the GCC bourses for the period of 2010-2017. CSR was calculated by using the total amount of donations and charity disclosed in the financial reports. The three performance proxies used as the dependent variables included return on assets (ROA; profitability), return on equity (ROE; profitability) and Tobin’s Q (market value).

This study found that the UAE had the highest level of CSR compared to the other GCC countries. Additionally, the findings showed a negative and significant relationship between CSR and ROA, and a positive and significant relationship between CSR and Tobin’s Q.

In addition to other reforms, this paper recommends the GCC governments to impose a CSR framework and SMART platforms in line with the UAE’s initiatives.

This paper offers new contributions to the GCC literature and recommendations to their firms and governments.