With the increasing importance of corporate social responsibility (CSR), stockholders are more concerned about the impact of firms’ CSR on operating performance. Using the inductance of 24 CSR rules, we construct a “Corporate Social Responsibility Index” as a proxy to measure the CSR performance at about 738 listed firms during the 2010 in Taiwan. A hedge portfolio that bought firms in the highest portfolio of the index (best CSR) and sold firms in the lowest portfolio of index (worst CSR) would have earned abnormal returns. We find that lower CSR performance firms have lower stock returns, worse operating performance, lower values and higher operating expenses.
