The Impact of Corporate Social Responsibility on the Financial Performance of Listed Companies in Thailand

: This study aims to: (1) investigate the amount of corporate social and environmental responsibility (CSR) spending, awards, and activities of listed companies in the Stock Exchange of Thailand (SET) and in the Market for Alternative Investment (MAI); (2) test the impact of CSR spending, awards, and ﬁnancial performance activities; and (3) examine the amount of CSR spending, awards, and activities between companies with and without a CSR committee. The sample included all the listed companies in the resource industry from the SET and the MAI. The data were collected from the companies’ annual reports from 2015 to 2019. Descriptive analysis, an independent-sample t -test, a correlation matrix, and an unbalanced panel data analysis were used to analyze the data. The average level of spending per activity was 2.2964 million baht. There were, on average, 2.1741 awards and 11.4178 activities during the studied period. Moreover, there was a signiﬁcant negative impact of CSR spending, and a positive impact of CSR awards and activities, on corporate ﬁnancial performance. Finally, there was a signiﬁcantly different amount of CSR spending, awards, and activities between the companies with and without a CSR committee. The ﬁndings of this study demonstrate that legitimacy theory can be used to explain the beneﬁt of CSR to Thai-listed companies, although CSR is still a voluntary corporate responsibility in Thailand.


Introduction
Today's businesses have an increasing focus on corporate social and environment responsibility (CSR) [1]. CSR is a prerequisite for any entity to operate in accordance with ethical principles and good management, and it helps firms to obtain permits from governments, communities, and related stakeholders [2]. All corporations are accountable to society and the environment, both inside and outside of the organization, in order to maintain sustainable development [3]. Carroll [4] argued that companies should strive to make a profit, comply with the law, be ethical, and be a good corporate citizen. The cornerstone of good business is its duty to generate profits while complying with the law. Above this, the business is required to maintain the status, based on ethics, of a good business citizen. CSR is widely practiced, ranging from enforced compliance to voluntary practices [5]. CSR has been increasingly adopted as an organizational strategy, since it benefits companies by demonstrating trustworthiness and improving public image. These benefits, in the long run, will help companies to gain a greater market share. Employees the Market for Alternative Investment (MAI); (2) test the impact of CSR spending, awards, and activities on the financial performance activities of listed companies in Thai capital markets; and (3) examine the levels of CSR spending, awards, and activities between the listed companies with and without CSR committees. This study aimed to provide several contributions to both theory and practice. In terms of its theoretical contribution, the study demonstrates that the legitimacy theory can explain the advantages of businesses spending their money on CSR and formulating CSR committees to seek legitimacy from social perception. In terms of its practical contribution, this study also demonstrates the impact of CSR spending, awards, and activities on firm performance, which could help companies to see the importance of CSR and help their regulators to formulate appropriate policies encouraging CSR practice.

Theoretical Perspective
Legitimacy theory is one of the most widely cited theories in the practice and disclosure of CSR [37,38]. This theory, according to Deegan [39], is a positive theory that aims to explain corporate behavior rather than specifying how companies should behave. Organizational legitimacy is a condition or status that exists when an entity's value system aligns with the value system of the larger social system of which it is a member. Where there is a real or perceived discrepancy between the two value systems, the entity's legitimacy is in jeopardy [40,41]. The point of view of CSR on this principle is that the power to utilize the natural and human resources of the company is due to the powers and rights inherited as a result of society's acceptance. The society decides and continually investigates whether or not the company's business operations meet the society's expectations. The license to operate can be revoked at any time if society determines that a company's activities are not likely to meet its expectations. The survival or growth of the company lies in whether the actions of the company meet the expectations of the society or not [42,43].
Thus, while CSR is considered from the perspective of legitimacy, it also expresses the awareness and the connection of society to the company. Companies have to constantly evaluate themselves to make sure that their practices are acceptable and meet the expectations of an ever-changing and expanding society. CSR information is therefore a strategic management asset of companies that seek to perform legitimate activities to reassure the public that the organization adheres to society's rules [44,45]. Management is incentivized to implement and disclose CSR activities to comply with legitimacy and social rules. The company can take appropriate action in society and reduce criticism from stakeholders by taking into account the CSR activities [46].
The legitimacy theory could explain the motivation of Thai-listed companies in spending and disclosing CSR activities, as there have been social pressure and regulatory standards requiring companies to engage in CSR practices in order to facilitate social recognition. The companies must demonstrate their participation in philanthropic and social investments by using CSR references in their annual reports, and by taking other steps to project a socially responsible company image [47]. These actions can result in short-or long-term financial benefits for businesses [48].

CSR of Listed Companies in a Thai Context
CSR practices have been promoted extensively in Thailand by government agencies. The concept of CSR was initiated by the Securities and Exchange Commission (SEC), and it has since been adopted into business practice among the listed companies. The SEC appointed a working group to promote the social and environmental responsibility of listed companies in 2006, and then in 2008, the group created "Corporate Social Responsibility Guidelines" to help companies operate with business goals that parallel social responsibility [21]. In the year 2010, along with the work of the SEC, the Ministry of Industry issued the "Social Responsibility Guidance Standard" in line with ISO 26000:2010, by which all types of businesses could put the concepts into practice [49]. In 2015, the Ministry of Social Development and Human Security formulated a corporate social responsibility promotion strategy, or the First National CSR Strategy (2015-2017), which was approved by the Thai Cabinet. The aim of this strategy is to promote corporate social responsibility for sustainable social development for corporations of all sectors [48]. In the same year, the Stock Exchange of Thailand (SET) developed a Thailand Sustainability Investment (THSI) list for investors looking for an alternative way to invest in high-performing ESG (environmental, social, and governance) stocks, and it granted sustainability awards for listed companies that had outstanding performance in social and environmental responsibility [23]. Another CSR movement among Thai-listed companies emerged in 2018. The SET launched the "SET THSI Index" made up of stocks of publicly traded firms that had excellent ESG practices so as to encourage investment in CSR practices [22].
The resource industry is a category of businesses seeking or managing resources, such as energy fuel production, utilities services, and mining operations. This industry sector is comprised of the energy and utilities sector, and the mining sector. This study has focused on companies in the resource industry because they have a substantial impact on society and the environment due to the use of natural resources to produce their products. The CSR concerns of this industry are related to social and environmental impacts on a local community's health, emissions, effluents, and waste [28]. According to Prayukvong and Olsen [50], it was found that Thai companies perceived the benefits of CSR practice in terms of building good will and community trust, as well as improving their reputation and image. Therefore, this industry has found it necessary to demonstrate its social and environmental responsibilities to compensate for society's perception of the use of natural resources in the production of goods and services. Chongruksut [51] examined social and environmental information in the annual reports of listed companies in the Stock Exchange of Thailand's SET 100 Index and found that companies in the resource industry disclosed CSR information more than those in other industries. Wongwichai et al. [52] studied the impact of factors on the CSR disclosure of Thai-listed companies in the petrochemicals and chemicals industry and resource industry by collecting data from annual reports. The study found that CSR awards is only one factor influencing those companies' CSR disclosures. In addition, Rukphanichmanee et al. [53] investigated the relationship between corporate social responsibility performance and the response of investors to the award announcement of listed companies in eight different industries. They found a positive relationship between CSR performance and investors' responses for companies in the resource industry. The findings from these studies indicate the possibility of companies in the resource industry that practice CSR having the ability to impress investors and then gain benefits from that performance. Therefore, based on the evidence from previous studies, this study aimed to investigate the influence of CSR performance, including spending, awards, and the company's financial performance activities. The results of the study provide insights into the effects of CSR performance, which represent the companies' CSR efforts and firm performance. These insights can help regulators formulate appropriate policies encouraging CSR practice and investment in the future.

Methodology Hypothesis Development
Many previous studies investigating the relationship between CSR practices and corporate financial performance have found different results. Many studies found that CSR and financial performance have a positive relationship [7][8][9][10][11][12][13][14], while some studies found a negative relationship [15][16][17], or even no relationship at all [18][19][20]. The findings are conflicting due to different samples, study periods, and methods of measuring CSR and financial performance [54]. Most previous studies have measured CSR by disclosure in annual reports or in separate reports, which may not represent the real effort of companies. Companies may put less effort into CSR but disclose more, or vice versa. In order to reduce the ambiguity of the CSR measurement by using CSR disclosure, some studies have used CSR spending as being representative of CSR efforts [27,53]. In their study, Matara et al. [54] and Weshah et al. [55] investigated the relationship between CSR spending and financial performance (ROA) and found a positive relationship. Likewise, Mahbuba and Farzana [27] examined the relationship between corporate social responsibility expenditures and profitability (profit after tax) and found a significant positive relationship between CSR expenditure and profitability. Therefore, this study aimed to use CSR spending to measure CSR effort in order to gain insight into CSR's effects. This is in relation to the extent to which a company has actual expenditures in CSR practices [27]. However, since the previous studies found both positive and negative relationships between CSR and financial performance, this study hypothesized only a possible effect of CSR spending on financial performance, without assuming the direction of that interaction, as follows:

Hypothesis 1 (H1). CSR spending per activity has an effect on financial performance.
Several studies have demonstrated that CSR awards play an important role in encouraging companies to conduct CSR activities [56] and to disclose CSR information [57][58][59]. Moreover, CSR has attracted attention from companies in Thailand for more than a decade. Virakul et al. [60] examined CSR practices in four Thai companies that received the best CSR awards from the Stock Exchange of Thailand (SET). They found that one of the driving forces behind their CSR initiative was to have better firm performance. Their study made the assumption that, in Thailand, companies conducted good CSR practices until they were recognized because they were motivated to strive for better performance. In other words, the better the CSR practices, and the more CSR awards that companies receive, the better financial performances companies have. However, in the meantime, there has been no study directly investigating the effect of CSR awards on firm performance in Thai-listed companies. On the other hand, there is a study by Hou [61] examining the relationship between CSR awards and corporate financial performance of companies in Taiwan. His study found that the number of times that a company receives CSR awards has a significant positive relationship with its corporate financial performance. The findings of his study show that the number of CSR awards is positively related to the firm's performance, supporting the notion that CSR awards contribute to companies' financial performance. According to the assumptions derived from the study by Virakul et al. [60] and the evidence from the prior study by Hou [61], this study hypothesized that: Hypothesis 2 (H2). CSR award has a positive effect on financial performance.
Chaffee [62] defines CSR as an obligation to activity that the firm must undertake. Engaging in CSR activities that "go above and beyond" laws or government requirements is one essential approach for companies to differentiate themselves from one another within the same industry [63]. Over time, companies can develop a CSR image within a society, with that image being of a high or a low performer in terms of those CSR activities. Companies are considered by stakeholders as high CSR performers when they report that they have undertaken numerous CSR activities [64]. Udomkit [65] investigated the different levels of customers' perceptions before and after presentations of company activities. She found that the CSR perception scores of the customers after the presentation were significantly higher than before the presentation. The results from her study prove that communicating CSR activities is crucial for strengthening positive public perceptions of the company. Moreover, there have been some studies focusing on the relationship between CSR activities and firm performance. Their findings demonstrated that CSR engagement positively affects corporate financial performance [66,67] because CSR activities can resolve conflicts between companies and stakeholders [68]. As the findings from prior studies have demonstrated the effects of the CSR activities on companies' images and consequently contribute to firm financial performance. This study, therefore, hypothesized that: H3). CSR activity has a positive effect on financial performance.
The literature increasingly focuses on the benefits that stakeholder-oriented boards can bring to CSR performance [36]. The corporate board of directors may establish a CSR committee to oversee such aspects as a strategy to convey social and environmental responsibilities [29,69,70]. It has shown that half of the 20 largest UK companies have a CSR committee, despite the fact that they had never had a CSR committee before. Although CSR committees were formulated based on the concept of sustainability governance, their contributions to CSR performance still represent an area that requires significant attention. Companies may set up CSR committees to demonstrate CSR performance without making any significant changes [34]. Rodrigue et al. [69] did not find a relationship between the existence of a CSR committee and environmental performance.
On the other hand, CSR committees may demonstrate a true commitment of companies to build organizational structures at the board level, which lead to efficient planning and oversight and improved CSR performance [29,35,36]. Companies may have direct involvement of board members in stakeholder interaction and dialogue through their CSR committees [71]. As a result, there will be better-informed board choices to put CSR strategy into action [71,72]. Liao et al. [73] and Homroy and Slechten [74] found that companies with CSR committees are more environmentally transparent than those that have no such committees. In addition, several studies have found a positive relationship between having a CSR committee and the CSR performance of a company [35,70,75,76].
Due to the conflicting opinions and findings about the contribution of CSR committees to CSR performance, this study focused on whether companies with and without CSR committees have different CSR performances. Therefore, this study hypothesized that:

Hypothesis 4 (H4).
There are different levels of CSR spending, awards, and activities between those listed companies with and those without a CSR committee.

Methods
The population and sample of this study was all the listed companies in the resource industry from the SET and the MAI during the period from 2015 to 2019 [77]. However, the study did exclude listed companies that (1) did not end their accounting year on the 31st of December, (2) were registered as a funded company of the resource industry listed by the SET or the MAI, and (3) were withdrawn from listing by the SET or the MAI, including listed companies under rehabilitation. After applying the conditions above, 80 listed companies were adopted as the sample in this study, consisting of 71 listed companies in the SET and 9 firms in the MAI. Corporate annual reports for this sample during 2015 to 2019 were used to collect data on CSR spending, awards received, activities, corporate financial performance, and corporate characteristics. The reason for using annual reports to collect data is that the annual report is a statutory report that is widely recognized as the principal means by which companies communicate their actions and activities [78].
The corporate annual reports were used to collect data on three main aspects, which are CSR, financial performance, and corporate characteristics. The study regards CSR as an independent variable by which company spending, awards received, and activities of CSR were assessed. Moreover, CSR spending was measured by average CSR payment per activity (million baht), while CSR awards and activities were measured by the number of awards and activities of corporate CSR efforts. Regarding corporate financial performance as a dependent variable, the return on assets (ROA) was used as a proxy in this study. Moreover, corporate characteristics were used as the control variables in this study, which consisted of firm size, firm risk (leverage), firm age, audit type, and the CSR committee. In this study, the CSR committee is defined as a part of the board's composition under corporate governance principles. Although a CSR committee is not mandated by Thai governance organization, many listed companies provide the CSR committee to address the social and environmental impacts of corporate actions, and how to respond to those issues. Therefore, in this study, a dummy variable was used as a proxy of the CSR committee as in 1 = having a CSR committee and 0 = the other. All these proxies were used in the prior related literature [26,79,80]. All the variable measurements used in this study are summarized in Table 1. The data were analyzed using the SPSS Statistics Software Program (Version 23). The data were first analyzed using descriptive statistics to survey the level and pattern of CSR spending, awards, and activities in the annual reports of the listed companies from both the SET and MAI. An independent sample t-test was used to test for different levels of CSR spending, awards, and activities between companies with and without CSR committees in their businesses. A correlation matrix was used to test for multicollinearity between all the variables used in this study. Finally, unbalanced panel data analysis was used to test for the possible impact of CSR spending, awards, and the corporate financial performance activities of listed companies in Thailand. There were two equations, which are model A and model B. Model A indicated the impact of CSR spending, awards, and corporate financial performance activities, which are based on the assumptions in Hypotheses 1, 2, and 3. The control variables demonstrating the corporate characteristics were added in Model B. These control variables were used in prior related studies to avoid overestimation or underestimation of the hypothesized relationships [26,79,80]. Therefore, the unbalanced panel data analysis equations are shown here:

Findings and Discussion
For the 80 listed companies that were adopted as the sample for this study, consisting of 71 listed companies in the SET and 9 firms in the MAI, 293 corporate annual reports for 2015 to 2019 were used to collect the data on CSR spending, awards, and activities. As shown in Table 2, it was found that the average level of CSR spending per activity was 2.2964 million baht, while there was a 2.1741 average for CSR awards, and a 11.4178 average for CSR activities during the period of study. In terms of the pattern of CSR, both CSR spending and awards fluctuated during 2015 to 2019 but CSR activity increased.
Before conducting the multiple regression analysis, the assumption that the data are not multicollinear among the variables included in the analysis was tested. Table 3 shows the correlation matrix used to test for multicollinearity between the nine variables used in this study, consisting of one dependent variable, three independent variables, and five control variables. The correlation for a pair of variables should not exceed 0.700, and the variables used in this study did not have a multicollinearity problem, because the highest score of the Pearson correlation between AWARD and SIZE was 0.424.
** is significant at 0.01 level, and * is significant at the 0.05 level.
To examine the impacts of CSR spending, awards, and the financial performance activities of the listed companies in Thai capital markets during the period from 2015 to 2019, unbalanced panel data analysis was used as summarized in Table 4. In the model A, the R squared shows that the model explained approximately 15.10% of the variance in the data. There was a significant positive impact of AWARD and ACTIVI on ROA, while SPEND had a negative impact on ROA at either the 0.01 or 0.05 level. In model B, the R squared demonstrated that the model explained approximately 23.80% of the variance in the data. Model B also demonstrated a positive impact of AWARD and ACTIVI on ROA, while SPEND had a negative impact on ROA at the 0.05 p-level. Using the control variables in model B, the study found that AUDIT had a positive influence on ROA at the 0.01 level, while there was a negative relationship between RISK and ROA at the 0.05 p-level. However, there was no relationship of SIZE, AGE, or COMMIT with ROA at the 0.05 p-level. Based on both models, the study accepted H1, H2, and H3.
The findings of a positive impact of CSR awards and CSR activities on corporate financial performance in both models A and B are not only consistent with prior related studies of, for example, Hou [61], Li et al. [56], Kao et al. [66], and Jia, X. [67], but also demonstrate that the legitimacy theory can be utilized to explain companies' CSR actions. Companies' activities and communications can have an impact on their legitimacy and consequently lead to a positive impact on firm performance [48]. The findings imply that CSR awards can reduce or close the legitimacy gap between corporate actions and its social expectations. Moreover, the corporations strongly believe that they are a part of the broader society, so actions and activities are provided to serve their social expectations. In this case, CSR awards and activities are used to indicate corporate compliance with societal norms and expectations. Therefore, if the corporations can meet their social expectations, they will be able to earn several advantages, such as competitive advantages, good reputation and image, high financial and non-financial performance, and firm value. On the other hand, the study found a negative impact of CSR spending on corporate financial performance. The result of this study differs from the prior reports of Matara et al. [54] and Weshah et al. [55], which found positive relationships between CSR expenditure and firm performance. This may be due to the reasons referred to in the previous studies, namely that the relationship between CSR and firm performance depends on many factors, such as the sample, study period, and method of measuring CSR. However, the findings demonstrating a negative relationship between CSR spending and ROA could provide insights into the contributions of CSR expenditures on firm financial performance in Thai-listed companies in the resource industry. In this study, CSR spending was measured by spending per CSR activity. This could imply that a company with less CSR spending per activity can manage expenses more efficiently than a company with more CSR spending. Thus, the company with highly effective expenditure management would have better financial performance. In other words, the more effectively a company can manage the CSR expenditures, indicated by lower spending per activity, the better its financial performance.
To test whether there are different levels of CSR spending, awards, and activities between the listed companies with and without CSR committees, an independent sample t-test was used (Table 5). There were three main quantifiers of CSR, consisting of spending, awards, and activities. There were significantly different levels of CSR spending, awards, and activities between the listed companies with and without CSR committees, at the 0.01 p-level. Therefore, this study accepted H4. Not surprisingly, the results are consistent with prior studies that demonstrated positive relationships between having a CSR committee and the CSR performance [35,70,75,76]. The results imply that listed companies with CSR committees spent more money and conducted more CSR projects than the firms without CSR committees. Therefore, the listed companies with CSR committees can earn CSR awards, with an advantage over the firms without CSR committees. From the study's findings, the results indicate that a CSR committee can work as an important team to increase and improve CSR spending, as well as CSR awards and activities. Conclusions and Contributions: The three main research aims posed were (1) to investigate the level of corporate social and environmental responsibility (CSR) spending, awards, and activities of listed companies in the Stock Exchange of Thailand (SET) and in the Market for Alternative Investment (MAI); (2) to test the impact of CSR spending, awards, and activities on the financial performance of listed companies in Thai capital markets; and (3) to examine for differences in the level of CSR spending, awards, and activities between the listed companies with and without CSR committees. It was found that the average level of CSR spending per activity was 2.2964 million baht, while there were 2.1741 average CSR awards and 11.4178 CSR activities during the period of study. Regarding the patterns in CSR, both CSR spending and awards fluctuated during the period 2015 to 2019, but CSR activities increased from 9.5490 average activities in 2015 to 12.3181 average activities in 2019. As to the second research question, there was a significant positive impact of CSR awards and activities on corporate financial performance, while there was a negative relationship between CSR spending and financial performance. In addition, by using the control variables, the study found a positive relationship between audit type and corporate financial performance, while there was a negative relationship between firm risk and corporate financial performance. However, firm size, firm age, and having a CSR committee did not correlate with corporate financial performance. Finally, there was a significant difference in the level of CSR spending, awards, and activities between the listed companies with and without CSR committees.
The study's findings provide several contributions and implications. First, the results can guide companies to pay attention to CSR, especially CSR awards and activities, because they can benefit from a higher corporate financial performance. Additionally, CSR spending per activity is also important for a company to take into account in managing CSR practices. The companies with lesser CSR spending per activity can manage expenses more efficiently than those with a higher CSR spending and, thus, gain an advantage in financial performance. Second, the study's findings are able to explain how and why the legitimacy theory can be used to explain the impact of CSR awards and activities on corporate financial performance, as to whether the corporate social expectations have a right to be responded to through corporate CSR actions and activities. The benefits from corporate responsibility are better reputation and loyalty, as well as better financial performance and firm value. Finally, the results also demonstrate that the guidelines from the SET provide benefits to the corporations and their social expectations, so that the CSR information could be made mandatory reporting in Thailand as well as in other countries.
There are some limitations to this study. Firstly, the study did not collect the other proxies of CSR information for the companies listed in Thailand. This is associated with possible impacts on corporate financial performance, if the corporations provide more in other CSR proxies. Secondly, this study focused only on the listed companies in the resource industry, excluding the other industries in Thailand of which there are seven types, namely the agricultural and food industry, consumer products industry, financial industry, industrial industry, property and construction industry, service industry, and technology industry. Finally, there were only 80 listed companies used in this study, while over 700 firms are listed in the SET and the MAI. Therefore, to address the limitations of this study, future studies could collect data on other CSR proxies of the listed companies, including other industries, from both the main capital markets and the alternative capital markets in Thailand. Institutional Review Board Statement: Ethical review and approval were waived for this study by the Ethics Committee in Human Research Walailak University because this study has met the criteria of the Exemption Determination Regulations.