Assessment on the social responsibility of Taiwan's manufacturing industry

An assessment on the social responsibility of Taiwan's manufacturing industry over the period 1991-2001 has been undertaken. Corporate environmental performance indices have been utilised to test for causal relationships between environmental performance and economic and financial performance. The two-stage least squares analysis and multiple regression approaches result in the following three findings: (1) three aspects of economic performance - net income, return on assets and return on equity - have a substantial negative effect upon a Taiwanese company's environmental performance; (2) a Taiwanese company's financial performance has a negative substantial effect upon the company's environmental performance and (3) a Taiwanese company's corporate environmental quality performance can affect investors' actions in the stock market, which will lead to changes in the company's market risk and cost/benefit ratio. The outcome suggests the need for management to improve environmental performance, thereby decreasing operational risk and better ensuring the long-term operation and development of a company.