Question

How corporate social performance may affect the financial decision making and
valuation?

Answer 1

The Corporate Social Performance (CSP) is the budget that a business spends to gain the best of social performance and affects the financial decision making and valuation for the long term that it has been serving the role. The CSP is the role of the business to make the social causes of the place that it is working to be more sustainable and strong with time. These social causes have their own needs which the business identifies and allocates some amount of profit to make those aspects be well addressed in the business processes.

The profits of the business may change along with the social needs and the amount needed to be spent on them to see the best out those aspects. The business may involve itself in one social activity say local school development like CSP issue. There is no guarantee that it can generate the same profits from the market to pay that much for the same program over and over till the needs are been addressed well. This makes the CSP a decision making gap creator for the business to make the right decision at the right time. Hence the CSP of the business which is new in that market has to evaluate its position and viability to put money into a CSP issue for the long term. This CSP offering makes the business allocates a substantial amount to make the needful profits and make valuation in the business uninterrupted for the long term in question. The business thus faces the challenge to put its money into other important internal or external issues of concern due to its pre-determined CSP issue identified and promised to the people. This makes the decision making for the CSP alongside the budget and its long term profits allocation in jeopardy if the decision is not reached as it needs to be.