“The impact of the level of corporate social responsibility on financial performance: Evidence from insurance firms in the Czech Republic”

The topic of Corporate Social Responsibility (CSR) has gained considerable popularity among researchers in recent decades in the Czech Republic. However, given this, no detailed study has been demonstrated on whether Czech insurance firms benefit from this. The paper uses an extensive content analysis method to investigate the impact of CSR on financial performance in 23 Czech insurance companies. These companies are included in the Czech Association of Insurance Companies, over the past years 2019 and 2020. Further, the GRI CSR Disclosure Index and correlation analysis are used. The results indicate a significant relationship between CSR disclosure and financial results. There is a linear positive relationship between CSR and ROE, and between CSR and ROA, even a significant one between CSR and ROE. The study suggests that insurance companies in the Czech Republic ought to make continuous efforts so that their CSR activities have a positive effect on their future development. The study investigates the impact of corporate social responsibility on financial performance via an extensive content analysis method. The analysis was based on the annual reports of 23 Czech insurance companies that are included in the Czech Association of Insurance Companies over the past years 2019 and 2020. Further, the GRI CSR Disclosure Index and correlation analysis are used. The results indicate a significant effect between CSR disclosure and FP. There is a positive linear relationship between CSR and ROE, as well as for CSR and ROA, even a significant one between CSR and ROE. The study suggests that insurance companies in the Czech Republic ought to carry out efforts constantly to ensure that their CSR activities have a positive impact on their future development. As for the limitations, it is not in Republic to publish CSR disclosures. Companies can CSR activities, but they do not report them. For future research, the information could be explored using a questionnaire or interview. Another limitation could be the limited period, it is better to include more years for the analysis. Also, the samples used in this investigation are limited to relative-ly big corporations and firms with high FP among Czech insurance companies.


INTRODUCTION
Many companies today are engaged in Corporate Social Responsibility (CSR). A lot of enterprises have incorporated the concept of CSR in their strategy and focus on supporting the community and the environment to make a difference to their stakeholders.
Researchers generally agree that there is a huge range of CSR definitions creating confusion upon this term (Tetrevova et al., 2021;Glonti et al., 2020). Anderson (1989) cites one of the oldest definitions of CSR from the 1950s, which says that entrepreneurs must pursue such strategies, make such decisions and undertake such steps that are desirable from the point of view of the aims and values of society. Nicolau (2008) argues that "CSR refers to a company's obligations to be accountable to all of its stakeholders in all its operations and activities".
CSR is a trendy topic in the Czech Republic and different industries. Still, no detailed analysis has been conducted so far to answer the question: Do Czech insurance companies benefit from this?
It is worth noting that many empirical studies have shown no significant relationship between CSR and FP (financial performance). This Insurance Markets and Companies, Volume 12, 2021 http://dx.doi.org/10.21511/ins.12 (1).2021.06 fact will be a potential case in this study. Ullman (1985) notes that several variables influence the relationship between CSR and FP. There is another view about positive relationships, as the benefits cover the actual costs of CSR.

LITERATURE REVIEW
According to Moon (2014), the habits described in Antic, Persian, Jewish, Hindu, Christian, Confucian, or Muslim texts are adapted to today's CSR. These habits were, for example, acting fairly or helping people in need. Brown and Forster (2013) return the idea of CSR to Adam Smith's Theory of Moral Sentiments, where he argued that "honesty is profitable". Similarly, based on philosophical discussion, Schreck (2009) derived CSR definition from the scheme definition of the term responsibility: CSR means that stakeholders hold a company morally responsible for social issues.
From the 1950s, the public started to focus on the social responsibility of the firm as a whole instead of focusing on the ethics of managers (Lee, 2008). Therefore, also the first definitions of CSR focused mainly on the responsibility of executives whose acts should be desirable for our society (Carroll, 1991). Caroll (2015) marks this period as the beginning of the modern stage of CSR. Ahen and Zettinig (2015) call CSR "a product of the post-World War II period" as its development was provoked by the social changes of the 1960s, such as the introduction of new civil, women's, consumers' and environmental rights. However, Vertigans and Idowu (2017) noticed that it was the considerable bargaining power of corporations at that time that called for responsibility. In the 1970s, new, more practical CSR approaches have been developed to relate organizations to their external environment and provide guidance for managerial action (Filizoz & Fisne, 2011). Vertigans and Idowu (2017) describe this whole period as the time of the rise of corporate contributions to society.
In the 1990s, specific interest in CSR began to spread as the enterprises faced the problem of mistrust of their customers (Suchánek et al., 2017;Tetrevova & Patak, 2015). Until then, ethics was discussed more in the fields of philosophy or medicine. However, the penetration of unfair commercial practices (for example, nonfulfillment of contracts, non-repayment of credit or distortion of accounting information) and illegal practices (employment discrimination, consumer abuse, and environmental pollution) into the economy gave rise to a new discipline -business or managerial ethics (Carroll, 2000). It is defined as a part of applied ethics that examines the effort of employees, managers, leaders and whole organizations to reflect on the ethical principles • responsibility of business towards its stakeholders, • economic and social influence of business in the direction of innovation, fairness and world society, • behavior of business towards mutual trust, • respecting rules, • supporting international business, • environment protection, • avoiding illegal operations.
Nowadays, the term business ethics was introduced accordingly, which does not address only the personalities of managers but states that ethical theory should be applied to organizational decision making (Jawahar & McLaughlin, 2001 Accordingly, this study aims to present theoretical and to examine an empirical relationship between corporate social responsibility (CSR) and the financial performance (FP) of Czech insurance companies.

DATA, METHODS AND HYPOTHESES
The paper focused on 23 Czech insurance companies that are included in the Czech Insurance Association. The Czech Insurance Association is an association for the organization and support of mutual assistance, cooperation and securing the interests of insurance and reinsurance companies. The Association is a legal entity and its registered office is in Prague. It started operations in January 1994. Beginning in 1998, it is a full member of Insurance Europe (formerly the "European Insurance and Reinsurance Federation", CEA). The association's goal is to coordinate, represent, promote and protect the common interests of insurers concerning state administration bodies and persons, as well as abroad.
In this study, the relationship between CSR and FP among Czech insurance companies is to be explored. Inspired by the study of Manokaran et al. (2018), the FP is represented by Return on Assets (ROA) and Return on Equity (ROE). To attain the objectives of this paper and to discover a type of the relationship between CSR and FP, the hypotheses are as follows (CSR as an independent variable): H1: There is a positive and significant relationship between CSR disclosure and a company's ROE.
H2: There is a positive and significant relationship between CSR disclosure and a company's ROA.
It is necessary to specify that FP indicators (EPS, ROE and ROE) are considered as a dependent variable for FP measurement. As a result, the following theoretical model was developed: CSR Disclosure (economic, social, environmental field) is a key factor that impacts Financial Performance (ROE, ROA).
The insurance companies are judged according to the GRI CSR Disclosure Index, and it covers these six areas: economic performance, environment performance, labor practice, human rights performance, social performance, and product responsibility.
Further, the relationship between CSR and ROA, ROE is examined using SPSS Statistics and correlation analysis.

RESULTS
The CSR activities are evaluated according to the annual reports crosschecking to capture CSR disclosures of reports of 23 Czech insurance companies. The final "rank" displays an overall comparison for all involved insurers and their disclosure in accordance with the GRI CSR Disclosure Index, from 0 to 6 points, and it contains how much they care about CSR in the company and how they achieve all the six points GRI CSR (economic, environment, labor practice, human rights, social and product responsibility indicator) ( Table  1). There were only a few differences between the years 2019 and 2020, probably due to the pandemic situation some insurance companies tried to expand their CSR activities.
For example, Kooperativa (2021) states that the strategy of social responsibility and sustainable business consists of a pyramid with four floors that are interconnected. It is based on prevention and responsible business as the basic principle of social responsibility. For the insurance company, the focus on prevention is key, it brings a positive social impact to everyone else. Ecology and sustainability are an essential part of the pyramid. Although they are not a manufacturing company, they realize that doing business has an impact on the environment. With this in mind, we are dealing with eliminating the effects of climate change and setting up processes so that we are here -as a human community and as a company -for 100 years. In line with the principles of sustainable business, it respects values such as fairness, transparency and compliance with the conditions of the European and domestic regulators (Kooperativa, 2021). They are following all the three pillars of CSR and even more, that is the reason for the total rank of 6 points. Table 2 presents a correlation analysis of 23 insurance firms in the Czech Republic, followed by an analysis of the relationship between the financial performances.
The correlation analysis has shown a positive linear relationship between CSR and ROE, as well as for CSR and ROA, even though CSR and ROA were not significant. According to these results, hypothesis 1 about the positiveness and significance between CSR and ROE is accepted. On the other hand, hypothesis 2 about the positiveness and significance between CSR and ROA is rejected. According to Kang et al. (2010), "findings suggest mixed results across different industries and will contribute to companies' appropriate strategic decision-making for CSR activities by providing more precise information regarding the impacts of each directional CSR activity on financial performance." Another study by Cho et al. (2019) confirms that "CSR performance has a partial positive correlation with profitability and firm value. In the relationship between CSR performance and profitability, only social contribution yields a statistically positive correlation. Analysis of the correlation between CSR performance and financial performance indicators revealed a positive relationship between the growth rate of total assets and corporate soundness and social contribution."

CONCLUSION
The study investigates the impact of corporate social responsibility on financial performance via an extensive content analysis method. The analysis was based on the annual reports of 23 Czech insurance companies that are included in the Czech Association of Insurance Companies over the past years 2019 and 2020. Further, the GRI CSR Disclosure Index and correlation analysis are used. The results indicate a significant effect between CSR disclosure and FP. There is a positive linear relationship between CSR and ROE, as well as for CSR and ROA, even a significant one between CSR and ROE. The study suggests that insurance companies in the Czech Republic ought to carry out efforts constantly to ensure that their CSR activities have a positive impact on their future development.
As for the limitations, it is not obligatory in the Czech Republic to publish CSR disclosures. Companies can conduct CSR activities, but they do not report them. For future research, the information could be explored using a questionnaire or interview. Another limitation could be the limited period, it is better to include more years for the analysis. Also, the samples used in this investigation are limited to relatively big corporations and firms with high FP among Czech insurance companies.