Impact of Corporate Social Responsibility Practices on Financial Performance: Evidence From Pakistan Stock Exchange

Abstract

This study has been carried out to check the relationship between Corporate Social Responsibilities (CSR) and other perforn1ance measuring factors of sixty-nine manufacturing companies from Pakistan Stock Exchange. Primary aim of this stud), is to check the correlation between CSR and Corporate Financial Perfom1ance (CFP). Audit Conm1ittee Independence, CEO Duality, Board Independence and Charitable Donation are taken proxies variables for CSR. Moreover, CFP has been measured by Tobin ' s Q, Return on Equity (ROE) and Return on Assets (ROA). Leverage, Risk and firm size has been taken as control variables. To examine the data of 2013 to 20 l 8, Fixed and Random effect models has been used. Considering the results of Housman's test random effect is suitable when CFP are measured with ROE and ROA; however fixed effect model provided relevant results through Tobin's Q. CEO duality has negative impact on ROA whereas, Charitable donations have significance positive relationship with ROE and ROA. Further it is also derived that CEO duality has also negative relationship/ impact on CFP once it is measured through Tobin 's Q while Audit conm1ittee independence has positive in1pact on ROE. Finally, the empirical finding of tlus study concludes that good practices of Corporate Social Responsibilities augment/ improve the CFP of manufacturing companies in Pakistan.