Impact of CSR and Good Corporate Governance Mechanism on Firm Financial Performance: Evidence from Oil & Gas, Cement and Pharmaceutical Sector of Pakistan

Abstract

Purpose – The main purpose of this study is to examine the impact of corporate social responsibility and good corporate governance mechanism on firm performance of oil & gas, cement and pharmaceutical sector of Pakistan Design/Approach/Methodology – This study draws on data of 42 firms of oil & gas, cement and pharmaceutical sector of Pakistan listed in Pakistan Stock Exchange (PSX) from 2016 to 2020, using a correlation to find the association between variables and regression model to find the casual relationship by two equations. One equation is used to examine the impact of corporate social responsibility and good corporate governance mechanism on ROA and second equation is used to examine the impact of corporate social responsibility and good corporate governance mechanism on EPS. Finding – Our correlational analysis for ROA shows positive association with CSR, OM, BI, DB and negative association with OC, AC and BS. The study also found that for Model 1 regression analysis has insignificant impact of CSR and OM, and significant impact of OC, AC, BI, BS and DB on ROA. For Model 2 regression analysis has insignificant impact of CSR, OM, OC, AC, BI, BS and significant impact of DB on EPS. Research Limitation/Implication – Present study does not include all proxies of CGM and focus only on internal governance mechanism. Further research might include external governance mechanism with internal governance mechanism to find out the impact. Originality/value – This study focus on the CSR and GCGM issues such as ownership concentration, ownership concentration, audit committee, board size, board independence and diversity in board and their influence on firm financial performance. Academic research gave more attention for the analyzing the impact of CSR, CGM and firm related features in Asian context.