Impact of Corporate Social Responsibility and Corporate Governance on Financial Performance of Firms: Evidence from Cement Industry of Pakistan

Abstract

This research is basically about the financial performance of cement sector in Pakistan. The purpose of this study is to determine the influence of corporate social responsibility (CSR) and corporate governance (CG) on financial performance (FP) in Pakistan's cement sector. Therefore, this study has been developed a model to analyze the impact of corporate social responsibility (CSR) and corporate governance (CG) on financial performance (FP) in which use company's reputation, CSR reports, and donation as CSR measure and audit committee, board size as a corporate governance measure to find the impact on financial performance that measured by ROA and ROE. As independent factors, the researcher examined at corporate social responsibility and corporate governance. In the meantime, the dependent variable is financial performance. However, Pakistan's cement industry has been chosen to evaluate the relationship between the variables listed above. In this study a qualitative research method is applied to look at the relationship. Secondary data was gathered using annual financial statements from 17 cement companies collected for the period 2015 to 2020 (period of six years). EViews Software uses various statistical tests (correlation and regression analysis) to examine data from annual financial statements. According to the outcomes of this study, the audit committee (independent variable) has a considerable impact on the cement sector's return on assets and return on equity (dependent variables). Furthermore, regression analysis revealed that in the cement sector of Pakistan, there is no significant association between company reputation, CSR reports, donation, board size (independent variables), return on assets, and return on equity (dependent variables).