The Impact of Corporate Social Responsibility and Corporate Governance on Financial Performance: Evidence from Oil and Gas Sector of Pakistan

Abstract

This study evaluate the effect of corporate social responsibility and corporate governance on Financial Performance from Oil and Gas Sector of Pakistan. The study has been carried out on 14 oil and gas companies of Pakistan for 12 year (2007-2019). The outcome have been attained using canonical regression analysis as statistical technique for investigative the influence of five independent variables of Corporate Governance on seven dependent variables of firm’s financial performance. There are numerous dimensions and aspects of CSR and corporate governance, which may influence a financial performance of oil and gas sector but we have taken three variables for measuring firm’s financial performance such as Return on assets (ROA), Return on Equity (ROE) and Net Profit Margin (NPM). The result showed that the corporate governance has significant and positive impact on business performance and the business performance can be improves by increasing the structure of corporate governance. The results reveal that the board size, independent directors, corporate size, corporate leverage and CSR report level are closely interlinked in the petroleum and gas sector. Remaining variables are irrelevantly linked with CSR disclosure to foreign directors, women directors and concentration of ownership. Our study recommended that firms should have an optimum corporate governance structure in the companies and certify that it is completely conformed in all aspects. Based on this study, it is also recommended for future researchers to extend its scope to other industries of Pakistan by adding more variables in corporate governance and firm financial performance to see the impact on all round firm’s performance for better understanding and generalizing the findings.