Abstract:
Due to positive correlation between CSR and financial performance, the increase in
financial performance will positively affect the development of economy and vice versa. Thus
CSR activities play an important role for corporate increasing trend that ultimately influence the
economy. To understand and to give some suitable explanation for corporate social
responsibility, it is important to know that what CSR activities impacting the sugar industries of
Pakistan and how these activities can impact the financial performance of sugar sector. This
study is conducted to evaluate and empirically determine the impact of CSR activities; donation,
workers profit participation fund (WPPF), and research and development (R &D) on
performance such as Sales, return on assets (ROA), and return on equity (ROE) of sugar sector
of Pakistan.
This study is conducted for sugar industry of Pakistan and all (30) sugar firms that are
listed on are unit of analysis for present study. Sugar sector is selected as corporate social
responsibility issue arises in sugar industry the most. Exploitation of farmers providing the raw
sugar cane to sugar mills, is the main reason as they are the main stakeholders of sugar firms so
their interest matters a lot to demand the implication of CSR activities form the this industry.
These CSR activities will work as to build sugar firm’s reputation in eyes of their stakeholders
that ultimately will be beneficial for the firm in terms of their performance.
By applying fixed affect model, results of the study suggested that WPPF, donations and
R & D have significant impact on the performance of sugar industries of Pakistan. R & D have
positive significant impact on financial performance in terms of sales but for ROA, and ROE, it
has impact on performance but this impact is on margin. WPPF have positive significant impact
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on performance of firms in terms of their ROA, ROE, and sales as percentage of total assets. The
CSR practices of sugar firms like donations have negative significant impact on performance of
sugar industry in terms of ROA, and ROE while it has positive relationship with performance of
firm in terms of sales as percentage of total assets but this positive relation is not significant.
