Impact of Corporate Social Responsibility on Financial Performance

Abstract

Major aim of this study was to evaluate the impact of Corporate Social Responsibility (CSR) on Financial Performance in Paldstan. Emerging CSR practices in developed world raise question about inclination of developing world towards CSR. As Pakistan is a developing country therefore industry is concerned towards profit maximization. But at the same time firms take CSR in account to increase financial performance. The study involved use of secondary data and audited annual reports of 5 years (2008-2012) for financial information. The sample size involved 26 listed companies of same size from different sectors which are supposed to incline toward better CSR. Stakeholder theory was used to measure CSR and stakeholders were Government, Employees, Suppliers, Creditors, Shareholders and Customers. Eviews was used to analyze regression model. The analysis and comparative results clearly suggested that there is positive relation between CSR and financial Performance. The outcomes of the research might help the corporate decision makers, government policy formulators and other related quarters to understand the impact of CSR on financial performance in Pakistan and to understand the overall impact of different dynamics of CSR in Pakistan.