CORPORATE SOCIAL RESPONSIBILITY (CSR) AND PROFITABILITY OF OIL INDUSTRY OF PAKISTAN

Abstract

Purpose: This research report concluded with the objective of understanding the impact of CSR on CFP in oil industry of Pakistan. The main purpose of this study is to identify and examine the each sub variable of CSR and its implication with regards to selected companies of oil industry. Moreover, the research has been conducted to understand the significance of CSR that why companies involve this factor in their business operations. Research Methodology: This research report is based on annual reports of the three selected companies that are Pakistan State Oil, Shell and Pakistan Petroleum Limited (PPL). The regression model is used to critically examine the empirical results. The dependent variable corporate financial performance is further divided into sub variable that are ROA, NIM, ROE, and EPS. Conversely the independent variable CSR is further break into donation, WPPF, WWF. Findings of the Research: In this research study linear regression technique is used to analyze the impact of each variable of CSR on the profitability of the selected companies using net income, return on assets and return on equity. The research aims to understand the impact of each CSR variable therefore, several hypothesis were created regarding each variable i.e. donations, WWF, and WPPF. However, the results varied from company to company. On the other hand, when the research identifies the impact of overall CSR on each company’s profitability all null hypothesis regarding positive relationship between CSR and CFP (ROA, ROE, and NI) were accepted with significant value greater than .05. Practical Implication In today’s era companies are more focusing on maximization of the shareholder’s wealth and to attract their investors by actively participating in corporate social responsibility. This will also increase the scope of CSR in developing countries as CSR is only limited to developed countries.