Abstract:
Corporate social responsibility is considered a very vital aspect in the society at present time. It has been seen that different countries are regulating corporate social responsibility. Companies have started to contribute towards the society more than ever. They are moving towards environmental protection, education and other attributes that benefit the society. Companies tend to get involved in societies to help people and all the stakeholders which are affected by them. It has been seen during recent time that a lot of contribution towards corporate social responsibility has increased. Deduction from this the question rests what is the benefit towards the companies by giving back to the society? The research tends to explore what certain effect of performing corporate social responsibility will company get being certain financial performance increase decrease occurs or not. The research tends to use 3 financial measures to explore the effects of corporate social responsibility. Return on asset, return on equity and earnings per share are used as financial measure to make deductions. Corporate social responsibility is measured by a scoring technique. 48 companies are considered in the research from different sector with age before 2010 and also with net capital of PKR 100 mil minimum. It has been seen before that larger companies tend to do more corporate social responsibility than smaller firms. Therefore the selection criteria is set accordingly. Panel data regression analysis has been used to test the data. The data has been extracted from stock exchange as listed firms are to be considered. Previous studies have concluded different results which are also linked with different theories. Securities and Exchange Commission of Pakistan regulated reporting of corporate social responsibility in 2009. Disclosure of sustainability is usually reported in financial statements annual. Some companies tend to report them separately. The results of this research conclude that corporate social responsibility has a mixed impact on financial performance. As a significant relationship has been deducted between earnings per share, return on assets and corporate social responsibility. Whereas return on equity does not have any significant relationship with corporate social responsibility.
