CORPORATE SOCIAL RESPONSIBILITY PRACTICES AND FINANCIAL PERFORMANCE: EMPIRICAL EVIDENCE FROM PAKISTAN

Abstract

This study aims to investigate the relationship between CSR practices and financial performance. The study formulates one hypothesis about the effect of CSR practices on firms’ financial performance. This study is based on data of 20 companies from the construction and chemical sectors from 2015 to 2019. The hypothesis was tested by using panel regression through using R software version 3.2. The results suggest that CSR practices has positive and significant effect on the financial performance of the firms in the study sample. The relationship between CSR practices and financial performance is inconclusive. There is a need to establish a general link between CSR practices and financial performance. The varying outcomes are primarily due to sample size, operationalization, and context, among other factors. Given the resource constraints, researchers suggest to conduct research on the association between CSR practices and financial performance in the context of developing countries. This study contributes to the literature on the effect of CSR practices on financial performance in the context of a developing country (Pakistan) and provides practical insights to corporate managers. Based on the results attained, it would be recommended that Pakistani corporate firms secure better financial performance by committing themselves in CSR activities.