Does Profitability of a Corporation Depends on It’s Corporate Social Responsibility?

Abstract

This study was to find the impact of corporate social responsibility practices on the firm financial performance of the oil and gas sector of Pakistan. For this study, fourteen companies of the oil and gas sector, listed on the Karachi stock exchange of Pakistan were selected as samples. Secondary data has been collected covering ten years from 2010-2019. The data was collected from the annual report and state bank site of Pakistan. E-views have been used to test the impact of CSR and firm profitability. For this study four tests were used to check the significance and stationarity of data. In which include Unit Root test, Co-integration, Vector Error Correction Estimation, and Granger Causality test. On the basis of the Unit Root test results, all variables show the stationarity. According to the results of Cointegration, there is no long-run relationship between variables. According to Granger Causality results shows all variables are move to another and impact on another if CSR take dependent variable excluded net profit after tax (0.0249), net profit margin (0.9989) and total assets are (0.4841) so, in which all three variables are move to one variable that is CSR. In vector error correction estimates take a137 observations these observations shows a results about short run dynamic relationship of variables. So In overall tests are used for analysis shows significant and stationarity results and these are good for study so it means these results create a positive impact on CSR and firm performance.