Impact of Corporate Social Responsibility Disclosure Reports on Sale Performance: Evidence from Pakistani Non-Financial Firms

Abstract

This manuscript investigates how corporate social responsibility disclosure reports impact on firm sales performance. The proxies used for sales performance and corporate social responsibility are return on sales and corporate social responsibility (CSR) disclosure index respectively. Data has been collected from 166 non-financial firms listed on the Pakistan Stock Exchange (PSX) for the period of 11 years from 2009 to 2019. The study has adopted panel data for statistical analysis. The study concluded that the corporate social responsibility (CSR) disclosure index has a significant negative impact on return on sales. Shareholders and agency theory shows that corporate social responsibility (CSR) activities create a financial burden for companies. These theories support this study’s results. According to shareholder theory, firms do not operate for society but also for their stakeholder’s benefits. The theory also states that companies need to focus on shareholders’ wealth maximization instead to invest in corporate social responsibility (CSR). Leverage, gross domestic product, financial development of banks, and foreign direct investment have also a negative impact on return on sales. The financial development of the private sector has a significant positive impact on return on sales. The findings of the study provide fundamental support to corporate managers and policymakers on how they bring improvement in corporate social responsibility (CSR) with the adoption of techniques regarding this study