Impact of Corporate Social Responsibility on Financial Performance Evidence from Pharmaceutical Sector Listed Companies of Pakistan

Irfan Rana

doi:10.11648/j.ebm.20180401.11

Abstract

The purpose of this study was to examine the impact of Corporate Social Responsibility (CSR) on Financial Performance (FP) of pharmaceutical sector companies listed in Pakistan Stock Exchange (PSX). According to published data of Pakistan Stock Exchange (PSX), a total of 9 pharmaceutical companies are reported in this sector. In order to achieve the purpose, data has been collected of three years from 2014 to 2016 from annual reports of the companies. In this study the spending on Education, Healthcare and Environment, Donation, and Workers Welfare Fund used as proxy for CSR measurement, while three proxies of Donation, Earning per Share (EPS), Return on Assets (ROA), and Return on Equity (ROE) as measurement of financial performance. Data has been analyzed using Panel Least Square Fixed Effect Regression. The findings s of the study revealed that there is positive impact of CSR on Financial Performance of the companies. It is evident that to boost the financial performance, the CSR phenomenon is an essential tool for growth in pharmaceutical industry of Pakistan.

Highlights

Corporate Social Responsibility (CSR) is the relationship of a company with society all in all
According to the latest report of Pakistan Centre of Philanthropy (PCP) in 2014 the top 25 companies contributed more than 54% of the total donations in 2014, and surprisingly there is no pharmaceutical company in the list, while this sector is a key sector among those contributing significant amount to Gross Domestic Product (GDP)
FP signifies financial performance, Return on Assets (ROA) denotes return on assets, Return on Equity (ROE) defines return on equity and Earning per Share (EPS) signify earnings per share which has been taken as proxies of DV means dependent variable whereas CSR denotes corporate social responsibility CSR treated as IV means independent variable and ε is helping as an error term in the equation of the study

Summary

Introduction

Corporate Social Responsibility (CSR) is the relationship of a company with society all in all. It has been defined by various specialists in various styles. Hajji and Ghazali (2012) [24] considered the company social obligation with the point of view of legitimacy theory in Malaysia. They contemplated eighty five companies of Malaysia that were recorded amid situation of financial crisis. Stakeholder theory examines various stakeholders of company on how a company treats their stakeholders This theory utilizes to think about the effect of corporate social obligation divulgence on financial execution

Objectives

Methods

Findings

Discussion

Conclusion