Nexus between corporate social responsibility and firm’s performance: A panel data approach

Abstract

AbstractThe purpose of this study is to investigate the relationship between corporate social responsibility and firm performance. Secondary data from 28 firms registered at stock exchange were selected as population of the study. Data from time period of 8 years from 2009–2017 was taken from annual reports and statements of firms. For statistical analysis STATA‐12 was used. Levin‐Lin‐Chu test is used for data stationarity. Mean,SD, correlation analysis and pooled ordinary least square were used for testing hypotheses. Fixed effect model and random effect model, Hausman test were used. Corporate social responsibility scored highest mean followed by returns on equity, earnings per share and lowest mean was scored by returns on assets. Correlation analysis revealed the positive and significant relationship among all variables. Pooled ordinary least square results show that corporate social responsibility has significant impact upon returns on assets, returns on equity and earnings per share. But most dominant is earning per share from coefficient value. Previous studies which claimed that by identifying CSR activities in annual reports would result in low returns on assets, low returns on equity and less earnings per share. Thus, findings of this study explained that by showing CSR in annual reports could result in high returns on assets, equity and earnings per share. This study have implications for firms, firms can take competitive advantage by taking part in CSR activities, by doing so will retain talented employees, enhanced brand image, reputation in society and attract more investors for firms.