Record Details

The Impact of Financial Performance on Corporate Social Responsibility

Organization Theory Review

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Field Value
 
Title The Impact of Financial Performance on Corporate Social Responsibility
 
Creator Ummara Fatima
Uzma Bashir
Atif Ali
 
Subject banking sector
corporate social responsibility
financial performance
 
Description The study explores how financial performance (FP) affects the corporate social responsibility (CSR) of the banking sector of Pakistan. Further, it also elaborates the comparison between FP and CSR of Islamic and conventional banks of Pakistan. The study is based on the annual reports of banks listed at Pakistan Stock Exchange (PSE) for the years 2010-2016. The study used several panel data diagnostic tests and three regression models to check the relationship between FP and CSR of Islamic and conventional banks of Pakistan, while taking leverage and size as control variables. The results indicate that in case of conventional banks the relationship between ROE and CSR is negative. Here, the results are consistent with the agency theory which states that investment in CSR related activities is a waste of resources. While return on asset (ROA) is depicting negative and insignificant relationship with CSR, which depicts that FP does not have any impact on the investment in CSR initiatives. In the case of Islamic banks, the relationship between return on equity (ROE) and CSR is positive and significant. Here, the results support social contract and stakeholder theories. The research has important practical consequences that will help the banking industry managers to adopt optimal investment strategies about CSR related activities. The study provides guidelines to conventional banks to invest more in CSR in the same way Islamic banks are doing. The findings of the study lay some foundations upon which a more detailed analysis of CSR of banks could be based.
 
Publisher School of Professional Advancement, University of Management & Technology, Lahore, Pakistan
 
Date 2018-12-31
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier https://journals.umt.edu.pk/index.php/OTR/article/view/530
10.32350/OTR.0202.01
 
Source Organization Theory Review; Vol 2 No 2 (2018): Fall 2018; 01-18
2221-2876
 
Language eng
 
Relation https://journals.umt.edu.pk/index.php/OTR/article/view/530/384
 
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