Abstract:
This study analyzes the relationship between corporate social responsibility
(CSR) practices and Firm Financial Performance of the listed manufacturing
companies in Sri Lanka with the utilization of data, obtained from thirty two
(32) firms' audited annual report and financial statements between 2010-2015,
Variables used for the study include, CSR spending of the company (salaries
and wages spending of employees, donation in the form of health,
environment, sports, community and education etc., employees’ welfare funds
& Other benefits), Return on Assets (ROA), Net profit ratio (NPR) and control
variable (total assets). Previous literatures provide conflicting results on the
relationship between corporate social responsibility (CSR) practice and firm
financial performance with some studies showing a positive relationship,
others negative and still others showing that there is no relationship between
the two variables. It is with this background that this study sought to establish
the relationship between corporate social responsibility practice and financial
performance. The correlation and regression tests were conducted by using
SPSS. The results suggested significant negative relationship between CSR
and ROA without adding control variable and adding the control variable. As
well as there is a significant negative relationship between CSR and NPR with
and without adding control variable. The actual responsibility of conducting
CSR activities are, to share their profits with society as without them they
could not survive. Also future research should be conducted to quantify how
much or to what degree these CSR programs have impacted on the society and
its corresponding value generation for the company. The value from a practical
perspective, the study is required to assess if investments in CSR is worthwhile
or not.
