Impact of Disclosure of Corporate Social Responsibility on Corporate Financial Performance in Bank, Finance and Insurance Sector in Sri Lanka

Abstract

Relationship between Corporate Social Responsibility (CSR) and Corporate Financial Performance (CFP) is a vexing problem faced by all business organizations. There are numerous studies supporting for different types of relationships ranging from positive to negative. This study focused on Bank, Finance and Insurance (BFI) sector. In the study disclosure of CSR is considered. Disclosure of CSR was measured in terms of CSR disclosures quantified via GRI guidelines and financial performance as in terms of ROE and ROA. Findings of the study revealed that the overall level of CSR disclosure is at a low level and there is a need of much improvement in Governance, economical, social and environmental disclosures which are the major components of sustainability. It is resulted a significant positive relationship between disclosure of CSR with ROE & ROA .It therefore claimed that the higher level of CSR disclosure yields the higher level of financial performance.