European Business & Management

| Peer-Reviewed |

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

Received: 24 September 2017    Accepted: 26 October 2017    Published: 05 December 2017
Views:       Downloads:

Share This Article

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.

DOI 10.11648/j.ebm.20180401.11
Published in European Business & Management (Volume 4, Issue 1, January 2018)
Page(s) 1-8
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Financial Performance, Corporate Social Responsibility, Pharmaceutical Sector, Fixed Effect Panel Regression

References
[1] Eells and Walton (1961), “Corporate social responsibility: Meeting changing expectations” (World Business Council for Sustainable Development, Geneva).
[2] Carroll, A. (1999). Corporate social responsibility-evaluation of a definitional construct. Business and Society 38, 268–295.
[3] McGuire, J., Schneeweis, T., Hill, J. (1986), an analysis of alternative measures of strategic performance. Advances in Strategic Management, 4 (2), 107-153.
[4] Drucker 1984; corporate social responsibility and its impact on financial performance: Investigation of U. S. Commercial Banks.
[5] Davis and Blomstrom 1975; Corporate social responsibility and strategic tax behavior. In: Schön, W. (Ed.), tax and corporate governance. Springer-Verlag, Berlin Heidelberg.
[6] Andrews 1973; Sustainability practices and corporate financial performance: A study based on the top global corporations. Journal of Business Ethics, 108: 61- 79.
[7] Epstein 1987). Corporate social responsibility. Ventus Publishing ApS. Cheruiyot, F., K., (2010). The relationship between corporate social responsibility and financial performance of companies listed at the Nairobi Stocks Exchange, Unpublished MBA Thesis, and University of Nairobi.
[8] Friedman, M. (1970), The Social Responsibility of Business is to Increase its Profits. New York: Times Magazine. P122-124.
[9] Mujahid, M., Abdullah, A. (2014), Impact of corporate social.
[10] Responsibility on firm’s financial performance and shareholders wealth. European Journal of Business and Management, 6 (31), 181-187.
[11] Jamali, D., Mirshak, R. (2007), corporate social responsibility (CSR): Theory and practice in a developing country context. Journal of Business Ethics, 72 (3), 243-262.
[12] Malik, M. S., Nadeem, M. (2014), Impact of corporate social responsibility on the financial performance of banks in Pakistan. International Letters of Social and Humanistic Sciences, 10 (1), 9-19.
[13] Akinyomi, O. J. (2013), Survey of corporate social responsibility practices in the Nigerian manufacturing sector. International Journal of Research Studies in Management, 2 (1), 1-10.
[14] Mcwilliams, A., Siegel, D. (2001), corporate social responsibility and financial performance: Correlation or misspecification? Strategic Management Journal, 21 (5), 603-609.
[15] Mughal, S. L. (2014), corporate social disclosure: A case study.
[16] Belal, A. R., Momin, M. (2009), corporate social reporting (CSR) in emerging economies: A review and future direction. Research in Accounting in Emerging Economies, 9, 119-143.
[17] Wibisono, Y. (2007), Concept and Application of CSR. Gresik: Fascho Publishing.
[18] Yang, F., Lin, C., Chang, Y. (2010), the linkage between corporate social performance and corporate financial performance. African Journal of Business Management, (4) 4, 406-413.
[19] KPMG. (2011), KPMG International Survey of Corporate Responsibility Reporting. 2011. Available from: http://www.in.kpmg.com/ SecureData/aci/Files/corporate-responsibility2011.pdf. [Last accessed on 2017 Jan 02].
[20] Nelling, E., Webb, E. (2009), corporate social responsibility and financial performance: The “virtuous circle” revisited. Review of Quantitative Finance and Accounting, 32 (2), 197-209.
[21] Kashyap, R., Mir, R., Iyer, E. (2006), toward a responsive pedagogy: Linking social responsibility to firm performance issues in the classroom. Academy of Management Learning and Education, 5 (3), 366-376.
[22] Poddi, L., Vergalli, S., Mattei, F. (2009), Does corporate social responsibility affect the performance of firms. Fondazione Enri Enrico Mattei, 52 (9), 1-45.
[23] Burton, B., Goldsby, M. (2009), corporate social responsibility orientation, goals and behavior: A study of small business owners. Business and Society, 48 (1), 88-104.
[24] Haji and Ghazali (2012) the corporate social performance: Financial performance link, Strategic Management Journal, 18 (4), 303-19.
[25] Samra Kiran, Shahid Jan Kakakhel and Farzana Shaheen (2015) Managing corporate performance: Investigating the relationship between corporate social responsibility and financial performance in emerging market. International Journal of Productivity and Performance Management, 59: 229-254.
[26] Jie, C. T., Hasan, N. A. M. (2016), Determinants of corporate social responsibility (CSR) and intrinsic job motivation: A case of Malaysian banking company. Malaysian Journal of Social Sciences and Humanities, 1 (2), 25-35.
[27] Kiran, S., Kakakhel, S. J., Shaheen, F. (2015), corporate social responsibility and firm profitability: A case of oil and gas sector of Pakistan. City University Research Journal, 5 (1), 110-119.
[28] Murtaza, I. A., Akhtar, N., Ijaz, A., Sadiqa, A. (2014), Impact of corporate social responsibility on firm financial performance: A case study of Pakistan. International Review of Management and Business Research, 3 (4), 1914-1927.
[29] Choi, C. (2010), corporate social responsibility and corporate financial performance: Evidence from Korea. Australian Journal of Management, 35 (3), 291-311.
[30] Iqbal, N., Ahmad, N., Kanwal, M. (2013), Impact of corporate social responsibility on profitability of Islamic and conventional financial institutions. Applied Mathematics in Engineering, Management and Technology, 1(2), 26-37.
[31] M. Shoukat Malik, Muhammad Nadeem (2014) A three-dimensional conceptual model of corporate performance; Academy of Management Review, 4 (4), 497-505.
[32] Ofori, D. F., Nyuur, R. B., S-Darko, M. D. (2014), corporate social responsibility and financial performance: Fact or fiction? A look at Ghanaian banks: Original research. Actacommercii, 14 (1), 1-11.
Author Information
  • School of Accounting & Finance, University of Central Punjab, Lahore, Pakistan

  • School of Accounting & Finance, University of Central Punjab, Lahore, Pakistan

Cite This Article
  • APA Style

    Irfan Rana, Faizan Asad. (2017). Impact of Corporate Social Responsibility on Financial Performance Evidence from Pharmaceutical Sector Listed Companies of Pakistan. European Business & Management, 4(1), 1-8. https://doi.org/10.11648/j.ebm.20180401.11

    Copy | Download

    ACS Style

    Irfan Rana; Faizan Asad. Impact of Corporate Social Responsibility on Financial Performance Evidence from Pharmaceutical Sector Listed Companies of Pakistan. Eur. Bus. Manag. 2017, 4(1), 1-8. doi: 10.11648/j.ebm.20180401.11

    Copy | Download

    AMA Style

    Irfan Rana, Faizan Asad. Impact of Corporate Social Responsibility on Financial Performance Evidence from Pharmaceutical Sector Listed Companies of Pakistan. Eur Bus Manag. 2017;4(1):1-8. doi: 10.11648/j.ebm.20180401.11

    Copy | Download

  • @article{10.11648/j.ebm.20180401.11,
      author = {Irfan Rana and Faizan Asad},
      title = {Impact of Corporate Social Responsibility on Financial Performance Evidence from Pharmaceutical Sector Listed Companies of Pakistan},
      journal = {European Business & Management},
      volume = {4},
      number = {1},
      pages = {1-8},
      doi = {10.11648/j.ebm.20180401.11},
      url = {https://doi.org/10.11648/j.ebm.20180401.11},
      eprint = {https://download.sciencepg.com/pdf/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.},
     year = {2017}
    }
    

    Copy | Download

  • TY  - JOUR
    T1  - Impact of Corporate Social Responsibility on Financial Performance Evidence from Pharmaceutical Sector Listed Companies of Pakistan
    AU  - Irfan Rana
    AU  - Faizan Asad
    Y1  - 2017/12/05
    PY  - 2017
    N1  - https://doi.org/10.11648/j.ebm.20180401.11
    DO  - 10.11648/j.ebm.20180401.11
    T2  - European Business & Management
    JF  - European Business & Management
    JO  - European Business & Management
    SP  - 1
    EP  - 8
    PB  - Science Publishing Group
    SN  - 2575-5811
    UR  - https://doi.org/10.11648/j.ebm.20180401.11
    AB  - 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.
    VL  - 4
    IS  - 1
    ER  - 

    Copy | Download

  • Sections