The Impact of Corporate Social Responsibility on Firm’s Financial Performance: Evidencefrom the Manufacturing Sectors of Pakistan

Abstract

This research investigates the impact of Corporate Social Responsibility (CSR) on the financial performance of manufacturing firms listed on the Pakistan Stock Exchange (PSX). The study focuses on three key financial indicators: Return on Equity (ROE), Return on Assets (ROA), and Earnings Per Share (EPS). Secondary data were collected from annual reports of 36 firms across five major sectors: Cement, Pharmaceutical, Automobile, Textile, and Fertilizer. The data were analyzed using SPSS to determine the statistical relationship between CSR activities and financial performance. The findings indicate that CSR has a significant positive impact on the financial performance of the firms studied. The results of the study are followed by several recommendations which are necessary for the enhancement of social responsibility of the organizations to enhance the financial performance. Based on these results, the study recommends that firms integrate CSR initiatives into their strategic planning. Specific suggestions include investing in educational development by establishing schools, colleges, and endowment funds for higher education, thereby enhancing long-term social and financial outcomes.