Impact of Corporate Social Responsibility on Firm Financial Performance: Evidence from Insurance Sector of Pakistan

Abstract

Corporate social responsibility (CSR) has become an emerging field of research and practice and little is known about its implications for financial sector firms in developing countries like Pakistan. This study investigates impact of CSR on firm performance for insurance sector of Pakistan. Using data of twenty-eight insurance companies for eight years, this study found that CSR has a positive influence on return on assets (ROA) and earnings per share (EPS), and insignificant influence on return on equity (ROE). Further, firm size predicted ROA, while leverage predicted ROE and EPS. Overall, this study documents that CSR could be a significant predictor of financial performance of firms in financial sector of developing economies like Pakistan. Findings of this study enable the managers of financial sector firms to understudy value of CSR and adopt it to manage their performance.