Abstract:
In general practice, businesses manipulate the changing competitive corporate
environment and consumer’s trends with the complete focus of gaining high profits.
Today, importance of Corporate Social Responsibility (CSR) cannot be neglected
at any instance as it focuses on the integration of operations and actions by the
businesses for the welfare of the society. This research study revolves around the
investigation and analysis of the impact of the CSR on Firm Performance (FP)
of the listed manufacturing firms in the Colombo Stock Exchange. The data were
collected from 2010 to 2016 from the annual reports of the selected 36 companies.
The researcher has used 6 proxies to measure CSR Earnings per Share, Leverage,
Major Business Cost, Turnover of Payable, Proportion of Wages & Benefits and
finally the Tax Pay Rate. By retaining the above six factors, the researcher studies
the impact on FP under three dimensions; Return on Equity, Tobin Q and Return
on Assets. Panel Data Regression method has been utilized for the analysis of
the data and the results of the fitted Random Firm Effect Model reveals that
EPS, Leverage, Major Business Cost, Turnover of Payable and the Tax Pay Rate
have a statistically significant impact on the Return on Assets. According to the
result of fitted Fixed Firm Effect Model, EPS is the only influential factor that
positively impact on the Return on Equity while the Random Firm Effect Model
for Tobin Q reveals that, none of the variables explain the variation in FP of the
listed manufacturing companies.
