Impact of Corporate Social Responsibility and Corporate Governance on Financial Performance of Firms: Evidence from Food and Personal Care Sector of Pakistan

Abstract

The proposed study is fundamentally on financial performance of food and personal care industry in Pakistan. This study aims to establish the relationship between corporate social responsibility (CSR) and corporate governance (CG) and financial performance (FP) on the food and personal care industry in Pakistan. Accordingly, this research has developed a model to determine the effects of corporate social responsibility (CSR) and corporate governance (CG) on the financial performance (FP) where reputation of the use company, reports regarding CSR and donation as a measure of CSR, and the audit committee, size of the board as a measure of corporate governance have been used to establish the effects on financial performance measured by ROA and ROE. The researcher investigated at corporate social responsibility and corporate governance as independent factors. Financial performance is, in the meantime, the dependent variable. Nevertheless, the food and personal care sector in Pakistan has been selected to test the connection between the variables indicated above. A qualitative study research is used to examine the relationship in this study. The secondary data collection was done based on annual financial statements of 17 food and personal care company collected within the period of 2019 to 2024 (period of 6 years). EViews Software involves several statistical tests (correlation and regression analysis) in the data analysis of annual financial statements. Based on the results of this research it can be concluded that the influence of the audit committee (independent variable) on the returns on assets and returns on equity in food and personal care industry (dependent variables) is rather significant. In addition, the regression analysis showed that the company reputation, CSR reports, donation, board size (independent variables), and the return on assets, as well as on equity (dependent variables), are not significantly correlated in the food and personal care sector in Pakistan.