Abstract:
With the increased concentration on the corporate social
responsibility (CSR), companies are not only required to focus narrowly on
generating profit for shareholders, but also asked to take responsibilities for
firms’ other stakeholders, e.g. customers, employees, society etc., from social,
environment and economic perspectives. Hence, nowadays, having both a
decent CSR performance and adding profitability are the significant aspects
for the company to achieve the sustainable success in the long term. In terms
of that, this dissertation aims to explore the CSR-profitability relationship,
namely to explore, how CSR influences the firm’s profitability. For this
purpose, this study measured corporate social responsibility disclosure in
terms of published CSR keywords on the annual reports of the 10 firms listed
on the Ghana stock exchange over five years ranging from 2011 until 2015.
The variables under consideration in the study include: return on assets, return
on equity, corporate social responsibility, company size, leverage, inflation,
and exchange rate. The study reveals that corporate social responsibility
(CSR), company size (CS) had positive and statistically significant effect on
return assets and return on equity in the domestic industrial sector of Ghana
after controlling for leverage, inflation, and exchange rate. The result also
concludes that there is positive relationship between Profitability and CSR
practices together with Firm Size and Firm Revenue as control variable. As
well as, this research will contribute to finance and accounting literature in
identified investment in CSR will lead to firm financial performance or
otherwise.
