Corporate Social Responsibility and Firm Performance: An Empirical Research on Banking Industry of Bangladesh

Abstract

In today’s competitive business environment, it is impossible to survive for the organizations which concentrate only on profit. As businesses are social entities, they have to go beyond ensuring profit and serve those who directly or indirectly get benefited or worsened by the organizations. Hence, publicly traded companies tend to perform Corporate Social Responsibility (CSR) and report this information. This paper investigates whether CSR amount reported in annual reports of companies has any significance as far as profitability and valuation of those companies are concerned. Linear regression analysis of three models under study incorporate five years’ data of 30 listed banking companies, the results of which reveal that CSR has no significant impact on neither the profitability nor the share price of the banking industry of Bangladesh. Therefore, the notion that supports CSR’s correlation with profitability, firm performance, and stock performance does not hold true in Bangladesh.