Influence of corporate social responsibility on financial performance of industries listed at Nairobi securities exchange, Kenya

Abstract

There has been an increased and continued expenditure by listed Industries on CSR activities over the years globally. It is now expected that a profit-making organization must engage in socially responsive activities. The study sought to examine the influence of expenditure on CSR on financial performance of Industries listed at Nairobi Securities Exchange in Kenya. The specific objective was to find out the influence of CSR on industries' profitability, to determine effects of CSR on a firm's liquidity position, and to find out influence of CSR on a firm's growth in assets. The study employed descriptive research design. The population of the study comprised of 49 firms out of 63 listed firms at NSE. Secondary data was collected from financial statements as well as NSE handbook. The data was processed and analyzed using Statistical Package for Social Science (SPSS). Descriptive statistics, T-Test statistics, Chi square statistics and Person correlation analyses were used to analyze the influence of expenditure of CSR on financial performance of industries listed in the NSE. Research finding were used to answer research questions and give recommendations on influences of CSR activities on financial performance of the industries listed at the NSE. The finding indicated that ROCE scores were significantly higher for firms with CSR expenditure of 20 million and above (M = 17.34, SD = 4.25) than for the companies with CSR of less than 20 million (M = 3.87, SD = 9.17). Hence, corporate social responsibility was found to have a significant effect on profitability of an industry. The finding also indicated that asset growth scores were significantly higher for industries with CSR expenditure of 20 million and above (M = 12.94, SD = 5.82) than for the companies with CSR of less than 20 million (M = 5.09, SD = 9.01). Hence, corporate social responsibility was found to have a significant effect on asset growth of a firm. The study concluded that expenditure on Corporate Social Responsibility had a significant influence on the profitability of an industry as well as growth on asset of an industry listed in the NSE.