| dc.description.abstract | This study sought to establish the relationship between corporate social responsibility
practice and financial performance of firms listed in the manufacturing, construction and
allied sector of the Nairobi Securities Exchange. The relationship between corporate
social responsibility practice and firm financial performance has been studied in the past
but results of these studies do not appear conclusive. Accordingly the objective of this
study was to establish the relationship between the practice of corporate social
responsibility and firm financial performance in the manufacturing, construction and
allied sector companies listed at the Nairobi Securities Exchange. The specific objectives
were to establish the effects of corporate social responsibility activities on financial
performance and to also establish the corporate social responsibility activities undertaken
by firms in the sector. This study is important because corporate social responsibility
practice is important and fundamental to the sustainable operations of firms, good
financial performance is also important for sustainability of any firm.This study was meant to be a census but due to the non-availability of complete data for
some of the companies, the research covered 10 out of the 14 companies in the sector.
Secondary data was obtained from the audited financial reports of the companies for the
period from 2007 to 2011. The score for corporate social responsibility practice was
obtained using content analysis of reports of the companies on various components of
corporate social responsibility as reported in their audited financial reports. Control
variables for manufacturing efficiency and capital intensity were also introduced in the
regression model so as to establish whether these variables had an effect on the relationship between corporate social responsibility and financial performance. The data
collected was analyzed using descriptive statistics and regression analysis.The results indicated the existence of a relationship between the independent variables
(corporate social responsibility score, manufacturing efficiency and capital intensity)
used in the model and the dependent variable (return on assets) with a correlation
coefficient of 0.870. The results of the study also showed that there was an insignificant
positive relationship between corporate social responsibility practice and financial
performance. Financial performance and manufacturing efficiency was found to have a
significant linear relationship which was inverse. | en_US |
