A study on corporate social responsibility and portfolio performance, at the Nairobi Stock Exchange.

Abstract

This research paper examined the relationship between Corporate Social Responsibility(CSR) and portfolio performance and determined the extent of CSR among listed companies on the Nairobi Stock Exchange (NSE). The period of the research was 2001 - 2005. The research was carried out using a questionnaire to determine the extent of CSR. A questionnaire was sent to all the 46 listed companies on NSE and only 31 responded to the questionnaire. The results showed that majority of the companies listed on NSE thus about 55% of this companies had a score above averaqe on corporate social responsibllrtv. Also using information from the questionnaire and pub!icly available data from the annual reports. Portfolios were constructed based on CSR score frcrn the questionnaire. Correlation analysis was done to determine whether there is any relationshic between CSR and portfolio performance. The results indicated that there was a relationship between CSR portfolio and that those portfolio ranked high on basis cf CSR perforrned better than low ranked portfolios. High ranked portfolios had a Sharpe ratio of 0.854 and low ranked portfolios had a Sharpe ration of 0.671. All the portfolios pertorrned better than the market proxy