The relationship between corporate social responsibility Practices and financial performance of firms in the Commercial and services sector at the Nairobi securities Exchange

Abstract

Corporate Social Responsibility is the continuing commitment by business to contribute to economic development while improving the quality of life of the workforce and their families as well as of the community and society at large. There is increasing demand for transparency and growing expectations that corporations measure, report, and continuously improve their social, environmental, and economic performance. The study sought to establish the relationship between corporate social responsibility and firm’s financial performance in the commercial and services sector of the Nairobi Securities Exchange. This study used a correlation descriptive survey research design. The population of the study comprised of companies in the commercial sector of the Nairobi Security Exchange. There were nine companies listed in the commercial and services sector of the Nairobi Securities Exchange as at 31st December 2012. Primary and Secondary sources were used to collect data. Descriptive and regression analysis were used to test the relationship between CSR practice and financial performance. The study found that CSR score, efficiency and capital intensity had a positive relationship with financial performance of commercial and services sector at the Nairobi Securities Exchange in Kenya. The study found an increase in CSR score would lead to increase in financial performance of commercial and services sector at the Nairobi Securities Exchange , the study also revealed that a unit increase in efficiency would lead to increase in financial performance of commercial and services sector at the Nairobi Securities Exchange and also that a unit increase in capital intensity would lead to increase in financial performance of commercial and services sector at the Nairobi Securities Exchange.