Abstract:
The relationship between Corporate Social Responsibility (CSR) and Corporate
Financial Performance (CFP) has become an important global matter, to an extent
that some local companies have established CSR departments (directorates) to
take care of social activities. The question still remains as to whether it pays to be
socially responsible more importantly, whether further efforts on social activities
lead to increased financial returns.
This research study seeks to investigate the relationship between the two
variables from a South African setting. The study is quantitative in nature with
Social Responsibility Index (SRI) of the Johannesburg Security Exchange (JSE)
chosen as a measure of CSR, and selected financial ratios (ROA, ROE, P/E, DY
and SV) as measures of CFP. The Mean, Median, ANOVA and Kruskal-Wallis
tests were all used to analyse the data.
On the basis of the Mean, GRP 3 companies reported the highest values on
variables ROA, ROE and DY. The Median results were consistent with those of
the Mean. Both the ANOVA and Kruskal-Wallis tests reported significant
differences on variables ROA, P/E and DY
