Relationship between Corporate Social Responsibility Disclosure and Financial Performance in Sri Lankan Domestic Banking Industry

Abstract

The purpose of this study is to examine the relationship between corporate social responsibility (CSR) disclosure and financial performance in domestic commercial banks in Sri Lanka. The researcher selected six high performance domestic commercial banks as a sample for a period of five years starting from 2009 to 2013.CSR disclosures and firm size have been identified as independent variables and financial performance identified as the dependent variable in this study. The researcher used secondary data for the purpose of analysis. This study employed return on equity to identify the financial performance (FP), GRI index G3 guidelines to identify the CSR disclosure level of the banks and firm size measured by logarithm of total assets of the banks. Through the result of the research it has been concluded that the null hypothesis can be rejected since there is a negative relationship between CSR disclosures and financial performance of selected domestic commercial banks. Researcher identified FP will not be totally depended on CSR disclosure. Bank performance varies with the different time periods, economic condition and other macro factors. The researcher further identified that CSR disclosure level in private banks is higher than the state banks even though the firm size of private banks are smaller than the state banks.