Abstract:
In Sri Lanka, the Manufacturing sector has a glorious history of getting
engaged themselves in different kinds of social activities which is formally
known as CSR (Corporate Social Responsibility). There has been an increased
and continued expenditure by listed manufacturing Industries on CSR
activities over the years globally. It is now expected that a profit-making
organization must engage in socially responsive activities. The study sought
to examine the influence of expenditure on CSR on financial performance of
manufacturing sector in Sri Lanka. The specific objective was to find out the
influence of CSR on industries’ profitability, to determine effects of CSR on
a firm’s using Return on Assets (ROA), Return on Equity (ROE), and return
on Investment (ROI). The study used annual reports of randomly selected
company for the period of 2010 to 2015.Correlationanalysis and regression
ware analyzed using E-views. To assess the impact as well as test the
hypothesis of the study whether there is a relationship and the extent of the
relationship between the independent variable (corporate social responsibility
expenditure) and the dependent variables. (ROA, ROE, ROI).The hypothesis
that was formulated was tested and the result shows that there is significant
negative relationship between CSR and ROA, that there is significant negative
relationship between CSR and ROE and. There is significant Positive
relationship between CSR and ROI in manufacturing industry in Sri Lanka.
The study concluded that expenditure on Corporate Social Responsibility had
a significant negative influence on the ROA and ROE of an industry as well
as that expenditure on Corporate Social Responsibility had a significant
negative influence on the ROI in manufacturing industry in Sri Lanka.
