Affiliations: [a] School of Economics and Management, Beijing University of Posts and Telecommunications, Beijing, China
| [b] Center of Economic and Research, Shandong University, Jinan, China
Correspondence:
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Corresponding author: Umair Akram, School of Economics and Management, Beijing University of Posts and Telecommunications, Beijing, China. Tel.: +86 13120333936; E-mail: [email protected].
Abstract: Usually firms work toward financial metrics and wealth accumulation by any means, as opposed to profit maximization and true value creation, for the benefit of all concerned. Using the yearly data of listed chemical firms in Pakistan, this article investigates the effect of corporate social responsibility on firms’ profitability. By applying the Pooled OLS, FEM, difference GMM and system GMM estimation techniques, we conclude that the profitability has significance dependence on its own lagged values. Interestingly, corporate social responsibility has significant positive impact on asset growth, net profit and net profit margin. The findings support the hypothesis that the firm investing on society can get socio-emotional wealth as well as financial benefits. Therefore, besides the government and public, the firms should also act as a corporate citizen to fulfill its economic responsibility, but also its social and environmental responsibilities.
Keywords: Corporate social responsibility, firms’ profitability, Pakistan, GMM
