Impact of Corporate Social Responsibility Disclosures on Financial Performance of Listed Manufacturing Companies in Sri Lanka

This study examines whether corporate social responsibility (CSR) towards primary stakeholders influences the financial performance (FP) of listed manufacturing companies (LMC) in Colombo stock exchange (CSE) in Sri Lanka. Data on dependent variable and independent variables was collected from annual reports of thirty listed manufacturing firms for the period of five years. Dependent variable of financial performance was measured by Return on Capital Employed (ROCE) which was calculated from relevant figures which are available in statement of financial position and income statement and accounting notes. Content analytical technique was used to developed content indexes on five stakeholders groups namely Community, Customers, Employees, Environment and Investors based on disclosures which are available in global reporting initiative-G3 guidelines. The regression analysis of the study has found that there is a statistically significant positive association between CSR indexes on stakeholders and FP. The study firmly concluded that higher social responsiveness of listed manufacturing firms in Sri Lanka yielded higher financial performance than the firms which are lower position in term of social responsiveness.