The Impact of Corporate Social Responsibility initiatives on the financial performance of companies listed in the Nairobi Securities Exchange

Abstract

This study examines the impact of Corporate Social Responsibility (CSR) initiatives on the financial performance of companies listed on the Nairobi Securities Exchange (NSE) from 2019 to 2023. Using a panel data approach, the study employs a descriptive research design to analyze the relationship between CSR and key financial performance indicators, including Return on Assets (ROA). Secondary data was collected from financial reports and company disclosures, with statistical analysis conducted using SPSS. The study applied an Ordinary Least Squares (OLS) regression model to assess the significance of CSR in influencing financial outcomes. Findings reveal that while CSR has a positive association with financial performance, the impact is statistically insignificant. Efficiency emerged as a key determinant of financial success, whereas capital intensity did not show a significant correlation with financial outcomes. The study concludes that CSR, though beneficial for corporate reputation and stakeholder engagement, does not directly translate into higher financial returns in the short term. It recommends that firms integrate CSR strategically with operational efficiency improvements to maximize financial and social value. Additionally, policymakers are encouraged to standardize CSR reporting practices to enhance transparency and comparability across industries.