The Effect of Corporate Social Responsibility on Stock Price and Before Tax Net Profit: Evidence from Bangladeshi Commercial
Author(s)
Md. Alamgir Hossen, Mahfuza KhatunAbstract:
The study intended to determine the effect of CSR on stock price and financial performance of Bangladeshi Commercial Banks. Financial Performance means audited net profit before tax and investment means loans, investment in treasury securities, investment in shares and subsidiaries. Investment in CSR means monetary spending on social activities. Five years’ data (2010 to 2014) collected from commercial banks’ audited financial statements, and publications have been used. Using multiple regression analysis, the study has been tried to find out the impact of corporate social responsibility (dependent variable) on stock price, and financial performance (independent variables). The study revealed that only14 out of 30 commercial banks has provided the necessary and complete CSR data that was appropriate for the study. It is also found that expenses on social activities have a short term effect on stock price but no effect on financial performance of commercial banks in Bangladesh.
Key words: Corporate social responsibility, net profit before tax, stock price, investment
JEL classification numbers: G21, M14, C12