MASTER PAPER

Research Project Proposal

for

Implication of CSR functions on Corporate Financial Performance

Supervisor:
Ms. Asma Akter Shelly
Lecturer (Banking & Finance)
School of Business
Bangladesh Open University

Submitted by:
Md. Mamunoor Rashid
MBA (Major: Finance & Banking)
Student ID # 141-33-812-028
Batch: 152
Bangladesh Open University
M-01957698521

1. Statement of the problems

Corporate Social Responsibility (CSR) is a companies' responsibility to the society
in which it operates. This means considering all stakeholders (internal, connected
and external) as part of the decision making process - not just the 'key players'.
CSR policies cover issues like as environmental policy and sustainability, health
and safety, treatment of staff, charitable work and contribution and supporting
local communities. Benefits to business of good CSR are brand differentiation,
avoiding regulation and building reputation in and outside the country. With the
increasing importance attached to environmental issues and social responsibility,
risk management and reporting, the CSR functions added for modern management
responsibility to the trends identified in the local and international economic
environment. The discussions on CSR practices in Bangladesh in its modern
global terms, is relatively new. In general, it is true that in Bangladesh, the status
of labor rights practices, environmental management and transparency in corporate
governance is not satisfactory, largely due to poor enforcement of existing laws
and inadequate pressure from civil society and interest groups like Consumer
Forums.
Though CSR is a relatively new concept in Bangladeshi corporate culture,
awareness of corporate social reporting has rapidly increased. All companies need
to consider their CSR for two basic reasons. Firstly, there is intensifying pressure
from stakeholders to do so. Any company that does not develop and promote its
CSR policy to all stakeholders will face increasing threats to its reputation.
Secondly, because it makes sound business sense, CSR enhances the reputation of
an organization, brings in new business and improves stakeholder return. The
Bangladesh Govt. has not imposed or proposed requirements for disclosure of
social and environmental performance. The Bangladesh Companies Act 1994 sets
the general framework for corporate financial reporting. However, no provisions
regarding CSR exist in the Companies Act 1994. However some progressive
companies disclosed some information on community, environmental and
consumer related activities.

2. Background/Rationale/Importance/Justification of the Study

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Corporate social responsibility allows organizations to do their bit for the society,
environment, and customers or for that matter stake holder. The importances of
corporate social responsibility are as follows:
-

The term corporate social responsibility gives a chance to all the

employees of an organization to contribute towards the society,
environment, country and so on: We all live for ourselves but trust me living
for others and doing something for them is a different feeling altogether.
Bringing a smile to peoples life just because your organization has pledged to
educate the poor children of a particular village not only gives a sense of inner
satisfaction but also pride and contentment. One should never forget the
importance of society and environment in our lives. It is indeed high time when
we also start thinking about people around us who are less privileged and
fortunate than us. Corporate social responsibility gives an opportunity to
organizations to work towards the betterment of the society and make it a
better place to live.

Corporate social responsibility goes a long way in creating a positive word

of mouth for the organization on the whole: Doing something for your
society, stake holders, customers would not only take your business to a higher
level but also ensure long term growth and success. Corporate social
responsibility plays a crucial role in making your brand popular not only
among your competitors but also media, other organizations and most
importantly people who are your direct customers. People develop a positive
feeling for a brand which takes the initiative of educating poor children,
planting more trees for a greener environment, bringing electricity to a village,
providing employment to people and so on. You really do not have to invest
much in corporate social responsibility activities. Do not undertake CSR
activities only to gain publicity but because you believe in the cause. There are
many organizations which tap remote villages, some of which are even
unheard as an initiative of corporate social responsibility.

Corporate social responsibility also gives employees a feeling of

unparalleled happiness. Believe me, employees take pride in educating
poor people or children who cannot afford to go to regular schools and
receive formal education: CSR activities strengthen the bond among
employees. People develop a habit of working together as a single unit to help
others. In fact they start enjoying work together and also become good friends
in due course of time. They also develop a sense of loyalty and attachment
towards their organization which is at least thinking for the society. Who does
not like to work with an organization where management is kind enough to
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take out time for the society and contribute in their own small way? Ask
yourselves, when is the last time you did something for your society,
customers, stake holders or environment? Corporate social responsibility also
goes a long way in building a positive image of the brand. Trust me, your
brand becomes a common mans brand. People start believing in the brand
and nothing can help you more than your customers trusting you and your
brand. Positive word of mouth eventually helps to generate more revenues for
the organization.

3. Objectives of the Study

This research depicts that the impact of CSR on corporate Financial Performance.
Many researchers have shown the positive relationship between CSR and
Financial Performance (FP). But there is few researches have been conducted in
Bangladesh on this topic. This research aims to explore relationship between CSR
and FP by measuring FP through Net Profit, Net Profit Margin, Total Assets, ROE
and ROA. As the Multinational companies are the pioneers in bringing and
practicing CSR in Bangladesh, in this research five MNCs financial information
has been used to measure FP of those MNCs that has been impacted by their CSR
activities. These MNCs are British American Tobacco, Marico, GSK, RB and
Berger. All of these companies are listed in Dhaka Stock Exchange.

4. Methodology of the Study

The design of this research has been described by the eight descriptors of research
design. As no survey/interview has been conducted for this research and as this
research has been done based on historical data so few descriptors of research
design have been eliminated. This research is a Formal Study because it tries to
answer few research questions and hypotheses that have been proposed. This
research is an Ex-Post facto research as the researcher of this research only reports
whats happening or what has happened and the researcher has no control over
variables. This is a causal study because it tries to find out relationships among
dependent and independent variables. As this research carries out once and
represents a snapshot at a specific point in time, this can be considered as crosssectional study.

5. Scope of the Study

Corporate communication would play an important role in the
development of CS. Although the corporate communication and corporate
social responsibility as two separate fields, these fields will largely overlap and
contribute to each other. This is due to the small market size of a country. In
corporate communication and communications in general there is no strong
differentiation of products and specialization. Therefore corporate communication
may take an important position in contributing to the CSR field. We can consider
several functions of corporate communication as very important in the
nearest future which would assist the development of CSR. The scopes of CSR
are: Communication, Education, Quality Maintenance and Cooperation.
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6. Limitations of the Study

There are some limitations of this research. The research is conducted fully based
on historical data and only data of five MNCs of five years. The result would be
more accurate if much data was used. The research sample includes only five DSE
listed MNCs financial data for five years. Bigger the size of the sample better the
result is. If the sample size included both MNCs and local companies financial
data then the result would have been more acceptable and considerable.

7. Plan (Chapter/Structure) of the Study

In this research the sample of five years financial data from 2010 to 2014 of 5
foreign listed corporations in Dhaka stock exchange has been taken. The five
MNCs are
1. British American Tobacco Bangladesh
2. Marico Bangladesh
3. GSK Bangladesh
4. RB Bangladesh
5. Berger Bangladesh
These MNCs have been selected randomly among all MNCs that have been
operating in Bangladesh. The data which is used in this research are financial data,
revenue, total assets, profit after tax, equity and amount of CSR that have been
extracted from annual reports of the firms. The data was collected from annual
reports of these companies. This research is cross-sectional study includes
historical data. Based on historical data the hypotheses have been tested through
Excel.
The correlation and regression methods were used to find the association between
Financial Performance and CSR activities. Variables used in the study are CSR
amount, profit after taxation, net profit margin to sales and the amount of total
assets, ROE and ROA. Results are generated in MS Excel.

8. References/Bibliography
1. Journal: THE COST AND MANAGEMENT ISSN 1817-5090, VOLUME-44,
NUMBER-4, JULY-AUGUST 2016
2. International Journal of Finance and Banking Research 2015; 1(1): 12-18 Published
online September 28, 2015 (http://www.sciencepublishinggroup.com/j/ijfbr) doi:
10.11648/j.ijfbr.20150101.12
3. European Research Studies, Volume XIII, Issue (4), 2010
4. Corporate Social Responsibility and Profitability: A Case Study on Dutch Bangla
Bank Ltd.
5. The Social Sciences 10(2): 171-177 2015 ISSN: 1818-5800 @ Medwell Journals
2015
6. Csaba Lentner Krisztina Szegedi Tibor Tatay
7. CBS online Journals
8. Report No. 37379-GLB-Beyond CSR: The Scope of Corporate Investment in CDD;
World Bank
9. Corporate Social Responsibility and Financial Performance LinkageEvidence from
the Banking Sector of Bangladesh Sarwar Uddin Ahmed1, Md. Zahidul Islam2, *,
Ikramul Hasan1(http://www.hgpub.com/jorm.html)
10. Sustainability ISSN 2071-1050 (www.mdpi.com/journal/sustainability)
11. The relationship between CSR and financial performance-A quantitative study
examining Swedish publicly traded companies (Linnaeus University Sweden)
12. ITO 1984
13. Finance Act 2015 & 2016