Abstract:
Purpose: The purpose of the research is to identify the impact of Corporate Social
Responsibility (CSR) on financial performance and capital structure decision making
of listed companies in Colombo Stock Exchange of Sri Lanka (CSE).
Design / Methodology / Approach: Quantitative data analysis techniques used in
this study to explain how the CSR activities affect financial performance and capital
structure decision measures within listed companies on the Colombo Stock Exchange
from 2018/2019 to 2023/2024. The study focuses on three key dependent variables:
Return on Assets (ROA), Tobin's Q, and Capital Structure. Independent variables
include CSR activities tailored towards the community, customers, employees, and
environment, benchmarked against the Global Reporting Initiative (GRI) framework.
Findings: The findings reveal a positive relationship between CSR activities and
financial performance indicators, indicating that companies practicing CSR tend to
achieve better financial performance. Moreover, the analysis uncovers insights into
how CSR practices influence capital structure decisions.
Implications and Limitations: This study highlights the strategic importance of
integrating CSR into corporate strategies to enhance both financial performance and
decision-making processes. However, it acknowledges limitations such as potential
endogeneity issues, data availability constraints, and the need for further longitudinal
research to capture the full impact of CSR on listed companies in the CSE.
Originality value: The empirical evidence on the relationship between CSR, firm
performance, and capital structure decisions within the context of the CSE, this study
contributes to the existing literature and offers valuable insights for practitioners,
policymakers, and scholars. and offer practical implications for stakeholders,
policymakers, and corporate practitioners seeking to integrate CSR into their business
strategies for sustainable growth and value creation.
