Modelling the Impact of Responsibility Levels on Corporate Financial Performance: The Case of Top 100 Firms in Mauritius

Abstract

The objective of this paper is to investigate the relationship between Corporate Social Responsibility (CSR) levels and the financial performance of Top 100 firms in Mauritius post the implementation of the mandatory CSR levy in 2009. Both qualitative and quantitative assessment of disclosures in the annual reports of the top 100 companies for the period 2010-2014. A CSR index based on Carroll’s (1979) CSR pyramid was constructed which was used to rate their CSR disclosure levels as per the five dimensions; economic, legal, ethical, environmental and social responsibility. The scores computed were then regressed against the profitability levels to depict any correlation between the variables. The study revealed mixed results for the responsibility levels and financial performance. A positive relationship was noted in case of economic responsibility, negative relationship for legal and ethical responsibility while the social, environmental and responsibility levels generated an insignificant relationship with the profitability level of the top 100 firms.