Corporate Social Responsibility and Financial Performance: Evidence from Pakistani Listed Banks

Round 1

Reviewer 1 Report

The majority of the references are not quoted in the text, please correct the reference list!

The stakeholder theory occurs very often in this paper. The author uses this term quite superficially on the first few pages. 46.line etc.

"The variation in CSR understanding, rules and regulations, and the Pakistani culture is different than rest of the developing and developed nations." This is your feeling but not proved in the article.

"Similarly, the findings of the random effects model illustrate that Capital Ratio has a significant positive relationship with ROE at a 5 percent level, while the coefficients of Age are 328 negative and significantly related to ROE at a 5 percent level." Why the Age has a negative coefficients? This would need some explanation. Too much trust towards mathematics!!!

Author Response

Please see the attachment 

Author Response File: Author Response.pdf

Reviewer 2 Report

Review 790759 Sustainability] Manuscript ID: sustainability

The MS deals with an interesting topic, CSR in banking in Pakistan. The paper needs a thorough editing for English language use. It also needs a serious reconsideration of its aims. It has two competing narratives: CSR in Pakistan’s banking versus CSR and financial performance in Pakistani banks. It does the former reasonably well. It fails at the latter, which touches upon a very well researched area, CSR and CFP. Once this is done, the rest of the work will be easier.

The aim of the paper is not clear in the introduction. For example, the first sentence introduces it as a contribution to corporate strategy, when in fact, the paper aims to understand the relationship between CSR and banking in Pakistan.

I do not think the following is correct: “The public attention, regulatory bodies, media and the researchers have been crucial in popularizing a firm’s CSR practices and their disclosure, and thereby, it has gained momentum over the last decade, particularly since the global financial crisis of 2008-2010.” I have not seen a trend change since the GFC and in any event, I do not think it is important. It is better to leave contentious, irrelevant claims out of the work.

The introduction needs amendment. The following sentences could be deleted for clarity “Numerous scholars have termed such activities as ‘socially responsible activities’ and due to the stakeholders’ pressure and CSR popularity, businesses tend to make them part of their business strategies [8, 9]. The public attention, regulatory bodies, media and the researchers have been crucial in popularizing a firm’s CSR practices and their disclosure, and thereby, it has gained momentum over the last decade, particularly since the global financial crisis of 2008-2010. The importance and necessity of CSR practices have made companies more conscious to and involved in CSR operations for its staff, customers, society, environment, and other stakeholders.”

The statement “CSR can be expressed as a self-regulating business model” is wrong. The better statement would be “CSR is a form of self-regulation. It can be adopted by organisations as part of their business model.” It should reference Sheehy, B, ‘Re-thinking CSR: Private Self-Regulation’ (2012) 37 Monash University Law Review 103-127. It should remove the additional noun “business model”.  Self-regulation and business models are incompatible concepts.

The next line, “A socially accountable business is expected to express its commitment of adhering to behave ethically, contributing to the economic prosperity of the community, playing a role in refining the public’s standards of life” is also incorrect. The business that is socially responsible is expected to do more than express a commitment. It is expected to act in a way that is “ethical, contributes to …” Reference, Sheehy, B ‘Defining CSR: Problems and Solutions’ (2015)  131 Journal of Business Ethics 625-648.

The introduction to the Pakistan focus needs work. Why was Pakistan chosen? Is it simply a country study contributing to the larger understanding of CSR in Asia? Or, is it a contribution to understanding CSR in Pakistan?

The paper states: “This study has its reasons for its justification. The prime reason of this study…” Every paper has its reasons. Delete the above quote and state the contribution in a clear, single sentence.  It should follow on the paper’s aim: “This study aims at examining the level of CSR practices and their disclosure among the listed banks in Pakistan. The research also plans to examine the CSR disclosure practices’ impacts of these listed banks on their economic performance.” These ideas need to be combined “This study aims to examine CSR disclosure and practice in Pakistani listed banks and the impact of such CSR on financial performance.”

The literature review has some factual errors. For example: “Corporate Social Responsibility (CSR) is relatively new academic and business research field.” It was started in the 1920’s and has been an active area of research since the 1970’s See Sheehy, B ‘Defining CSR: Problems and Solutions’ (2015)  131 Journal of Business Ethics 625-648. Much of the literature review could be improved by looking at Sheehy’s article.

Error: “"stockholder theory" was coined by Ansoff in 1965” That term is off topic. I suspect the authors mean ‘stakeholder theory’ and ought to look at E Freeman’s work.

This definition, like consensus models generally, fails to provide clarity beyond Carroll 1992. “Sarkar and Cory [53, p.143] defined CSR as “it implies that firms must foremost assume their core economic responsibility and voluntarily go beyond legal minimums so that they are ethical in all of their activities and that they take into account the impact of their actions on stakeholders in society, while simultaneously contributing to global sustainability” See Sheehy, referenced above.

The paper should be redrafted with clear attention to the aims and contribution as set out in the conclusion:

“This study adds to the existing CSR knowledge, its disclosure and extent; from the context of a developing country, Pakistan, in many ways: Firstly, this study look at the CSR practices’ impacts and their disclosure on economic performance indicators of the Pakistani banks with regard to the stakeholders theory, thereby contributing to the CSR disclosure and economic performance literature.

“The previous studies investigative of the CSR disclosure and economic performance relationship in financial organizations are insufficient, and the existing few report mixed results. Therefore, this study is an attempt to fill the gap in the literature. Secondly, Pakistan’s commercial banks reveal the CSR information with focus on these nine categories: shareholders, employees, manager/ governance, customers, suppliers, competitors, community, environment and the CSR management. The results further indicate that stakeholders’ benefits could maximize when their expectations are met. These findings support the stakeholder theory: the pressure and expectations of the stakeholders might affect the CSR disclosure of firms (banks). Thirdly, this study offers insight into the CSR disclosure initiatives in Pakistan’s context. The commercial banks are less in concurrence to revealing the supplies and environment related CSR information. This indicates that revision of the CSR guidelines from the government of Pakistan is needed. Moreover, offering incentives to the banks might improve the CSR practices and their disclosure. The study also found out that there are no established rules and regulations for companies in Pakistan to regulate the CSR activities. Mostly, the businesses engage in CSR activities and their disclosure voluntarily. Finally, this study will help the concerned regulating bodies to develop and ensure the implementation of the standard framework on CSR practices and its disclosure, to promote corporate transparency in such CSR activities. The scope of research can be broaden by future researchers, by comparing the impact of CSR disclosure practices on financial performance of conventional banks with those being practiced by Islamic banks, operating in SAARC region.

Comments for author File: Comments.pdf

Author Response

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Author Response File: Author Response.pdf

Round 2

Reviewer 2 Report

The authors have addressed the concerns. A further improvement of the English would be desirable but should be optional and not amount to a mandatory further revision. Although not elegant, it suffices to communicate its ideas and arguments in English that is largely correct.