Impact of social responsibility accounting on the future profitability of listed firms in Kenya

Social responsibility accounting is the ability to provide accurate information in the financial statements regarding the estimated social cost occasioned by the production externalities on the environment and the public and how much deliberate intervention cost had been incurred to bridge the gap between the marginal social cost and the marginal private cost by a firm. The objective of this paper is to establish whether there is any significant relationship between social responsibility accounting and profitability of selected firms listed in Kenya. The study would employ a cross-sectional descriptive survey design. Secondary data would be collected on Return on Capital Employed (ROCE), Earnings per Share (EPS), Net Profit Margin (NPM) and Dividend per Share (DPS) as a measure of profitability of firms over a period of five years. The data would be analyzed using multiple regression models. The paper suggests that there is a significant relationship between Social Responsibility Accounting and Return on Capital Employed (ROCE) and Earnings per Share (EPS), Profit Margin and Dividend per Share. Based on this it is recommended that government should give tax credit to organizations that comply with its environmental laws and that environmental reporting should be made compulsory in Kenya so as to improve the performance of organizations and the nation as a whole. The paper also recommends that there is a need for the Institute of Public Accountants of Kenya (ICPAK) to hold ongoing training courses and workshops regarding social responsibility accounting, methods for their implementations and their effects on the future of companies.