Abstract:

Social responsibility disclosure has become necessary in all economic sectors as it effectively increases the transparency of financial reports, which will maintain existing customers, attract new customers and increase the companies` market shares. In light of the expansion of competition, the commitment to society is one of the essential goals of the firms, and the subject of social responsibility becomes a  critical topic for organizations seeking to enhance their social progress and improvement, develop their reputation and maximize their values. Therefore, this study aims to investigate the effect of social responsibility disclosure on financial performance. The panel data is collected from the annual reports of the industrial companies listed on the PEX  from 2018 to 2022, and the deductive approach is used. An index of four main categories and 20 subcategories measures social responsibility disclosure. Besides, financial performance is measured by two indicators; the market indicator, represented by Tobin's Q, and the accounting indicator, measured by return on assets. SPSS is used for data analysis. The results indicate that social responsibility disclosure significantly positively impacts financial performance measured by return on assets and Tobin's Q. Also, the findings show no statistically significant differences in social responsibility disclosure among Palestinian industrial companies during the study period. The study has several implications as it encourages holding workshops to promote companies increasing their social responsibility disclosure and enacting legislation to obligate companies to expand their social responsibility disclosure in their published reports.