This research study aims to investigate the relationship between corporate social responsibility and the cost of equity with financial performance as a mediator. The sample of the study comprises of 100 firms listed on the Karachi Stock Exchange. The period of study ranges from 2005 to 2014. Panel regression techniques have been used to carry out the research. For mediation analysis bootstrapping technique is used. The results of bootstrap test shows that financial performance does not mediate relationship between corporate social responsibility and the cost of equity. Overall, results of the study suggests that in Pakistan corporate social responsibility is still at its infancy stage and there is a need for civil society, business class and the government to create mass awareness about corporate social responsibility.
Key Words: CSR, Cost of Equity, Financial Performance, Mediation, KSE-100 Index
