ABSTRACT:- Engaging in corporate social responsibility and their disclosures are common in recent business setting around the globe. Corporate social responsibility has become more significant over the past decades, and the validity of research on how it is associated with firm performance remains uncertain and incomplete. Many public and private Sugar manufacturing firms in Kenya have been facing poor financial performance, and some are closing up, even after receiving funding from the government. Consequently, this study aimed to establish the effects of corporate social responsibility cost on financial performance of sugar manufacturing companies in Kenya. The specific objectives of this study were; to assess the effect of community development costs on financial performance of sugar manufacturing companies in Kenya, to examine the effect of environmental responsibility costs on financial performance of Public and private sugar manufacturing companies in Kenya, and to evaluate the effect of economic responsibility on the financial performance of sugar manufacturing companies in Kenya. The study was guided by the stakeholder theory, Legitimacy theory and theory of the firm. The study adopted a correlation research design. The study’s target population was 12 sugar manufacturing companies in Kenya. Census sampling technique was used to select all the 12 sugar manufacturing companies in Kenya. A secondary data collection sheet was used to document information from audited financial statements of the companies downloaded from website from 2012 to 2021. Panel Data was analyzed using descriptive and inferential statistics. Multiple regression analysis indicated that community development costs, economic responsibility costs and environmental responsibility costs had a significant effect on financial performance with a coefficient of -0.2146, -0.2896, -0.2728 and p-value of 0.006, 0.000and 0.000. The study depicted that corporate social responsibility had a significant effect on financial performance with an R² of 0.29. Therefore, the study concluded that corporate social responsibility improvement improves financial performance. The study recommended that management of sugar companies should provide more funds to community development costs, policy makers should develop strategic policies that would enhance the practice of economic social responsibility, respond to environmental demands for cleaner environment.

Keywords: Community Development: Financial Performance: sugar manufacturing companies in Kenya.