Journal of Innovation in Business and Economics Vol. 03 No. 01 June 2019 Page 11-22 P-ISSN: 2580-9431 E-ISSN: 2581-2025 http://ejournal.umm.ac.id/index.php/jibe 11 Received: 08-12-2018 | Revision: 26-12-2018 | Accepted: 31-05-2019 Efficacy of Social Accounting Practices on the Financial Performance: Evidence from Ethiopia Uvaneswaran S M 1 , Tsega Zemen 2 , Seid Muhammed 3 College of Business and Economics, Wollo Univesity, Dessie, Ethiopia 1,2,3 Abstract This aims of this paper is to examine the effects of social accounting practices on the financial performance of business organizations in the city of Dessie, South Wollo, Ethiopia. To fulfill this objective, a stratified-random sampling design was used, followed by proportional sampling techniques. The research data were obtained from primary and secondary sources and analyzed using multiple linear regression to understand the effect of corporate social responsibility accounting practices on financial performance. The results of the study indicated that report on social accounting was indeed necessary, however, there was no standard guideline followed when reporting except the Ethiopian commercial code and statement of socio-economic operations. Likewise, the observation during this research showed that an increase in corporate social responsibility scores would lead to an increase in the company's financial performance. Keywords: Corporate social responsibility; social accounting; financial performance Introduction Social accounting is a branch of accounting which attempts to measure the social benefits that an organization provides and the social costs that an organization incurs, with a view of using such to make available information that would enhance appropriate allocation of scarce resources for the benefit of the organization and the society (Huang & Watson, 2015). Crowther (2000) considers social accounting as an approach for reporting the firm’s activities that stresses the need for identification of socially relevant behavior and its social performance by the development of appropriate measures and reporting techniques. Social accounting and reporting is part of Corporate Social Responsibility (CSR) that organizations can use to gain competitive advantage over the firms and those who fails to practice it then the firms would be difficult to link the CSR and competitive advantage (McWilliams & Siegel, 2011; Saeidi, & Saaeidi, 2015). Society is seen to benefit when organizations implement a social approach to accounting and reporting in a number of ways; honoring stakeholders right of information, balancing corporate power with corporate responsibility, increasing transparency of corporate activity, identifying social and environmental costs of economic success (Gray, 2000). On the other hand, organization will benefit from applying social accounting practices in the following ways; increasing information for decision making, establishing more accurate product or service costs, improving image and public relations management, identifying social responsibility, identifying market development opportunities and maintaining legitimacy. An accountable business performance reporting process to stakeholders helps in integrating these performs into business practices and also for identifying future risks and opportunities. Furthermore, the firms can disclose their social activities in the annual statements stating the positive activities in limited manner. They also use other channels of communicating such as newspapers and the company websites (Kalunda, 2007). This paper would try to establish the nature and mode of social accounting practices among the Ethiopian firms located in Dessie Town according to the list of Ethiopian chamber of commerce. The sectoral association and the ministry of trade whether the firms engaging in CSR practices has any impact on their financial performance. Chepkoech, Chenuos, & Kosgei (2015) stated that the performance is a general term applied to a part or to all the conducts of activities of an organization over a period of time often with reference to past or projected cost efficiency, management responsibility or accountability or the 1 E-mail: uvaneshsm@gmail.com 2 E-mail: tsegazemen@gmail.com 3 E-mail: seidmuhammedahmed@gmail.com