Abstract
Corporate social responsibility (CSR) are the activities of firms that are not only considered for economic profit but also include the social welfare returns. To find the key drivers that affect the relationship between corporate social responsibility (CSR) and firm performance, we investigated the moderating effects of CEO power and ownership structure. Ownership structure is classified into two parts: managerial ownership and ownership concentration. We selected a sample of firms from eight manufacturing sectors of the Pakistani economy for the analysis. We collected data from the State Bank of Pakistan (SBP), Securities and Exchange Commission of Pakistan (SECP), Pakistan Stock Exchange (PSX), and companies’ annual reports over the period 2008 to 2017. We employed the Fixed Effects model and Generalized Method of Moment (GMM) to investigate the association between CSR and firm performance. The empirical analysis of this study highlights the following conclusions: First, CSR has a significant positive association with firm performance. Second, the relationship between CSR and firm performance shows the same results with the interaction of CEO power. Thirdly, interaction of the managerial ownership with CSR has a significant positive relationship with firm performance. Fourth, the interaction of the ownership concentration with CSR has a positive effect on firm performance.
Highlights
In the last decade, sustainability has become a more important issue, and shareholders have been paying more attention to social activities
We considered the interaction of chief executive officer (CEO) power and ownership structure to explain the relationship between corporate social responsibility (CSR) and firm performance (FP)
Results revealed that CSR and FP are positively associated because social activities enhance the confidence of firms for the inside and outside environment
Summary
Sustainability has become a more important issue, and shareholders have been paying more attention to social activities. CSR is commonly defined as those activities of firms that consider economic profit, and include social welfare returns [1,2]. This explanation provides clear evidence on CSR actions revolving around people and sustainability [3]. In the world of CSR, many researchers have moved their attention from measuring CSR disclosure to exploring CSR determining factors [4,5,6,7]. L Lambertini and A Tampieri [10] argued that firms with CSR activities can get more profit than non-CSR firms
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