Does corporate social responsibility affect dividend policy? Empirical evidence in the French context

Abstract

PurposeThe purpose of this paper is to focus on the impact of corporate social responsibility (CSR) on dividend policy in the French context. In addition, the authors seek to determine if the individual components of CSR influence dividend policy.Design/methodology/approachThis study uses panel data methodology for a sample of French non-financial firms between 2008 and 2018. Generalized least squares method is used to estimate the models.FindingsUsing panel data methodology for a sample of 825 observations for the period 2008–2018, this study finds a positive impact of CSR practices on dividend policy. The authors also find that individual components of CSR positively influence dividend policy. To check the robustness of the results, this study further runs a sensitivity tests, including an alternative measure of dividend policy, all of which confirm the findings.Practical implicationsThis study has examined the impact of CSR on dividend policy in France and may have implications for regulatory, investors, analysts and academics. First, the involvement in CSR best practices encourages companies to pay more dividends to investors. Therefore, investors are more motivated to invest in socially responsible firms than socially irresponsible firms. Second, given the association of CSR with the quality of accounting information and financial markets, regulators should step up recommendations relating to the different societal dimensions of CSR.Originality/valueWhile little previous work has focused on the causal link between CSR and dividend policy, this research is the first, to the authors’ knowledge, to have looked at the impact of CSR on dividend policy in France.