Exploring Role of CSR in Preventing Bankruptcy: Moderation Effect of Board Independence in Manufacturing Sector of Pakistan and Australia

Abstract

The purpose of the paper was to investigate the effect of CSR in prevention of bankruptcy while considering role of board independence in manufacturing sector of Pakistan and Australia. For this purpose, data of 50 publicly listed manufacturing companies from Australia and Pakistan was collected for 2005 to 2018 on factors of corporate social responsibility (CSR), bankruptcy and board independence. Meanwhile, EViews was used to conduct tests and correlation and multiple regression techniques were applied for the empirical investigation. The findings of the study reveal that bankruptcy is not significantly affected by the CSR contribution of manufacturing companies from developing and developed country. i.e. Pakistan and Australia. However, in case of Pakistan, evidence of moderation effect of board independence on effect of CSR on bankruptcy is found which is also significant. But this could not be evidenced from the Australian firms. Lastly, the paper also discusses the implications.