Optimizing Accounting-Based Financial Performance: The Role of Corporate Social Responsibility and Independent Board Structures in Pakistan

Abstract

This study investigates the impact of CSR and independent boards on firm performance using the theory of stewardship. The study uses panel data of the top 30 companies listed on the Stock Exchange during the period 2017-23. Data were collected yearly from the publications of the companies, such as balance sheets and other reports. The study finds a positive relationship between independent boards and companies’ performance. It shows the importance of corporate governance for a limited board structure when the members are increased up to the limit the performance of the company is reduced and may be an external member who lacks expertise regarding the company’s internal system. However, the relationship between CSR and company performance is negative. This study indicated in Pakistani's context that the performance of that company will be good, with a fair number of independent members. Because there are fewer rules and regulations to protect investors in Pakistan, independent members work sufficiently in the interest of investors. For companies that make CSR in the form of philanthropic donations or money, their performance is reduced Because CSR does not reach deserved people, and the company does not get any special value in the minds of the public.