Does corporate governance shape the relationship between corporate social responsibility and financial performance?

Rezaul Kabir, Hahn Thai Minh

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

Purpose:
The theoretical and empirical relationships between corporate social responsibility (CSR) and corporate financial performance are not without controversy. Yet, CSR activities are increasingly undertaken by a large number of firms, not only in developed countries but also in emerging countries. This paper aims to investigate the moderating effect of different aspects of corporate governance, which are foreign and state ownership, board size and board independence, on the relationship between CSR and financial performance.

Design/methodology/approach:
A sample of Vietnamese listed firms is analyzed. Robust regression analysis is performed using ordinary least squares as well as fixed-effects and two-stage least squares model.

Findings:
Ordinary least squares regression results show that CSR activities affect the financial performance of firms positively. Furthermore, corporate governance features like foreign ownership, board size and board independence strengthen the positive relationship between CSR and financial performance, but there is no such impact of state ownership.

Originality/value:
Previous studies mostly investigate the direct effect of CSR on financial performance. A few studies examine the moderating effect of corporate governance, which is ownership concentration and board gender diversity. As an emerging country, Vietnam has some specific characteristics on corporate governance. This paper contributes by investigating the moderating effect of few major aspects of corporate governance, which are foreign and state ownership, board size and board independence.
Original languageEnglish
Pages (from-to)227-258
JournalPacific Accounting Review
Volume29
Issue number2
DOIs
Publication statusPublished - 2017

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Corporate Social Responsibility
Financial performance
Corporate governance
State ownership
Board independence
Foreign ownership
Moderating effect
Board size
Ordinary least squares
Emerging countries
Corporate financial performance
Gender diversity
Robust regression
Two-stage least squares
Ownership concentration
Developed countries
Fixed effects
Direct effect
Design methodology
Regression analysis

Keywords

  • Corporate social responsibility, Vietnam, Firm performance, Corporate governance

Cite this

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title = "Does corporate governance shape the relationship between corporate social responsibility and financial performance?",
abstract = "Purpose:The theoretical and empirical relationships between corporate social responsibility (CSR) and corporate financial performance are not without controversy. Yet, CSR activities are increasingly undertaken by a large number of firms, not only in developed countries but also in emerging countries. This paper aims to investigate the moderating effect of different aspects of corporate governance, which are foreign and state ownership, board size and board independence, on the relationship between CSR and financial performance.Design/methodology/approach:A sample of Vietnamese listed firms is analyzed. Robust regression analysis is performed using ordinary least squares as well as fixed-effects and two-stage least squares model.Findings:Ordinary least squares regression results show that CSR activities affect the financial performance of firms positively. Furthermore, corporate governance features like foreign ownership, board size and board independence strengthen the positive relationship between CSR and financial performance, but there is no such impact of state ownership.Originality/value:Previous studies mostly investigate the direct effect of CSR on financial performance. A few studies examine the moderating effect of corporate governance, which is ownership concentration and board gender diversity. As an emerging country, Vietnam has some specific characteristics on corporate governance. This paper contributes by investigating the moderating effect of few major aspects of corporate governance, which are foreign and state ownership, board size and board independence.",
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Does corporate governance shape the relationship between corporate social responsibility and financial performance? / Kabir, Rezaul; Thai Minh, Hahn.

In: Pacific Accounting Review, Vol. 29, No. 2, 2017, p. 227-258.

Research output: Contribution to journalArticleAcademicpeer-review

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AU - Thai Minh, Hahn

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AB - Purpose:The theoretical and empirical relationships between corporate social responsibility (CSR) and corporate financial performance are not without controversy. Yet, CSR activities are increasingly undertaken by a large number of firms, not only in developed countries but also in emerging countries. This paper aims to investigate the moderating effect of different aspects of corporate governance, which are foreign and state ownership, board size and board independence, on the relationship between CSR and financial performance.Design/methodology/approach:A sample of Vietnamese listed firms is analyzed. Robust regression analysis is performed using ordinary least squares as well as fixed-effects and two-stage least squares model.Findings:Ordinary least squares regression results show that CSR activities affect the financial performance of firms positively. Furthermore, corporate governance features like foreign ownership, board size and board independence strengthen the positive relationship between CSR and financial performance, but there is no such impact of state ownership.Originality/value:Previous studies mostly investigate the direct effect of CSR on financial performance. A few studies examine the moderating effect of corporate governance, which is ownership concentration and board gender diversity. As an emerging country, Vietnam has some specific characteristics on corporate governance. This paper contributes by investigating the moderating effect of few major aspects of corporate governance, which are foreign and state ownership, board size and board independence.

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