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.
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.
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.
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.
The authors thank Dalo Ambrogio, Samy Essa, Iftekhar Hasan, Xiaohong Huang, Mai Tuyet Thi Nguyen, the editor Nick Nguyen, two anonymous reviewers and the seminar participants at the University of Twente, Annual Paris Financial Management Conference (2015) and Vietnam International Conference in Finance (2016) for many useful comments and discussions on previous versions of the paper. They also thank the Dutch Organization for International Education (Nuffic) for providing financial support.
Kabir, R. and Thai, H.M. (2017), "Does corporate governance shape the relationship between corporate social responsibility and financial performance?", Pacific Accounting Review, Vol. 29 No. 2, pp. 227-258. https://doi.org/10.1108/PAR-10-2016-0091Download as .RIS
Emerald Publishing Limited
Copyright © 2017, Emerald Publishing Limited