Revisiting the Role of Women on Boards: Corporate Social Responsibility and Firm Performance

What the paper says

Abstract Manuscript type: Research paper Research aims: The concept of CSR is comparatively new in emerging economies. Thus, the present study aims to fill this gap by investigating the association between CSR and firm performance, with the moderating role of gender diversity on the board. Design/Methodology/Approach: Panel data related to non-financial sector firms, listed at the Pakistan Stock Exchange, covering the period of 2016 to 2023, was collected. CSR was measured with CSR expenditure and CSR disclosure, whereas firm performance was measured through three distinct proxies, namely, net profit margin, ROE and Tobin’s Q. For analysis, this study used the novel technique of dynamic panel data. Research findings: The findings suggest that CSR has a positive and significant impact on firm performance. Moreover, the presence of women on the board significantly strengthens the association between CSR and firm performance. Research limitations: This study focuses only on the non-financial firms, as financial firms operate under different regulatory frameworks and performance parameters. Future studies may extend this analysis to financial firms as well. Moreover, the present study used board gender diversity as a moderator. Future studies may focus on CEO gender as a moderator. Practical implications: CSR initiatives benefit the wider community by enhancing a firm’s reputation, stakeholders’ trust, and long-term risk management. Together, these outcomes have the potential to increase shareholders’ wealth. This study presents empirical findings to regulatory bodies to support their efforts in encouraging corporate decisionmakers to explore the impact of a more gender-diverse board structure. Additionally, this study also encourages managers to invest in CSR initiatives and disclose these in the annual reports as investments because these initiatives play a significant role in boosting the firm's performance. Originality/value: This study tries to explore the concept of board gender diversity from a male-dominated society, and further, it also examines its moderating role between CSR-firm performance. This study used distinct proxies for CSR and firm performance. The robustness of the results was analysed using the GLS approach, which efficiently addresses serial correlation and heteroskedasticity in panel data. Alternative approaches, such as fixed or random effects, were not employed for robustness, as they do not correct these issues as effectively.