Does a Board Characteristic Moderate the Relationship between CSR Practices and Financial Performance? Evidence from European ESG Firms

Matteo Rossi, Jamel Chouaibi, Salim Chouaibi, Wafa Jilani and Yamina Chouaibi
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Matteo Rossi: Department of Accounting, Faculty of Economics and Management of Sfax, University of Sfax, Sfax 3018, Tunisia
Jamel Chouaibi: Department of Accounting, Faculty of Economics and Management of Sfax, University of Sfax, Sfax 3018, Tunisia
Salim Chouaibi: Department of Accounting, Faculty of Economics and Management of Sfax, University of Sfax, Sfax 3018, Tunisia
Wafa Jilani: Department of Accounting, Faculty of Economics and Management of Sfax, University of Sfax, Sfax 3018, Tunisia
Yamina Chouaibi: Department of Accounting, Faculty of Economics and Management of Sfax, University of Sfax, Sfax 3018, Tunisia

JRFM, 2021, vol. 14, issue 8, 1-15

Abstract: This study aims to examine the potential effect that corporate social responsibility practices (CSR) have on financial performance in ESG firms, using the moderating role of board characteristics. To test the moderating effect of the board characteristics in the relationship between CSR practices and financial performance, we applied linear regressions with panel data using the Thomson Reuters ASSET4 database from European countries in analyzing data of 225 listed companies between 2015 and 2019. The results show that board characteristics partially moderate the relationship between CSR practices and financial performance in European ESG firms. In addition, this study indicates that CSR practices affect the firm’s financial performance positively. The study findings appended a new dimension to governance research that could provide policymakers and regulators with a valuable source of information to strengthen governance mechanisms for better financial performance. Previous studies mostly investigate the direct effect of corporate governance on financial performance. A few studies examine the moderating effect of CSR practice. This paper contributes by investigating the moderating effect of governance mechanisms in the ESG context.

Keywords: CSR practice; financial performance; corporate governance; environmental social and governance (ESG) (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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