CSR as a strategic determinant of cash holdings: comparative evidence from an emerging market

Asad Sultan and Hassan Mujtaba Nawaz Saleem

Social Responsibility Journal, 2026, vol. 22, issue 9, 2041-2056

Abstract: PurposeThe purpose of this study is to examine whether corporate social responsibility (CSR) functions as a precautionary commitment that increases corporate cash holdings in emerging markets.Design/methodology/approachUsing a balanced panel of 202 non-financial firms listed on the Pakistan Stock Exchange from 2013 to 2024, this study integrates stakeholder theory and corporate finance perspectives. Pooled OLS, two-way fixed effects, lagged CSR models, System GMM and panel quantile regression are used to address heterogeneity, endogeneity, persistence and distributional effects.FindingsCSR engagement is positively and significantly associated with corporate cash holdings in all specifications. Dynamic estimations confirm that the CSR–liquidity relationship is persistent and intertemporal, while the quantile results show stronger effects among high-liquidity firms. The findings of this study support the precautionary or commitment-based interpretation of CSR rather than the financing-constraint alleviation view commonly observed in developed markets.Research limitations/implicationsThis study relies on expenditure-based CSR measures and focuses on a single emerging market. Future research should explore governance moderators and cross-country comparisons.Practical implicationsManagers should align CSR engagement with long-term liquidity plans. Investors may interpret CSR-linked cash retention as a signal of an entity’s financial resilience. Regulators may enhance CSR disclosure frameworks to clarify the interaction between CSR commitment and financial flexibility.Originality/valueThis study provides dynamic and distribution-sensitive evidence from a frontier market, reconceptualizing cash holdings as a strategic complement to CSR under institutional uncertainty.

Keywords: Corporate social responsibility; Cash holdings; Precautionary motive; Emerging markets; Pakistan stock exchange (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:eme:srjpps:srj-11-2025-1268

DOI: 10.1108/SRJ-11-2025-1268

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