Do investments in CSR activities enhance financial performance for politically connected firms? Evidence from France

Hela Garrouch, Badreddine Hamdi, Tarek Mejri () and Hicham Sbai ()
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Hela Garrouch: Université de Tunis
Badreddine Hamdi: UB - Université de Bourgogne
Tarek Mejri: LITEM - Laboratoire en Innovation, Technologies, Economie et Management (EA 7363) - UEVE - Université d'Évry-Val-d'Essonne - Université Paris-Saclay - IMT-BS - Institut Mines-Télécom Business School - IMT - Institut Mines-Télécom [Paris], UEVE - Université d'Évry-Val-d'Essonne
Hicham Sbai: LGMSS URAC‑45 - University Chouaïb Doukkali, El Jadida

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Abstract: Purpose - This study aims to examine the effect of corporate social responsibility (CSR) on financial performance (FP) and how this relationship is affected by firms' political connections. Design/methodology/approach - The authors use a sample of French companies listed on the SBF 120 index over the period 2011–2023. To mitigate endogeneity concerns, the authors apply the System Generalized Method of Moments. Findings - The results show that for firms without political connections, the FP is positively influenced by a strong commitment to social responsibility. This suggests that stronger FP can be achieved through better CSR performance. However, for firms with political connections, this relationship becomes negative, indicating that political ties may hinder the benefits of CSR on FP. Originality/value - The key contribution of this paper is the investigation of the effects of political connection on the link between CSR engagement and FP in the French context.

Keywords: GMM estimator; SBF 120 index; Political connections; Financial performance; Corporate social responsibility (search for similar items in EconPapers)
Date: 2025
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Published in Journal of Accounting and Organizational Change, inPress, pp.1-17. ⟨10.1108/JAOC-03-2025-0091⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05395353

DOI: 10.1108/JAOC-03-2025-0091

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