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

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.