Does Ownership Concentration Moderates In Csr And Firm Performance Relationship? An Evidence From Non-Financial Sector Listed Companies Of Pakistan

Abstract

The purpose of this study is to analyze the impact of corporate social responsibility on firm performance and to investigate the moderating role of ownership concentration in CSR-firm performance relationship. The sample of the study is all the non-financial companies listed in Pakistan stock exchange (PSX) and covers the period of 2006-2020. Data has been collected from the annual reports of companies and Balance sheet analysis (BSA) document issued by state bank of Pakistan (SBP). Corporate social responsibility is measured through CSR spending ratio, Firm Performance is measured through return on assets, Ownership concentration is measured through the percentage of shares held by the largest shareholder, Control variables of the study are Firm age, Firm size and Firm leverage. The study used Eviews software, and Generalized Methods of Moments (GMM) technique for the purpose of data analysis. Results reveals that the impact of CSR on firm performance is significant and positive. The relationship of ownership concentration on firm performance is significant and negative. Ownership concentration negatively moderates the relationship between CSR and firm performance. These findings may help policy makers and regulators identify how concentrated ownership structure may affect CSR activities in Pakistan. Regulators may also investigate the effectiveness of CSR initiatives in firms with concentrated ownership, because investment in CSR activities from these companies could lead to worsening of financial performance.