Corporate Social Responsibility and Financial Performance: The Moderating Effect of Firm Maturity and Institutional Quality

Purpose: The purpose of this study is to analyze the impact of corporate social responsibility on financial performance. It also investigates the moderating influence of firm maturity and institutional quality on the relationship between corporate social responsibility and financial performance. Design/methodology/approach: This research employs secondary data on a sample of 71 publicly traded companies in the food and personal care, cement, chemical, and textile industries spanning the years 2011 to 2020. It employs static panel estimation techniques for estimating purposes. Findings: The results indicate that corporate social responsibility plays a key role in determining financial performance. It indicates that CSR reduces financial performance. Further, the findings indicate that firm maturity and institutional quality weaken the negative impact of CSR on financial performance. The findings suggest that firm maturity and institutional quality play a key role in explaining the association between CSR and financial performance. Research limitations/implications: The findings have several practical implications. First, the findings provide evidence of how investment in CSR can increase the financial performance of mature firms. The findings also highlight the importance of institutional quality in promoting CSR activities in the country. Furthermore, the findings of the study are also beneficial for all those firms that are interested in social activities. Originality/value: This study is, according to the researchers' knowledge, the first investigation of the impact of corporate social responsibility on financial performance, considering the moderating influences of firm maturity and institutional quality in Pakistan.