Impact of Corporate Governance on Firm Performance: The Moderating Role of Corporate Social Responsibility

Abstract

The paper aimed to analyze the mediating role of CSR between corporate governance/firm performance relationships. The sample comprised of 761 US listed for which data for the period 2010-2018 was collected from Thompson Reuters ASSET 4, COMPUSTAT, and annual reports. Using 2SLS regression, the findings of the study reveal that the presence of Female board members (FBM) have a significant positive impact on ROA and that CSR does moderate the FBM /firm performance relationship. Financial Institutional Investor’s (FII) also has a strong positive impact on ROA and CSR does moderate the FII/firm performance relationship. These findings are valuable for governmental agencies to encourage CSR due to its positive impact on firm earnings as well as on meeting the social obligations of the firm. These findings can be used as a basis to further liberalize the financial markets considering the positive impact of foreign ownership of firm performance.