Does CSR committee drive the association between corporate social responsibility and firm performance? International evidence

What is it about?

Relying on the stakeholder view, this study investigates the role of CSR committee in moderating the association between CSR and firm performance (FP). Further, we examine whether country-specific governance and institutional factors drive the effect of CSR committee on the CSR-FP association. The study's sample includes 4405 firms from 39 countries over the period 2002-2020. For analysis, Ordinary Least Squares (OLS) regression with year and firm fixed effects is employed as the primary econometric model. Two-step Generalized Method of Movement (GMM) is employed to address the endogeneity issues. This study provides international evidence that the existence of a CSR committee enhances CSR's contribution to FP. Moreover, the benefits of CSR committee, in terms of enhancing the positive impact of CSR on FP, are significantly greater in strong governance countries and in environmentally less sensitive industries. The findings are further checked through endogeneity and robustness tests and remain unchanged. The presence of CSR committee is a key governance mechanism that assists firms in generating value from their CSR activities. CSR committee strengthens the firm's relations with the stakeholders via an effective CSR channel, which translates into improved FP and long-term value.

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