DOES IT PAY TO BE GOOD? An Examination of the moderating effects of board gender diversity and financial leverage on the relationship between corporate social responsibility and firm performance.
Corporate social responsibility has gained a lot of attention the past decades. Problems like resource depletion, environmental pollution and social conditions are more relevant than ever. It is no longer possible for firms to solely focus on creating economic value, because firms are increasingly hold accountable for their social and environmental impact. The concept of CSR has also gained interest of the academic society and has been the topic of lots of previous research. Though there are a lot researches where the relationship between CSR and performance is examined, the results are inconclusive. This research aims to contribute to the CSR and performance literature by examining two variables that are expected to moderate the relationship between CSR and performance. The research question of this research is ‘’To what extend do board gender diversity and financial leverage moderate the relationship between corporate social responsibility performance and performance at organisations within the European energy sector?’’. Data concerning CSR and board gender diversity are extracted from the Asset4 database by Thomson Reuters and data concerning performance and financial leverage are extracted from the database Eikon. A sample of 199 companies within the European energy sector was used to conduct multiple regression analyses. The results show that CSR positively influences performance and that both board gender diversity and financial leverage negatively moderate the relationship between CSR and performance. Thereby the results show that when a one year lag is used board gender diversity negatively affects performance. Financial leverage was not found to have a consistent significant effect on performance. The result suggest that companies with a better CSR performance do increase performance, based on financial measures. This shows that next to the ethical aspect of CSR it is also financially rewarding to engage in CSR. The results also suggest that companies that do engage in CSR should carefully consider whether they want a more gender diverse board and the amount of financial leverage they want to have. With these results this study contributes to the ongoing CSR and performance debate.
Faculteit der Managementwetenschappen