Corporate Social Responsibility Performance, Corporate Risk and Moderating Role of Firm Life Cycle: Evidence from Pakistan

Abstract

The purpose of this article is to examine the relationship between corporate social responsibility (CSR) performance and corporate financial risk while using firm life cycle stages as a moderating variable. OLS regression and fixed effect models are used. The sample data consists of 323 non-financial companies listed on the Pakistan Stock Exchange during the period from 2008 to 2019. The OLS regression results of our study suggest a negative association between CSR performance and financial risk, that is, positive CSR performance of the firm substantially decreases the firm’s financial risk. The firm life cycle moderates the relationship between CSR performance and corporate financial risk. This research used legitimacy theory and stakeholder theory to link CSR and the firm life cycle with corporate financial risk. The most crucial stage for a corporation is its state of maturity. Managers and owners are advised to pay attention to their corporations during this period to avoid expulsion or failure. This means that greater emphasis should be placed on enhancing the operations and overall health of the corporation during this stage. By doing so, the corporation can maintain a sustainable and successful trajectory.

Keywords: Corporate Social Responsibility Performance, Corporate Financial Risk, Firm Life Cycle

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