Slack resources, free cash flow and corporate social responsibility expenditure: evidence from an emerging economy

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shah Md Taha Islam ◽  
Ratan Ghosh ◽  
Asia Khatun
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Cash Flow ◽  
Random Effect ◽  
Emerging Economy ◽  
Free Cash Flow ◽  
Slack Resources ◽  
Content Type ◽  
Review Reports ◽  
Corporate Social

PurposeThe purpose of this study is to investigate whether financial resource allocation decisions for corporate social responsibility (CSR) depends on slack resources and free cash flow.Design/methodology/approachThe study's sample consists of 202 company-year observations from 51 financial institutions over the period 2015–2019. The authors collected CSR data from CSR review reports published by the Central Bank (Bangladesh Bank). The financial and governance data are collected from corporate annual reports and year-end review reports published by the Dhaka Stock Exchange. This study uses both the random-effect and generalized estimating equation models to test the hypotheses.FindingsThe authors establish two key findings consistent with the predictions of slack resource theory and free cash flow theory. First, the authors find a significant and positive relationship between slack resources and CSR expenditure. This result also supports the traditional thinking about corporate giving – that doing well enables doing good. Second, the author show that increases in free cash flow are associated with increases in CSR expenditure. This indicates the presence of agency problems between managers and shareholders regarding CSR expenditure.Originality/valueThis study is the first to show the positive impacts of slack resources and free cash flow on CSR expenditure in an emerging economy characterized by both capital constraints and high salience of CSR expenditure. The study has important implications for regulators, advocacy groups, shareholders and analysts in emerging economies that share similar contextual characteristics.

scholarly journals Corporate Social Responsibility dan Free Cash Flow pada Tax Avoidance

2021 ◽  
Vol 31 (5) ◽  
pp. 1069
Author(s):  
Ni Putu Sintia Sukma Dewi ◽  
I Gusti Ayu Made Asri Dwija Putri
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Cash Flow ◽  
Stock Exchange ◽  
Linear Regression Analysis ◽  
Tax Avoidance ◽  
Free Cash Flow ◽  
Manufacturing Companies ◽  
The Government ◽  
Corporate Social

Tax avoidance is the taxpayers effort to reduce tax payments to the government made by taxpayers, especially companies because they do not violate regulations regarding taxation. This study aims to examine the effect of corporate social responsibility and free cash flow on tax avoidance which is proxied by using the cash effective tax rate (CETR). This research was conducted at manufacturing companies listed on the Indonesia Stock Exchange for the 2016-2019 period. The sample used was 68 companies with a total observation sample of 272  in 4 years. The data analysis technique used in this study is multiple linear regression analysis. Based on the results of the study show that corporate social responsibility has no effect on tax avoidance and free cash flow has a positive effect on tax avoidance. Keywords: Corporate Social Responsibility; Free Cash Flow; Tax Avoidance.

Exploring the Bi-directional relationship between corporate social responsibility and financial performance in Indian context

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shafat Maqbool ◽  
Shabir Ahmad Hurrah
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Financial Performance ◽  
Corporate Strategy ◽  
Random Effect ◽  
Social Dimension ◽  
Content Type ◽  
Indian Context ◽  
Corporate Social ◽  
The Relationship

Purpose This study aims to investigate the relationship between corporate social responsibility (CSR) and financial performance from the bi-directional perspective. Design/methodology/approach The final sample for this study are 79 companies listed in the national stock exchange for a period of eight-years (2008–2015). Random effect panel regression was performed to examine the possible link. Findings The result shows that CSR has a positive impact on the contemporaneous and future financial performance of the selected companies. Further, the study shows that only social dimension has a positive and significant impact on concurrent and future financial performance. The results further validate slack resource theory as lagged financial performance has a positive and significant impact on CSR. Practical implications The strategic value of CSR indicates that it should be seen as a value-enhancing strategy, and therefore, incorporated with the broader corporate strategy of the company. Companies should not trade-off between CSR and financial performance, rather a strategic synchronization of CSR with corporate functioning is essential. This will pave a way to build a stakeholder-sense in the corporate entities. Originality/value The study comprehensively examines the relationship between CSR and financial performance from both “prospective” and “retrospective” framework. This bi-directional approach has received minimal attention in the Indian context.

scholarly journals Pengaruh Corporate Social Responsibility Terhadap Nilai Perusahaan dengan Profitabilitas dan Free Cash Flow Sebagai Pemoderasi

2018 ◽  
pp. 2274
Author(s):  
I Made Adi Mahendra ◽  
Ni Gusti Putu Wirawati
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Cash Flow ◽  
Firm Value ◽  
Sampling Method ◽  
Positive Influence ◽  
Free Cash Flow ◽  
Mining Company ◽  
Analysis Technique ◽  
Corporate Social

Every company will strive to increase the value of the company through increasing the prosperity of the owner or shareholders by improving the company's performance. Increased corporate performance one of which can be done by applying social responsibility (CSR). This study aims to test and obtain empirical evidence of the influence of Corporate Social Responsibility (CSR) on the value of companies with profitability and free cash flow as a moderator. This research was conducted at mining company listed in Bursa Efek Indonesia (BEI) year 2013-2016. Sampling method used is purposive sampling. The number of samples meeting the criteria is 10 companies. Methods of data collection is done by documentation method. Data analysis technique used is Moderated Regression Analysis (MRA). The result of moderation testing between Corporate Social Responsibility and corporate value shows a positive influence which means profitability and free cash flow strengthens the influence of Corporate Social Responsibility towards firm value. Keywords: firm value, CSR, profitability, free cash flow

scholarly journals A nexus between corporate social responsibility disclosure and its determinants in energy enterprises

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rahil Irfan Ahmed ◽  
Guohao Zhao ◽  
Naveed Ahmad ◽  
Umme Habiba
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Stock Exchange ◽  
Random Effect ◽  
Random Effect Model ◽  
Content Type ◽  
Energy Emissions ◽  
Csr Disclosure ◽  
Corporate Social ◽  
Energy Companies

Purpose Corporate social responsibility (CSR) is a requirement for energy enterprises as different stakeholders deem environmental and social responsibility the duty. This study aims to explore the determinants that affect CSR disclosure in energy enterprises of developing nations. Design/methodology/approach Panel data of energy companies is used that are listed on Pakistan Stock Exchange. A comprehensive CSR disclosure index is developed using seven themes, i.e. environment, employees, energy, emissions, product, community development and other CSR-related activities. A random effect model of regression is used on the sample of data. Findings The finding of the study reveals that profitability, financial leverage, board size and being a multinational subsidiary has a significant relationship with CSR disclosure level. Research limitations/implications The sample is confined to a certain number of years and publicly traded energy companies. Further studies can explore the relationship of CSR among different groups of firms, such as SMEs, non-listed companies and state-run enterprises to document whether the findings are significant or not. The opinions and ideas of external stakeholders could also be explored using various qualitative methods such as interviews. Originality/value To the best of the authors’ knowledge, it is the first study of its kind whose only focus is energy sector enterprises. A comprehensive scale is used to measure CSR practices. It is helpful for upcoming studies to examine the various aspects of CSR research and figure sound outcome.

Corporate governance and corporate social responsibility (CSR) disclosure in an emerging economy: evidence from commercial banks of Kazakhstan

2019 ◽  
Vol 19 (3) ◽  
pp. 490-507 ◽  
Author(s):  
Nurlan Orazalin
Keyword(s):  
Corporate Governance ◽  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Commercial Banks ◽  
Banking Sector ◽  
Emerging Economy ◽  
Content Type ◽  
Reporting Practices ◽  
Corporate Social ◽  
The Given

Purpose This paper aims to explore the extent and nature of corporate social responsibility (CSR) reporting practices in the banking sector of Kazakhstan and investigates the effects of board characteristics on CSR disclosures in the given emerging economy. Design/methodology/approach Data on CSR disclosures were manually collected from annual reports of all commercial banks listed in the Kazakhstan Stock Exchange (KASE) for the period 2010-2016. Financial data were obtained from audited financial statements available on bank websites and the Web page of the National Bank of Kazakhstan. Findings The empirical results reveal that board gender diversity has a positive influence on CSR reposting, while board size and board independence have no impact on the level of CSR disclosures. Furthermore, the results show that bank size and bank age are significant factors in the dissemination of CSR disclosures. Additionally, the findings suggest that banks with a share of foreign ownership disclose more extensive and transparent information on CSR activities than banks owned by local investors and state-owned banks. Originality/value The study provides evidence on the relationship between corporate governance and the level of CSR in the context of an emerging economy such as Kazakhstan, representing the Central Asian region. The study contributes to the current literature by focusing on the banking sector of Kazakhstan as a research context due to its substantial representation in the capital market of the given emerging economy.

Does corporate social responsibility extend firm life-cycles?

2018 ◽  
Vol 56 (11) ◽  
pp. 2408-2436 ◽  
Author(s):  
Feng Jui Hsu
Keyword(s):  
Corporate Social Responsibility ◽  
Life Cycle ◽  
Social Responsibility ◽  
Cash Flow ◽  
Cash Holdings ◽  
Life Cycles ◽  
Content Type ◽  
Firm Life Cycle ◽  
Hump Shape ◽  
Corporate Social

Purpose The purpose of this paper is to assess US-based firms from 2005 to 2015 to determine whether firms with better corporate social responsibility (CSR) performance will allocate capital through their life-cycle to better maintain or extend total assets. Design/methodology/approach Kinder, Lydenberg, Domini Research & Analytics social performance rating scores were used to measure CSR performance in an initial sample of 19,707 firm-year observations. Firms are first classified into stages including introduction, growth, maturity, and decline, and use multiclass linear discriminant analysis, the Dickinson classification scheme (Dickinson, 2011), and the ratio of retained earnings to total assets (RETA) as life-cycle proxies. Life-cycle was formulated based on a broad set of accounting data sourced from Compustat. Various corporate characteristics from the CRSP database were used to classify all sample firms into five equal groups based on their CSR performance. Findings A firm’s equity and debt issuance assume a hump shape over the life-cycle under CSR practice, and higher-CSR firms face fewer significant issues as they mature; payout, RETA, and free cash flow decreased from high-CSR performance firms to low-CSR performance firms; and cash holdings also exhibit a hump shape over the life-cycle and higher-CSR practices are associated with significantly lower cash holdings. Originality/value CSR performance is a useful predictor for forecasting firm life-cycle and superior CSR performance ensures efficient capital allocation throughout firm life-cycle. Furthermore, CSR practice is an indicator of firm life-cycle sustainability and indicates a firm’s future cash flow patterns.

Do green legitimacy and regulatory stakeholder demands stimulate corporate social and environmental responsibilities, environmental and financial performance? Evidence from an emerging economy

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Charles Baah ◽  
Yaw Agyabeng-Mensah ◽  
Ebenezer Afum ◽  
Minenhle Siphesihle Mncwango
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Financial Performance ◽  
Environmental Performance ◽  
Emerging Economy ◽  
Environmental Responsibility ◽  
Content Type ◽  
Adoption And Implementation ◽  
Social And Environmental Responsibilities ◽  
Corporate Social

PurposeOrganizations desire to achieve green legitimacy and regulatory stakeholder demands and have been potent in influencing the adoption and implementation of social and environmental responsibilities in current business settings. Perceiving that social and environmental responsibilities that promote social growth and environmental sustainability have shifted from being optional to mandatory for organizations, this study from the perspectives of institutional and stakeholder theories elucidates the efficacy of green legitimacy and regulatory stakeholder demands on the adoption of social and environmental responsibilities at the organizational level and how these variables relate with environmental and financial performance in the context of an emerging economy.Design/methodology/approachThe study adopted a positivist methodological paradigm, survey research design, a quantitative approach and partial least square structural equation modelling (PLS-SEM) in making data analysis and interpretations due to its appropriateness for predictive research models.FindingsThe results highlighted that desire for green legitimacy and regulatory stakeholder demands influenced the adoption of environmental responsibility, social responsibility, environmental and financial performance. While environmental responsibility positively and robustly influenced environmental performance, social responsibility positively and significantly influenced financial performance. The findings particularly exposed that while environmental responsibility had negative and insignificant effect on financial performance, social responsibility negatively and significantly influenced environmental performance. Moreover, environmental performance was also found to be negatively and insignificantly correlated with financial performance. Based on the results, theoretical and practical implications are explained for policymakers, managers, government authorities and business owners.Originality/valueThe study is among the few to investigate how firms desire to achieve green legitimacy and regulatory stakeholder demands motivate the adoption and implementation of environmental and social responsibilities and its implications on environmental and financial performance in the context of an emerging economy. Although environmental responsibility has received significant attention in past studies, it is mostly considered a subset of corporate social responsibility. Thus, this study is among the first to explore the dimensional effects of corporate social responsibility namely environmental responsibility and social responsibility on performance in the context of an emerging economy and as individual constructs.

Does institutional ownership and internationalization affect corporate social responsibility in emerging economy firms? An empirical evidence from India

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Manogna R.L. ◽  
Aswini Kumar Mishra
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Institutional Investors ◽  
Emerging Economy ◽  
Group Affiliation ◽  
International Investments ◽  
Content Type ◽  
Business Group Affiliation ◽  
Lending Institutions ◽  
Corporate Social

Purpose The preference of firm corporate social responsibility (CSR) spending is shaped by different groups of owners and the institutional environment in which the firm operates. This paper aims to study the heterogeneity among the controlling groups and firms’ internationalization in influencing the CSR decision in emerging economy firms. Design Methodology Approach This paper draws understanding from institutional theory to inspect the propensities of various ownership groups such as lending institutions (LI), domestic mutual funds (MF) and foreign institutional investors (FIIs). The empirical analysis was conducted from a sample of 1,594 unique Bombay stock exchange (BSE)-listed non-financial Indian firms during the 2014–2019 period using Tobit panel regression analysis. Findings The findings reveal that firms’ CSR activities are impacted differently by ownership share of different types of institutional investors after controlling for firm-level resources and capabilities. Lending institutions, FIIs and MF are supportive of CSR investments by firms along with international investments by the firm. Further, the results show that the CSR spend is positively influenced by the business group affiliation of the firm compared to the unaffiliated group of firms. Practical Implications The analysis has implications for both institutional investors and multinational firms. In the merging market context, managers and owners who target long term strategies such as CSR will benefit from increasing shareholdings of creditors (lending institutions). They can also take steps to improve their transparency and corporate governance structure so as to attract foreign institutional investments, thus, in turn, helping the internationalization process of the firm. Originality Value This paper considers the role of the diverseness of the ownership institutional investors along with the moderating effect of business group affiliation of the firm and international investments in impacting the CSR spend. This disparity has not been previously studied with the latest data in an emerging economy context.

scholarly journals The Socially Responsible Company distinctive as an element for the creation of economic value of a company

2020 ◽  
pp. 17
Author(s):  
Edgar Mauricio Flores Sánchez ◽  
Javier Antonio Flores Delgado ◽  
Axel Rodríguez Batres ◽  
Joaquín Bernardo Varela Espidio
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Cash Flow ◽  
Economic Value ◽  
Economic Benefits ◽  
Free Cash Flow ◽  
Focal Points ◽  
Socially Responsible ◽  
Flow Method ◽  
Corporate Social

Purpose: The present investigation was designed to determine the possible relationship between obtaining the Socially Responsible Company distinctive and the generation of economic value by the obtaining companies. Design/methodology/approach: A sample of 32 companies listed on the Mexican Stock Exchange that were awarded the Socially Responsible Company distinctive was drawn and two valuation focal points were considered: one before obtaining the distinctive and another subsequent to it. To establish the economic value of the companies, the free-cash-flow method was used. This study is considered, therefore, under the income approach of business valuation methods. Finally, the values obtained in both focal points were compared to determine the change in generated value attributable to the SRC distinctive. Findings: The results confirmed that obtaining the distinctive as a Socially Responsible Company does have an impact on the generation of economic value for the companies belonging to the sample -measured through the free-cash-flow method. This impact was determined at an average 6.26%, reasonably resembling the distribution of individual results a normal probabilistic distribution. Originality/value: This work adds value to the research on corporate social responsibility value measurement. This research study differentiates from others in the area due to the use of the CSR certification granted in Mexico by CEMEFI, as a social responsibility variable. In addition, the free-cash-flow method was used in the analysis, which is a novelty as it had not been applied to investigations of this type before. Likewise, this research work adds to past research in as much as it concludes that there is a positive relationship between corporate social responsibility and the generation of economic benefits.

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