Title: Econometric evidence on the moderating role of board composition in the CSR - financial performance Nexus

Authors: Mouna Rekik; Foued Saâdaoui

Addresses: Institut des Hautes Études Commerciales de Sfax (IHECS), University of Sfax, Sidi Mansour Road, Km 10, P.O. Box 43, Sfax 3061, Tunisia ' Rabat Business School, International University of Rabat, Technopolis, Sala-Al-Jadida, Morocco; LR18ES15: Algebra, Number Theory and Nonlinear Analysis, Faculty of Sciences of Monastir, Tunisia; Institut des Hautes Études Commerciales de Sousse (IHECSO), University of Sousse, Sousse 4054, Tunisia

Abstract: This study explores the relationship between corporate social responsibility (CSR) and firm financial performance, focusing on how board composition influences this link. It examines how governance features of the board of directors support stakeholder interests and align with strategic company goals. The analysis uses the feasible generalised least squares (FGLS) estimator, an advanced econometric method that corrects for heteroscedasticity and serial correlation to produce reliable estimates. The study analyses a panel of 349 European firms from 2011 to 2021, measuring CSR through environmental, social, and governance (ESG) scores and their key dimensions. Results show a significant positive association between CSR and financial performance, measured by return on assets and equity. Board characteristics such as size, independence, and gender diversity strengthen this relationship, while chief executive officer (CEO) duality weakens it. These findings highlight the critical role of sound corporate governance in maximising the value created by CSR initiatives.

Keywords: corporate social responsibility; CSR; firm's financial performance; corporate governance; moderating effects; FGLS regression.

DOI: 10.1504/IJCEE.2025.150009

International Journal of Computational Economics and Econometrics, 2025 Vol.15 No.4, pp.368 - 391

Received: 19 Dec 2024
Accepted: 23 May 2025
Published online: 21 Nov 2025 *

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