Exploring the relationship between CSR performance and and financial constraints: Empirical evidence for European firms

Marwa Samet , Khaireddine Mouakhar (1) , Anis Jarboui (2)

1 Métis Lab EM Normandie
2 Institut supérieur d'administration des affaires de Sfax

This paper investigates the relationship between corporate social responsibility (CSR) activities and financial constraints. Our panel dataset consists of 397 European companies listed in the STOXX Europe 600 during 2009–2014. The findings reveal that firms with higher CSR performance exhibit lower degree of financial constraints. In addition, the link between CSR performance and financial constraints is a fully mediated relationship. The negative effect of CSR performance on financial constraints follows the path through mitigating agency conflicts of free cash flow and information asymmetry. The findings suggest that one mechanism linking CSR performance and financial constraints is a reduction of capital-market imperfections.

Keywords: Corporate social responsibility; financial constraints; free cash flow; information asymmetry; STOXX Europe 600

Domains: Humanities and Social Sciences; Business administration

Marwa Samet, Khaireddine Mouakhar, Anis Jarboui. Exploring the relationship between CSR performance and and financial constraints: Empirical evidence for European firms. Review of Social Economy, 2018, 76 (4), pp.480-508. ⟨10.1080/00346764.2018.1480795⟩. ⟨hal-02065921⟩