Does CSR contribute to the financial sector's financial stability?: the moderating role of a sustainability committee
Does CSR contribute to the financial sector's financial stability?: the moderating role of a sustainability committee
Purpose: this study tests whether corporate social responsibility (CSR) performance is a predictor of the financial sector's financial stability (FS), with the moderation of a sustainability committee.
Design/methodology/approach: the sample covers financial sector firms included in the Thomson Reuters Eikon database. The analyses are based on 8,840 firm-year observations for the years between 2002 and 2019 and the country-firm-year fixed-effects (FE) regression analysis is executed.
Findings: the results reveal that CSR initiatives contribute to the financial sector's FS as a whole and the sector's three individual sub-sectors. This proven significant association holds for all sub-sectors, namely insurance, banking, and investment banking. Moreover, the moderation analysis reveals the prominent role of a sustainability committee in bridging CSR performance (CSRP) with FS.
Research limitations/implications: the findings highlight that meeting societies' expectations pays back in the form of greater FS in the financial sector.
Practical implications: the findings suggest that CSR engagement helps the financial sector firms manage their risks and alleviates exposure to insolvency. This is because CSR performance promotes firms' accountability and transparency toward stakeholders. The results help motivate managers to pursue CSR goals more seriously to ensure FS. The moderation analysis implies that sustainability committees develop policies and practices to integrate the non-financial and financial goals of the firm.
Originality/value: although prior studies have examined the link between CSR and financial performance (FP) in the financial sector, those studies have largely ignored FS in terms of risk-adjusted performance. Besides, prior studies have exclusively focused on the banking sector, but the authors concentrate on the banking, insurance, and investment banking sectors.
CSR initiatives, CSR performance, financial sector, financial stability, sustainability committee, sustainable development
105-125
Orazalin, Nurlan
cbddd475-fe49-4ffd-ab51-66b0da0e0ec2
Kuzey, Cemil
050ed080-1355-4785-b4db-9b99531f8b96
Uyar, Ali
158e7f65-d98e-4da5-b747-f23bafe12aa9
Karaman, Abdullah
dbd82a7b-2580-415c-81f4-bd59e6f1b79f
18 January 2024
Orazalin, Nurlan
cbddd475-fe49-4ffd-ab51-66b0da0e0ec2
Kuzey, Cemil
050ed080-1355-4785-b4db-9b99531f8b96
Uyar, Ali
158e7f65-d98e-4da5-b747-f23bafe12aa9
Karaman, Abdullah
dbd82a7b-2580-415c-81f4-bd59e6f1b79f
Orazalin, Nurlan, Kuzey, Cemil, Uyar, Ali and Karaman, Abdullah
(2024)
Does CSR contribute to the financial sector's financial stability?: the moderating role of a sustainability committee.
Journal of Applied Accounting Research, 25 (1), .
(doi:10.1108/JAAR-12-2022-0329).
Abstract
Purpose: this study tests whether corporate social responsibility (CSR) performance is a predictor of the financial sector's financial stability (FS), with the moderation of a sustainability committee.
Design/methodology/approach: the sample covers financial sector firms included in the Thomson Reuters Eikon database. The analyses are based on 8,840 firm-year observations for the years between 2002 and 2019 and the country-firm-year fixed-effects (FE) regression analysis is executed.
Findings: the results reveal that CSR initiatives contribute to the financial sector's FS as a whole and the sector's three individual sub-sectors. This proven significant association holds for all sub-sectors, namely insurance, banking, and investment banking. Moreover, the moderation analysis reveals the prominent role of a sustainability committee in bridging CSR performance (CSRP) with FS.
Research limitations/implications: the findings highlight that meeting societies' expectations pays back in the form of greater FS in the financial sector.
Practical implications: the findings suggest that CSR engagement helps the financial sector firms manage their risks and alleviates exposure to insolvency. This is because CSR performance promotes firms' accountability and transparency toward stakeholders. The results help motivate managers to pursue CSR goals more seriously to ensure FS. The moderation analysis implies that sustainability committees develop policies and practices to integrate the non-financial and financial goals of the firm.
Originality/value: although prior studies have examined the link between CSR and financial performance (FP) in the financial sector, those studies have largely ignored FS in terms of risk-adjusted performance. Besides, prior studies have exclusively focused on the banking sector, but the authors concentrate on the banking, insurance, and investment banking sectors.
Text
CSR and Financial stability
- Accepted Manuscript
More information
Accepted/In Press date: 20 April 2023
e-pub ahead of print date: 15 May 2023
Published date: 18 January 2024
Keywords:
CSR initiatives, CSR performance, financial sector, financial stability, sustainability committee, sustainable development
Identifiers
Local EPrints ID: 477564
URI: http://eprints.soton.ac.uk/id/eprint/477564
PURE UUID: 12ee8840-76b1-483c-bbf9-92c8432f8ca6
Catalogue record
Date deposited: 08 Jun 2023 16:45
Last modified: 17 Mar 2024 02:39
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Contributors
Author:
Nurlan Orazalin
Author:
Cemil Kuzey
Author:
Ali Uyar
Author:
Abdullah Karaman
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