This study extends the literature on the capital structure of corporate social responsibility (CSR) firms by examining the effect of CSR on the firm probability of default using a sample of 496 firms from 17 developing countries for the period 2010–2017. This paper employs the two‐step system generalized method of moments (GMM) technique that mitigates the endogeneity problem. Our findings for the full sample show that high CSR participation reduces the firm probability of default in developing countries. Our results are robust after separating the sample into four regions. Precisely, CSR participation reduces the probability of default in Asian, Latin American, and European regions (except the African and Middle Eastern region). Overall, our findings suggest that as firms in developing countries increase their investments in CSR activities, the probability to default their obligations decreases.
In the competitive world nowadays, financial development (FD) is recognized as one of the important drivers of economic growth via absorptive capacity. The link between FD and foreign direct investment (FDI) inflows in economic community of western african states (ECOWAS) economies is largely ignored in empirical studies. Using panel of 15 ECOWAS countries for the period 1999–2017, with bias corrected least squares dummy variable estimator this study explores the impact of FD on FDI inflows. The empirical findings from this study demonstrate that FD is significant predictor of FDI inflows. The results further suggest that human capital development and trade openness are relevant determinant of FDI influx in ECOWAS countries. The result is robust to alternative indicator of FD; broad money. Functional financial system in the host country is crucial and necessary in attracting foreign capital to the countries; hence FD architecture in the recipient economies should be strengthened.
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