Exploring the mediating role of corporate social responsibility in the connection between board competence and corporate financial performance amidst global uncertainties

Abstract

Despite the growing literature on corporate social responsibility (CSR), little is known about how the board of directors' competence can affect the CSR‐financial performance relationship during severe uncertainties such as the COVID‐19 outbreak. This paper focuses on exploring the mediating role of CSR in the connection between board competence and corporate financial performance amidst global uncertainties. The sample consists of Jordanian companies listed on the Amman Stock Exchange. Data were analyzed using the partial least square structural equation modeling. The findings show that boards' CSR competence has a direct and indirect positive impact on financial performance. Therefore, boards of directors' CSR competence can be seen as enablers for CSR activities. In this regard, companies could invest more in qualifying board directors to be socially responsible and enhance their role in improving corporate financial performance. This study identifies and provides empirical evidence on a critical enabler of CSR activities (i.e., boards of directors' CSR competence) from a developing country perspective. This, in turn, could widen the management and other stakeholders' understanding of CSR‐enhancing factors and therefore increase its efficiency. We provide theoretical and practical implications to guide regulators and businesses to ensure sustainable development.

ESG controversies and corporate performance: The moderating effect of governance mechanisms and ESG practices

“…Despite a growing body of literature on ESG and corporate performance, a conspicuous gap exists in our understanding of how ESG controversies specifically impact firms within diverse regulatory and cultural contexts (Clarkson, Li, Richardson, & Vasvari, 2008). Furthermore, the role of corporate governance structures, particularly within the complex EU environment, remains underexplored (Al Frijat et al, 2024;Amel-Zadeh & Serafeim, 2018;Amin et al, 2023;Eliwa et al, 2023;Elmagrhi et al, 2019;Elsayed & Elshandidy, 2020Elsayed et al, 2022Elsayed et al, , 2023Gallego-Álvarez & Pucheta-Martínez, 2022;Galletta & Mazzù, 2023;Teti et al, 2022). While studies have established both positive and negative associations between ESG performance and corporate financial outcomes (Margolis et al, 2009), there is often a lack of nuanced exploration regarding ESG controversies and their distinct impacts.…”