Evaluating the Impact of Corporate Social Responsibility, Financial Distress, and Firm Performance in an Emerging Market

Abstract

The study explores the impact of Corporate Social Responsibility (CSR), Financial Distress (FD), and the Firm Performance (FP) in Pakistani, listed, non-financial corporations. This study uses data from year 2006 to 2023, collected from annual reports. To ensure a robust analysis, study undertakes Generalized Method of Moments (GMM), Fixed Effect (FE) and Random Effects (RE) techniques. The findings imply that resource allocation for CSR not only achieves social duty but also maximizes value of shareholder value by enhancing FP. Alternatively, results show a significant and negative effect of FD on ROA. Which indicates that those corporations that are undergoing FD may face a downfall in their profits, reviling negative consequences of financial challenges. The study will help to investors, managers, and policymakers on how CSR boost the profitability of these corporations and uncovers the adverse effects of FD. The study also serves as a guide for policymakers and investors, informing them of the implications of FD on FP.