Corporate social responsibility and firm risk: Egypt’s case

Download This Article

Dina Hassouna ORCID logo, Rania Salem

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.


Studies amongst developed countries have extensively investigated the link between corporate social responsibility (CSR) and financial performance. However, due to lack of research in the Middle East, especially in Egypt, the association between CSR and firm risk remains much less understood (Nguyen & Nguyen, 2015). Therefore, this paper is one of the very few studies that investigate the impact of CSR on firm risk amongst developing countries. A sample of 31 Egyptian listed companies was examined over four years, from 2011 to 2015. We test the impact of CSR on firm risk using fixed and random effects estimation models. We use operating leverage, financial leverage and the beta coefficient of the sample companies’ stocks as a proxy for the companies’ risk. Identified control variables are firm size, market-to-book value, return on equity, return on assets, and firm age. Other variables are used to control for corporate governance, board characteristics and audit committee characteristics. The results show that CSR affects operating risk, yet it does not have a significant impact on financial or market risks in Egypt, which in turn emphasizes that CSR in developing countries differs in characteristics from that in developed countries (Vo & Arato, 2020).

Keywords: Corporate Social Responsibility (CSR), Firm Risk, Operating Leverage, Financial Leverage, Firm Beta, Egypt

Authors’ individual contribution: Conceptualization — D.H. and R.S.; Methodology — D.H. and R.S.; Formal Analysis — R.S.; Investigation — D.H.; Writing — Original Draft — D.H. and R.S.; Writing — Revision & Editing — D.H. and R.S.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G3, M4, C1

Received: 13.01.2021
Accepted: 09.04.2021
Published online: 13.04.2021

How to cite this paper: Hassouna, D., & Salem, R. (2021). Corporate social responsibility and firm risk: Egypt’s case. Journal of Governance & Regulation, 10(2), 74–83.