Corporate social responsibility performance, reporting and generalized methods of moments (GMM): A structured review of corporate governance determinants and firms’ financial consequences

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Abstract

In line with the business case argument for corporate social responsibility (CSR), CSR performance and reporting should lead to positive firms’ financial outputs. As CSR issues may be linked with greenwashing behavior and self-impression management, effective corporate governance as a monitoring tool should increase CSR reporting and performance. While empirical-quantitative research on CSR extremely increased since the last decade, endogeneity concerns impair the validity of research results. This paper focuses on one of the most important techniques to include endogeneity concerns: the generalized method of moments (GMM) as dynamic panel regression. This paper summarizes the results of archival research on corporate governance determinants and firms’ financial consequences of CSR performance and reporting. The increased importance of managing and reporting on CSR issues represents the key motivation to conduct a systematic literature review. By including 131 quantitative peer-reviewed empirical studies in this field, in line with legitimacy and stakeholder theory, there are indications that 1) gender diversity positively influences CSR performance, and 2) CSR performance increases both accounting- and market-based financial performance (ROA and Tobin’s Q). A research agenda with detailed research recommendations are provided for future studies.

Keywords: CSR Performance, CSR Reporting, Corporate Governance, Environmental Performance, Financial Performance, Legitimacy Theory

Authors’ individual contribution: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

JEL Classification: M41, M48, Q3, Q56

Received: 09.06.2021
Accepted: 18.01.2022
Published online: 20.01.2022

How to cite this paper: Velte, P. (2022). Corporate social responsibility performance, reporting and generalized methods of moments (GMM): A structured review of corporate governance determinants and firms’ financial consequences. Corporate Ownership & Control, 19(2), 8–27. https://doi.org/10.22495/cocv19i2art1