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CSR investment and operating and financial leverage under competitive pressure

Author

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  • Taher Hamza
  • Rym Mhadhbi
  • Zeineb Barka

Abstract

We investigate the cost of socially behaving firms and its impact on firms' operating and financial leverage. In addition, this relationship is likely to be subject to a potential moderating effect of industry competitive pressure. Using a sample of French-listed companies over 2002-2016, our empirical findings show that: 1) CSR affects positively and significantly, via social performance, the firm operating leverage (OPLEV). Environmental performance however, has no significant impact; 2) industry competition has a significant and negative impact on the association between CSR and OPLEV. In less competitive industries, CSR policy creates a competitive advantage that reduces firm's operating risk; 3) a negative effect of CSR on the financial leverage (FINLEV). Overall, our findings continue to hold after controlling for endogeneity and conducting alternative econometric specifications and have important policy implications.

Suggested Citation

  • Taher Hamza & Rym Mhadhbi & Zeineb Barka, 2024. "CSR investment and operating and financial leverage under competitive pressure," International Journal of Business Governance and Ethics, Inderscience Enterprises Ltd, vol. 18(4/5), pages 375-394.
    • Handle: RePEc:ids:ijbget:v:18:y:2024:i:4/5:p:375-394
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