TITLE:
Mediating Effect of Corporate Governance on Corporate Social Responsibility, Market Power and Financial Performance Nexus
AUTHORS:
Timothy Azaa Ayamga, Christine Avortri, Sharon Donnir, Kingsley Tornyeva
KEYWORDS:
CSR, Corporate Governance, Market Power, Financial Performance, ROA, ROE, GPM, Board Independence, Board Size, Board Diversity, Firms in Ghana
JOURNAL NAME:
American Journal of Industrial and Business Management,
Vol.14 No.9,
September
10,
2024
ABSTRACT: The study investigates the intricate relationship between Corporate Social Responsibility (CSR), market power, financial performance (Return on Assets, Return on Equity, Gross Profit Margin), and the mediating role of corporate governance (CG) in this complex nexus. Leveraging quantitative methods and drawing from annual reports of 38 firms in Ghana over a six-year period (2015-2021), the study scrutinizes the interplay among CSR CG, market power, and financial performance. Initial findings substantiate a direct positive association between CSR and both market power and financial performance. However, the examination of corporate governance as a mediator reveals a nuanced picture. While corporate governance significantly mediates the relationship between CSR and financial performance, it does not appear to exert a mediating effect on the CSR-market power relationship. This underscores the crucial role of robust corporate governance structures in optimizing the impact of CSR initiatives on financial outcomes. It also emphasizes the need for strategic alignment between corporate governance practices and CSR strategies. The results suggest that while governance plays a pivotal role in enhancing financial performance through CSR initiatives, other strategic pathways may influence market power independently. The study’s implications underscore the importance of tailored governance strategies to capitalize on the positive impact of CSR on financial performance, while also recognizing the need for diverse strategic approaches to bolster market power.