The relationship between CSR and corporate governance moderated by performance and board of directors’ characteristics

This paper studies the relationships among corporate governance (CG), ethical practices, and corporate social responsibility (CSR). In particular, the mediating effect of ethical practices on the relationship between CG and CSR is examined. Moreover, the moderating effects of financial performance, as well as board of directors characteristics on both the direct relationship between CG and CSR and the one mediated by ethical practices. Data were collected through a questionnaire distributed to employees working in private corporations operating in Lebanon and in various countries in the MENA region. The structural relationships among CG, ethical practices and CSR are analyzed using partial least squares structural equation modeling (PLS-SEM) in SmartPLS 3. The findings indicate that ethical practices fully mediate the relationship between the audit committee component of corporate governance and the three corporate social responsibility initiatives towards stakeholders, customers and employees. No such results were found for the corporate governance component of board of directors. Furthermore, multi-group analysis deployed to determine the moderating effects of performance and board of directors on these relationships identified differences in the relationships due to board characteristics and corporate performance.