Purpose There is a debate between sound Shariah-compliant firms engaging in social good as a moral obligation and behaving ethically in terms of increasing corporate social responsibility (CSR) activities and those firms that are not Shariah-compliant. The purpose of the present study is to contribute to this debate by empirically investigating the effect of the profitability of firms on CSR activities and shareholders’ dividends and the interaction effect of a firm’s Shariah compliance with religious and ethical principles. Design/methodology/approach The data used in this study were collected from the annual financial reports of 74 Pakistani listed companies over 2012-2016 (N = 370). An epistemological model of the unity of knowledge was applied to determine the contribution of Shariah-compliant enterprises to community well-being. Furthermore, the Tawhidi string relation methodology was used to establish the circular causal model. To check the robustness of our findings, we also analysed the data using fixed and random effects regression models to test the effect of firm profitability on CSR activities and dividends, whereas moderation regression analysis was applied to test the moderating effect of Shariah-compliant firms. Findings The results show that the profitability of firms has a significant impact on shareholders’ dividends in both Shariah and non-Shariah firms. Furthermore, the relationship between firm profitability and CSR is stronger for non-Shariah-compliant firms than Shariah-compliant firms. This indicates that Shariah firms are less involved in doing CSR activities than non-Shariah firms. This implies that Shariah status does not play an important role in ensuring managers’ ethical behaviour. Practical implications The results suggest that the Security and Exchange Commission of Pakistan should attach more importance to Shariah compliance by firms in developing their CSR policies to improve social development and human well-being. These findings have important implications for many Islamic countries irrespective of whether they are developed or developing. Originality/value The present study provides a new addition to the prior literature by investigating the relationship between profits and CSR activities and the interaction effect of Shariah-compliant firms. From an Islamic ethical perspective, this study can also contribute to the growing discussion on Shariah compliance and CSR activities.
The purpose of this study is to enhance the understanding in debate of governance demographics by investigate the impact of board diversity on dividend policy and moderating effect of corporate investment efficiency on dividend policy. The sample incorporated in this study comprises of panel data of 77 firms listed in Karachi stock exchange (KSE) during the period of 2012-2019. This study performs a parametric technique regression analysis to measure the investment efficiency and Panel least square models to investigate the association between board diversity and dividend policy. Furthermore, hierarchical explained the results for interaction effect of investment efficiency. This study adds a new finding in the corporate governance through empirical an investigation on the association between board diversity and dividend policy. Results support the interaction effect of investment efficiency between board diversity and dividend policy. Our study suggests that firms involve in high level of efficient investment with diverse ethnic backgrounds and gender in corporate board significantly associated with dividend policy. This study explains the practical implications for the corporate boards in the south Asian culture who enhance the investment efficiency that main goal of finance to enhance the wealth maximization of shareholders in terms of dividends.
Debates around sound corporate governance in the corporate world have a legal obligation to work on shareholders’ dividend and cost-efficiency. The purpose of this study is to investigate the board size with interaction effect of boards’ ancestry on shareholders’ dividend. Furthermore, the study explores the interaction effect of educational diversity with board size on cost-efficiency. Data analysed in the current study were obtained from the financial reports of 77 firms listed in Karachi stock exchange from 2012 to 2019. A panel regression model based on fixed and random effects was employed on gathered data. Moreover, the moderating effect of board’s ancestry and directors’ education is investigated through hierarchical regression. Our findings contribute to the previous literature by investigating the impact of corporate governance on shareholder’s wealth and cost-efficiency. In addition, the moderating effect of directors’ ancestry and education is also examined. The results show that board size has a significant impact on the investor’s wealth and cost-efficiency. The interaction effect supports the idea that directors’ ancestry in board size enhances shareholders’ dividend. Moreover, the board of directors’ education also moderates cost-efficiency of firms. The results suggest that the corporate sector of Pakistan must promote the directors’ ancestry in developing shareholders’ interest. The policymakers must focus on the directors’ education to enhance cost-efficiency of a firm to take care of the ultimate consumer.
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