Purpose The purpose of this study is to investigate the effect of board diversity on corporate social responsibility (CSR) practices and the interaction effect of Shariah compliance of firms with religious and ethical principles. Design/methodology/approach A total of 65 firms listed on the Pakistan Stock Exchange (PSX) were selected. The data were collected from the companies’ financial reports from 2012 to 2018 (n = 455). The data were analyzed using fixed and random effects regression models to test the effect of board diversity on firms’ CSR activities, while hierarchical moderated regression analysis was used to determine the moderating effects of Shariah compliance. Findings The study found evidence for a moderating effect of Shariah compliance on the relationship between board diversity and CSR activities. The findings suggest that a high level of Shariah compliance together with diverse educational backgrounds and presence of both genders among corporate members significantly promoted CSR activities. Research limitations/implications The present study included the demographic variables, gender, ethnicity and education; but excluded language and culture. 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. Policy-makers should encourage more women to become directors on company boards and to increase philanthropic and charitable activities. These findings possess important implications for many Islamic countries irrespective of whether they are developed or developing. Originality/value To the best of the authors’ knowledge, this study provides the first empirical analysis of the relationship between CSR and board diversity from the perspective of Islamic Shariah law. The findings will contribute both theoretically and empirically to the existing body of knowledge.

PurposeThe purpose of this study is to investigate the relationship between the listed firms' debt level and performance on the Pakistan Stock Exchange (PSX) during a five-year period.Design/methodology/approachThis study uses pooled ordinary least squares regression and fixed- and random-effects models to analyse a cross-sectional sample of 30 Pakistani companies operating in the automobile, cement and sugar sectors during 2013–2017 (N = 150).FindingsThe results indicate that both short- and long-term debt have negative and significant impacts on firm performance in profitability. This suggests that agency issues may lead to a high-debt policy, resulting in lower performance. However, both sales growth and firm size have positive effects on the profitability of non-financial sector companies.Research limitations/implicationsThis study suggests that when debt financing significantly and negatively influences firm profitability, company owners and managers should focus on finding a satisfactory debt level. However, this study is limited to the automobile, cement and sugar sectors of Pakistan. Future studies could address other sectors, such as textiles, fertilizers and pharmaceuticals.Originality/valueThis study focusses on enhancing the existing empirical knowledge of debt financing's influence on the PSX's major sectors' profitability.

No abstract

The purpose of this study is to investigate the impact of behavioral biases on investment decision, and the interaction effect of socio-demographic characteristics. Data were collected from a sample of 179 individual investors in the Pakistan Stock Exchange (PSX). The authors conducted a hierarchical regression analysis to test the moderating effect of socio-demographic variables on behavioral biases. The results show that behavioral biases have a significant impact on investors’ decision-making. Moreover, socio-demographic variables (education, occupation and marital status) moderate the relationship between emotional biases and investors’ decision-making. This study provides a new addition to prior literature by investigating the impact of behavioral biases on investors’ decision-making, and the interaction effect of socio-demographic characteristics.

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.