Corporate Social Responsibility and Capital Structure in the World's Largest Economies

Abstract

Companies are under external pressure to adopt Corporate Social Responsibility (CSR) practices. No consensus has been achieved in CSR literature yet. Positive and significant results of the relationship between CSR and financial performance are not always confirmed in empirical studies. Thereby, we seek to understand the influence of capital structure on the performance of CSR practices, since there is a theoretical omission about intangible attributes. We used a sample of 1,642 publicly traded companies on the 10 highest GDP countries. Using GMM 2SLS estimator, the results reveal positive and significant relationship between Capital Structure and CSR. We found differences between countries related to the Capital Structure volume required to achieve a CSR positive index. Our findings provoke further debate concerning the reasons that conduct organizations to adopt such practices and foster new discussions about the aspects that involve social practices responsible adoption in companies.