Abstract
This thesis provides a detailed examination of Corporate Social Responsibility Decoupling (CSRD), corporate governance, financial resource constraints (FRC) and firm’s Life Cycle Stages (LCS). The research consists of three dynamic and interrelated essays that examine the CSRD literature and determinants of CSRD behaviour. The first essay is a systematic literature review (SLR) of the CSRD literature. The second and third essays are quantitative studies that estimate regression models, including ordinary least squares, fixed effect, lagged approach, and change analysis to better understand factors that affect CSRD. The main results are validated using various robustness techniques.
The first essay synthesises the CSRD literature, discussing the causes and consequences, and other organisational attributes of CSRD that have been examined by scholars during the period from 2010 and 2020. The review uses the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) framework to extract and filter CSRD studies. Articles were collected according to quality and relevancy criteria. The final review consisted of 175 published articles. A theme analysis identifies and classifies CSRD-related research topics, such as causes and consequences of CSRD, CSRD from developing and developed countries' perspectives, and CSR communication for CSRD and CSR recoupling. The SLR examines the drivers of CSRD and analyses the consequences of CSRD for companies. There is a comprehensive discussion of CSRD in developed and developing economies. CSR communication is also identified as a tool for decoupling and recoupling. The identified themes provide a thorough illustration of CSRD literature for new CSRD scholars. Suggestions for future research, such as examining country-level policymaking and implications of CSRD variance and identifying cultural and economic hurdles to achieving core CSR purposes are also included. Policymakers and scholars may adopt the approach that CSRD is a misreporting of information similar to accounting fraud, however, under the current environment, companies are not subject to equivalent levels of scrutiny and responsibility in the context of CSRD as in the case of accounting misconduct. This is particularly relevant given that an increasing number of CSRD scandals indicate that the purpose of bringing change through corporate CSR has not been well adopted by corporations. The study offers a comprehensive literature review for the period of 2010 to 2020. The studies identified and reviewed are structured into meaningful themes that provide extensive groundwork for future researchers.
Based on the research gap identified in the first essay, the second essay investigates the impact of FRC on CSRD, along with the moderating role of corporate governance on the CSRD-FRC relationship. In particular, this thesis examines how companies under immense stakeholder and peer pressure, may engage in symbolic CSR disclosures despite being unable to achieve their disclosed CSR performance due to financial constraints. Using a panel data sample of 4,193 US firm-year observations for the period of 2006-2021, the study documents empirical evidence that firms facing FRC tend to exhibit higher levels of CSRD. The main findings are further validated using difference analysis and prove that companies with higher FRC are more likely to engage in CSRD. Further examination of the data reveals that the CSRD-FRC relationship is moderated by CEO, board, and nominating committee characteristics. This research contributes to the CSRD literature by highlighting the role of financial resources in shaping CSR behaviour and provides insights for practitioners, regulators and policymakers on the challenges firms face in maintaining CSR performance when exposed to FRC.
The third essay investigates the association between CSRD and firm LCSs. The findings show that immature firms adopt CSRD when hindered from achieving desired CSR performance while revealing symbolic CSR disclosure due to external pressure. The analysis uses two dynamic approaches: overall LCS-CSRD association and CSRD involvement in separate LCSs. An exploration using 7,198 US firm-year observations from 2006 to 2022 identifies that a firm’s maturity negatively and significantly impacts CSRD, suggesting that CSRD decreases with a firm’s maturity. CSRD also significantly increases (decreases) during the introduction (growth and maturity) LCS, indicating young firms cannot meet adopted CSR policies. An increase in the firm’s (financial and human) resources is associated with reductions in CSRD consistently for all LCSs. The results are robust to various alternative measures of CSRD and LCSs, change analysis and lagged variables. This work provides evidence that LCSs are a crucial determinant of CSRD.