Enhancing Firm Performance through Corporate Social Responsibility: The Impact of Foreign Ownership in Pakistan's Non-Financial Sector

A firm's financial performance can be significantly influenced by conflicts between the interests of shareholders and managers in a corporate world where corporate social responsibility (CSR) is not recognized to align these interests and enhance the value of the firm. By using the data of firms listed on the Pakistan Stock Exchange (PSX 100 index), the relationship between CSR and firm performance, along with the investigation of the moderating role of foreign ownership, was examined. Panel data from 75 non-financial firms over the period 2011–2020 were used to analyze the extent to which CSR can affect firm performance and whether differences in ownership modify the effect. We have employed robust econometric techniques. A Significant positive effect of CSR on firm performance was found, which supports the notion that socially responsible initiatives contribute to long-term financial success. Moreover, the results imply potential conflicts of interest where managerial entrenchment undermines shareholder value because institutional ownership has a negative but statistically insignificant impact, and managerial ownership shows a significant negative effect. The findings offered valuable insights for investors, policymakers and managers and also made a significant contribution to the growing literature on corporate governance, CSR, and firm performance in emerging markets like Pakistan.