The Impact of Corporate Social Responsibility on Financial Distress Risk: Evidence from GCC Countries

This research seeks to explore the impact of corporate social responsibility (CSR) on financial distress risk (FDR) using a regression model on a sample of data taken from publicly traded non-financial companies in the Gulf Cooperation Council (GCC) country's stock markets from the period 2018-2022. The dependent variable (i.e., FDR) is assessed using the Altman Z-Score model, and the findings of this research indicate a significant and positive link between a company's financial distress risk and corporate social responsibility activities. The findings support the argument that sustaining CSR practices during financial distress may be considered a strategic decision to protect long-term ties and support, which are critical to the company's rehabilitation and future prosperity. The results of this study can assist GCC-listed firms to become more conscious of the aspects that might improve their CSR activities and take the required safeguards to maintain their financial situation, avoid financial distress risks, and lengthen the firm's continuity.