Corporate social responsibility and financial reporting quality: the role of board gender diversity

Purpose This study aims to investigate the impact of corporate social responsibility (CSR) on financial reporting quality (FRQ). In addition, the role of board gender diversity (BGD) in the CSR–FRQ relationship is investigated. Design/methodology/approach The study’s sample includes 135 nonfinancial Pakistan Stock Exchange-listed companies from 2010 to 2022. A multidimensional financial method is used to evaluate the firm’s CSR participation. FRQ is measured using the accrual-based model proposed by Jones (1991) and the accrual-quality-based model offered by Dechow et al. (1995). BGD is the proportion of female directors to total directors on the board. The fixed effect estimation model is employed in this investigation. Furthermore, the system-generalized approach of the moment estimation technique is employed to assess the robustness of the results. Moreover, a firm’s participation in CSR activities can be measured using a CSR index to ensure the reliability of the results. Findings Empirical results demonstrate that firms with higher CSR engagements have higher FRQ, which supports the stakeholder perspective of CSR. Furthermore, this favorable association is more vital for organizations with more gender diversity on their boards. Practical implications The study’s findings give policymakers, business managers, regulators and investors a better understanding of the impact of firm engagement in CSR-related activities on FRQ in Pakistani enterprises and the role of greater gender diversity in the board in this CSR–FRQ relationship. Originality/value Little research in the literature examines the impact of CSR on FRQ. To the best of the authors’ knowledge, this is the first study in an emerging market to empirically assess this association and investigate the function of BGD in this previously unknown relationship.