The role of company size in mediating corporate social responsibility disclosure and profitability

Abstract This study examines the direct and indirect effects of corporate social responsibility disclosure (CSRD) on profitability, with a focus on the role of company size as a mediator. The impact of CSRD and company size on profitability and CSRD on company size was examined using panel data regression for 48 companies listed on the Palestine Stock Exchange between 2012 and 2023. In addition, Baron and Kenny’s method was used to evaluate the mediation effect. The analysis was repeated using the one-step generalised method of moments to address potential endogeneity issues. The results reveal a significant positive relationship between CSRD, company size, and their impact on profitability, as well as a significant positive correlation between CSRD and company size. Furthermore, the findings show that the relationship between CSRD and profitability in Palestinian companies is partially mediated by company size. The research outcomes are significant for experts and policymakers on corporate social responsibility (CSR) disclosure policies and profitability. The positive results may lead to enhancing CSR disclosure policies within Palestinian companies and adopting sustainable practices that benefit society and the environment. This, in turn, may increase the chances of Palestinian companies of attracting investments.