Title: Idiosyncratic risk and capital structure: the mediating role of corporate reputation and moderating role of corporate social responsibility

Authors: Yu-Sheng Kong; Faiza Siddiqui; Vikesh Kumar

Addresses: School of Finance and Economics, Jiangsu University, Zhenjiang, 212013, China; School of Finance and Economics, Taihu University of Wuxi, China ' School of Finance and Economics, Jiangsu University, Zhenjiang, 212013, China ' Department of Business Administration, Sukkur IBA University, Sukkur, 65200, Pakistan

Abstract: This study examines the impact of idiosyncratic risk (I.Risk) and corporate reputation (CR) on the capital structure of non-financial companies. The study incorporated a generalised method of moments (GMM) model to examine the proposed association of firm-specific factors and capital structure. The Baron and Kenny modelling is used to estimate the mediating relationship of the study. The analysis is performed on panel data from the 2010 to 2019 period of 284 listed firms on the Pakistan Stock Exchange (PSX). The research findings state that I.Risk has a negative significant effect on capital structure. In addition, the Sobel test findings evidenced that CR has significantly mediated the relationship between I.Risk and capital structure. Moreover, corporate social responsibility has significantly moderated the relationship between I.Risk and CR.

Keywords: capital structure; idiosyncratic risk; corporate reputation; corporate social responsibility; CSR; generalised method of moments; GMM; generalised least squares; GLS.

DOI: 10.1504/MEJM.2025.142874

Middle East Journal of Management, 2025 Vol.12 No.1, pp.98 - 123

Received: 03 Aug 2023
Accepted: 09 Sep 2023
Published online: 30 Nov 2024 *

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