Corporate social responsibility and cash holdings: does board gender diversity matter? Online publication date: Thu, 02-Jul-2020
by Siwar Nasr; Nadia Lakhal; Itidel Ben Saad
International Journal of Business Governance and Ethics (IJBGE), Vol. 14, No. 3, 2020
Abstract: This paper investigates the relationship between corporate social responsibility (CSR) and cash holdings and whether board gender diversity influences this relationship. We use a sample of French listed companies from 2010 to 2015. Based on the instrumental variable method and the quantile regression approach, we show that there is a positive relationship between CSR and cash holdings suggesting that agency costs embedded in CSR activities could be associated with large cash reserves. Hence, managers could opportunistically use these activities to extract rents by increasing their held cash. We further show that women appointed as board directors moderate the relationship between CSR and cash holding which turns negative in case of board gender diversity. Board gender diversity is then considered as a good corporate governance device in French firms that is able to curtail the incentives of CEO to opportunistically use CSR activities at the expense of other stakeholders.
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