The impact of corporate responsibility on financial performance throughout the firm life cycle: The case of Egypt

Abstract

The socially responsible role of companies in society is an age-old debate between practitioners and academics. Companies' urge for financial growth causes environmental and societal difficulties such as dangerous workplaces, chemical exposure, and urban decay. Companies now view internal and external corporate responsibility and sustainability as a crucial business strategy for survival and Competetive. But since their effect on companies' financial Performance always yielded inconclusive results, knowing the firm lifecycle stage may help understand business actions, especially regarding sustainability programs, CSR investments, and associated economic outcomes. In this paper, The moderating effect of firm lifecycle on the relationship between Corporate Sustainability Performance (CSP) as a proxy for CSR on financial Performance (proxied by ROA) is examined. The results demonstrate that firm lifecycle does act as a moderator on the relationship between CSP and financial Performance of firms in the S&P ESG EGX index. Our findings inform regulators and standard-setters in developing countries, particularly Egyptian regulators, on the advantages of introducing sustainability indices (such as the S&P EGX ESG Index). The government's promotion of ESG may benefit listed corporations. The ESG index will empower investors to help firms enhance transparency, information disclosure, and reporting requirements by tying ESG to improved financial Performance.