The impact of corporate social responsibility on financial performance: The moderating role of investor sentiments

Document Type : Research Paper

Authors

1 Master of Accounting, Yazd University, Yazd, Iran

2 PhD. student in Finance-Financial Engineering, Yazd university, Yazd, Iran

Abstract

This study explores the impact of corporate social responsibility (CSR) on firms’ financial performance, emphasizing the moderating role of investor sentiment. CSR is assessed through five key dimensions: human resources, community involvement, products and services, customer orientation, and energy efficiency. The empirical analysis is based on a sample of 179 firms, systematically selected from 737 companies listed on the Tehran Stock Exchange over the period 2015 to 2022. Data collection was carried out through document analysis, and hypothesis testing was performed using a multivariate regression model with panel data, implemented in EViews software. The empirical findings reveal that CSR exert a significant and positive influence on financial performance. Moreover, investor sentiment moderates the relationship between CSR and financial outcomes, suggesting that firms can leverage positive market perceptions to enhance their financial position. The results imply that companies engaging in socially responsible activities are better positioned to foster investor optimism and build trust, thereby gaining a competitive advantage over firms with weaker CSR engagement. Enhancing CSR strategies, improving information transparency, analyzing the psychological effects of CSR on investors, and proactively managing reputational risks—such as negative media coverage—can all contribute to maintaining favorable investor sentiment and mitigating adverse emotional reactions in capital markets.

Keywords

Main Subjects

References

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Journal of Accounting Advances
Volume 17, Issue 1
September 2025
Pages 225-261

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History

  • Receive Date: 24 December 2024
  • Revise Date: 03 July 2025
  • Accept Date: 05 August 2025

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