Examining the moderating role of corporate governance mechanisms on the relationship between corporate social responsibility and firm performances in ghana

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The main objective of the study is to examine the moderating effect of corporate governance on the relationship between corporate social responsibility and firm performance. The study uses an explanatory research design and a quantitative research approach. The sample for this study includes sixteen (16) firms who have their data readily available and accessible for the purpose of this research and the data period spans from 2014 to 2019. The sampling technique used for this study is the purposive sampling technique. Based on the findings of the study, it is concluded that corporate social responsibility is harmful to firms in Ghana and that corporate governance mechanisms have no significant effect on the performance of these firms. However, the adverse effect of corporate social responsibility on performance can be reduced by interacting corporate social responsibility and corporate governance mechanisms such as board size and board composition. To the extent that corporate social responsibility hurts the financial performance, it is recommended that firms should limit their spending on corporate social responsibility as this is found to have adverse effects on their performances. Instead, firms should strive to identify effective avenues where their funds could be invested in order to aid in improving their revenue flows as corporate governance activities depletes their earnings. When board composition as a moderator changes the negative effect of CSR to a positive one, it is recommended that, firms must ensure that they improve their board composition by ensuring that there are more independent directors than executive directors as recommended by the corporate governance code. This would lead to better allocation of funds that the company intends to use for CSR activities and hence lead to improving the firm’s performance.
A thesis submitted to the department of accounting and finance, school of business, Kwame Nkrumah university of science and technology in partial fulfilment of the requirements for the award of the degree of master of science, finance