Ownership structure, stakeholder engagement, and corporate social responsibility policies: The moderating effect of board independence

This study primarily purposes to empirically examine the impact of stakeholder engagement mechanism in the form of professional shareholders on the corporate social responsibility (hereafter CSR) disclosure and how the previous nexus is shaped and moderated by the level of board independence within a dynamic framework. An agency theory framework is adopted to understand the extent to which professional shareholders, such as government, institutional, and foreign, influence the firm's CSR reporting. To the best of our knowledge, most of the prior studies in the CSR field have not yet provided a profound analysis of the moderating effect of board independence on the relationship between ownership structure and CSR disclosure. Hence, working on this sensitive issue merits our attention and deserves our recognition. Due to endogeneity bias, our reported results vary in their significance level across the three econometric models: pooled ordinary least square, fixed effects, and two-step system generalized method of moments. The findings unveiled that the effect of government, institutional, and foreign investors on CSR disclosure is more positive under conditions of the high level of board independence. The study sheds new light onto the paradoxical empirical findings of the prior research that has tried to link ownership structure to CSR disclosure directly by analyzing the significant role of independent directors on the aforementioned nexus. Further, this study pays rigorous attention to provide multidimensional insights for responsible parties to support the notion of stakeholder engagement mechanism beyond the current boundaries.