Does Corporate Social Responsibility Increase Investment Efficiency During Economic Policy Uncertainty? Exploring the Moderating Role of Family and Non-Family Firms

This study addresses an unexplored area in research by examining the potential moderating influence of Corporate Social Responsibility (CSR) on the relationship between economic policy uncertainty (EPU) and investment efficiency (IE), considering both family and non-family firms as moderators. Using agency and organizational theories, we analyzed data from 293 non-financial firms from 2010 to 2021. Our findings show that the positive effects of CSR extend beyond stable environments, proving effective in uncertain circumstances. The results emphasize the strategic orientation of CSR involvement, demonstrating that CSR disclosure by family firms may not effectively bridge information gaps in the market due to their strategic choices, such as internal financing and potential impression management strategies. The research adds to the literature by considering the motivation to misrepresent CSR information within family firms. It reveals that CSR moderation is effective when the motivation to misrepresent is low. This emphasizes the credibility and strategic alignment of CSR initiatives in reducing information asymmetry during times of economic uncertainty. These results suggest that regulatory bodies should devise policies to scrutinize CSR information to prevent deceptive practices in family businesses. Our research findings enhance the current understanding of sustainability practices by family businesses. Past studies, particularly those utilizing various theoretical perspectives like Socio Emotional Wealth (SEW), frequently depicted family firms as exceptionally socially responsible. However, our results indicate that their actions could be shaped by institutional and legal considerations, particularly in environments characterized by weak institutions.