Impact of Corporate Governance Characteristics on Corporate Social Responsibility Disclosure in Palestinian Companies: Mediating Effect of Financial Performance

Corporate social responsibility is a comprehensive approach of a company that determines the amount of the organization’s contribution to society and the use of its available resources in a responsible manner. Previous studies indicate limited contributions of Palestinian-listed companies to social issues and low levels of Corporate Social Responsibility Disclosure (CSRD). The objectives of the study are to examine the level of CSRD of Palestinian companies and the relationship between independence, size, ownership, gender diversity, Corporate Social Responsibility (CSR) Committee and ethical commitment of the Board of Directors (BOD) on the level of CSRD and financial performance of Palestinian companies. In addition, the objectives of the study are to examine whether financial performance mediates the relationship between independence, size, ownership, gender diversity, Corporate Social Responsibility (CSR) Committee and ethical commitment of the Board of Directors (BOD) and CSRD in Palestinian companies. The sample of this study comprises 31 companies listed on the Palestine Stock Exchange from 2012 to 2021. This study adopted agency theory and resource dependence theory, and OLS multiple linear regression was employed to examine the relationship between the variables. The results showed that the level of CSRD in Palestinian companies is 29.5%. Furthermore, independence, size, gender diversity, CSR committee, and ethical commitment of BOD have a positive and significant relationship with CSRD. There is also a positive and significant relationship between size, gender diversity, CSR committee and ethical commitment of BOD and financial performance. Financial performance was found to mediate the relationship of independence, size, gender diversity, CSR committee and ethical commitment of BOD and CSRD. It is suggested that the Palestinian Stock Exchange should place more efforts to highlight the importance of CSR through seminars and workshops and provide tax exemption for CSR efforts done by the companies. The Palestinian Code of Corporate Governance should also provide guidelines on specific attributes of the board of directors, such as the nature of the educational qualification and level of experience, specifying a percentage of women’s representation on BOD and ensuring BOD instil an ethical culture in their organization to enhance CSRD in Palestinian companies.