Mediating Role of Independent Directors on Corporate Social Responsibility and Firm Performance

Abstract

Corporate board members acquire responsibility to represent the stakeholders on whom it impacts; independent board members are entrusted to serve and protect those stakeholders not represented in the board. Independent directors are neither executive nor proprietor, so they are expected to consider the interests, needs and aspirations of non-represented stakeholders. The strategic nature of corporate social responsibility falls under the instructions of corporate board directors, and their independent directors' role becomes essential to ensure and protect the fair share for corporate socially responsible activities to protect the welfare of society and the environment. It has been evident in emerging markets, and corporate social responsibility influences the financial performance of companies. The present study examines the mediation role of independent directors on corporate social responsibility and firm performance. The result of the study shows independent directors mediates between corporate social responsibility and financial performance of firm. Further the findings of the study validate the arguments of stakeholders and shareholder theories of corporate governance. SPSS (AMOS) is used to perform mediation analysis by taking diversified companies listed in Bombay stock exchange (BSE).