Do investments in CSR activities enhance financial performance for politically connected firms? Evidence from France

Purpose This study aims to examine the effect of corporate social responsibility (CSR) on financial performance (FP) and how this relationship is affected by firms’ political connections. Design/methodology/approach The authors use a sample of French companies listed on the SBF 120 index over the period 2011–2023. To mitigate endogeneity concerns, the authors apply the System Generalized Method of Moments. Findings The results show that for firms without political connections, the FP is positively influenced by a strong commitment to social responsibility. This suggests that stronger FP can be achieved through better CSR performance. However, for firms with political connections, this relationship becomes negative, indicating that political ties may hinder the benefits of CSR on FP. Originality/value The key contribution of this paper is the investigation of the effects of political connection on the link between CSR engagement and FP in the French context.