CSR communication and financial performance: the moderating role of public authorities and the rule of law

The paper analyzes the moderating role of public regulation and governance modes, particularly the effectiveness of public authorities and the rule of law, in the relationship between CSR disclosure and corporate financial performance.Drawing on literature examining the complementarity between hard and soft law, our study aims to shed light on how the involvement of public authorities in regulating private corporations influences their perception of the instrumental role of CSR communication.Using a sample of international companies representing 11,743 firm-year observations across 30 countries between 2007 and 2018, our empirical analysis shows that the relationship between CSR disclosure and corporate financial performance is more significant in countries characterized by low government effectiveness and a stronger rule of law.Our results suggest that private actors' perception of weak public governance leadership is likely to encourage them to view the quality of CSR information as a strategic performance lever, consistent with the substitution logic between hard and soft law.