The potential impact of managerial entrenchment on firms’ corporate social responsibility activities and financial performance: evidence from Iran

Purpose>The present study aims to assess the effect of managerial entrenchment on firms’ corporate social responsibility (CSR) activities and financial performance in Iran.Design/methodology/approach>In this paper, the variable of managerial entrenchment, which includes board independence, management duality, management tenure, the board compensation, independence and ownership percentage, is initially analyzed using the exploratory factor analysis method, and its effect on performance and CSR is evaluated using the multivariable regression test. Given that a total of 103 listed companies on the Tehran Stock Exchange are selected during 2012–2017. In this paper, return on assets (ROA) and Tobin’s Q are the two variables to measure financial performance.Findings>The results of hypotheses testing indicate that there is a positive and significant relationship between managerial entrenchment and financial performance based on the ROA and Tobin’s Q indices, separately. Moreover, the results of this study indicate that there is also a positive and significant relationship between managerial entrenchment and CSR activities.Originality/value>The current study almost is the first study, conducted in a developing country similar to Iran, and the provided results might be beneficial to other developing countries.