Accounting And Finance Dissertation Introduction Sample 8

The competitive environment within the business landscape has been rapidly increasing due to the increasing globalization and also due to the fact that it has become easier and convenient for the competitors to reproduce the innovations developed by the firms. Accomplishing and sustaining competitive advantage for a longer period of time has become a tough challenge for the performance of business enterprises (Kumar et al., 2011). Similarly attracting consumers has also become a challenging task whereas corporate social responsibility (CSR) has become a way forward  with which firms can impact the customers incidentally (Lee, Oh & Kim, 2013). Moreover, quality, price and the other vital factors that consumers contemplate before buying from the brand, CSR performance of the company has also been regarded as a substantial factor that, individuals commence making a purchase decision (Desai & Waller, 2010). A supple resourcefulness by a firm which is focused towards the important stakeholders chiefly the consumers and the investors are referred to as CSR (Mpekansambo, 2013). The CSR undertakings carried out by the firms have a constructive and a substantial impact on the society particularly in the case of international organisations who have the prerequisite resources to bring transformation in the society with the benefit of their social welfare work. 

Due to the positive image of the brand that is conveyed due to their social activities, the consumers tend to attract to the firms that actively participate in such activities. According to Manzini & Vezzoli (2003) customer make purchases of the products and services from brands that have emphasized the issue related to sustainable, social and economic development or have operated for the sector that needed assistance. There are various ways through which firms can contribute in CSR activities. Some of the commonly used ways of fulfilling their social obligations by the firm are participation in environmental efforts considering how critical it has become to take care of the environment (Scherer & Palazzo, 2011), participating in philanthropy activities like donating money for a cause and local community programs is another way through which firms can strengthen their CSR performance (Carroll & Shabana, 2010).  CSR has recently has also evolved in Pakistan and the local Pakistani firms are now actively participating in CSR activities. 

 On the other hand, CSR has played a significant role in evaluating the future worth of the firms in terms of their competence, effectiveness, and even subsistence (Saguy, 2016); hence those companies that have implemented CSR activities are more appealing and attractive for the investors and stakeholders. More prominently, the evidence in reference to the responsible behaviour of the firms is approved by their financial information; hence offering more value for the firms in a broader standpoint (García-de-Madariaga & Rodríguez-de-Rivera-Cremades, 2010). This proposes that the actions undertaken by businesses can produce a positive reaction from the investors, as firms that have undertaken CSR actions have the greater probability of showing higher returns subsequent to the socially responsible activities (Cheng, Ioannou & Serafeim, 2014). However, some studies have related socially responsible actions with that of distress risk, while representing a negative association between the two concepts.

 According to the study conducted by Bénabou & Tirole (2010), companies have frequently incorporated CSR activities, chiefly as a risk management strategy, as these activities can help firms in augmenting their reputation, which eventually protects these firms from social, regulatory, and political sanctions. This suggests that lack of CSR orientation will finally result in negative sanctions, and this would result in the loss of brand image and reputation while increasing the media and political pressure on the companies in terms of possible consequences and penalties (Jo & Harjoto, 2011). However, CSR activities and positive commitment in them results in the cohort of several benefits ranging from financial to social, and these benefits ultimately permit the businesses to compensate the costs related with it. 

 The study conducted by Saeidi et al. (2015) suggested that the life cycle of the company has played a role of mediator in reference to CSR and financial distress. In particular, it is obvious from the cases of companies that their access to resources is more likely to progress with the passage of time across the life cycle stages, which leads to the estimation that there exists a relationship between CSR and financial distress across the life cycle stages (Torugsa, O’Donohue & Hecker, 2012). The fundamental purpose for it can be argued to be the relationship between the CSR activities and financial distress, and the vigorous nature in reference to the economic rudiments and their variations; for instance, the cash flows, asset turnover, solvency-related risks and even retained earnings, and even the opportunities that would be obtainable to the companies during their life cycle (Ducassy, 2013). This has even been established that the negative relationship between the financial distress and the positive CSR activities is magnified due to the progression of firms in their life cycle. Therefore, the main of this study has been to identify whether corporate social responsibility and financial distress are inter related or not as well as the effect of life cycle on the relationship between corporate social responsibility and financial distress.