Outside Directors and CSR in Japan: The Moderating Effect of Director Shareholding and Financial Leverage

Abstract

This paper aims to extend earlier research on the relationship between corporate governance and corporate social responsibility (CSR) in the Japanese context. Using a sample of 125 Japanese companies listed on Tokyo Stock Exchange from 2010–2020, this paper investigates how outside directors impact the CSR outcomes of firms, and further how this relation is moderated by director shareholding and financial leverage. The results show that the proportion of outside directors positively affects the CSR outcome of firms, and director shareholding negatively moderates this relationship. Only a weak support is found for the negative moderating effect of financial leverage on the relationship between outside directors and CSR outcomes.