DefinePK

Abstract

The investigation within this study examines the complex relationship between Corporate Social Responsibility (CSR), Accounting Conservatism (AC), and Dividend Policy (DP) in the context of ethical financial decision-making that is spreading throughout the world. The analysis looks at data gathered from 200 Pakistani listed firms spanning 2014-2024 to understand how AC serves as a linking mechanism for CSR programs to sustain dividends. The analysis, conducted through a dynamic two-step system Generalized Method of Moments (GMM) model, demonstrates that CSR significantly impacts accounting conservatism, thereby enhancing dividend policy. The empirical results show that CSR has a powerful positive impact on accounting conservatism (β = 0.0316, p = < 0.01), and subsequently on dividend policy (β = 0.1273, p = < 0.1). Moreover, the mediation analysis shows that the relationship between CSR and dividend policy is partially mediated by accounting conservatism, indicating that conservatism plays a mediating role between ethical behavior and the reward of shareholders. The research offers a new perspective on the emerging market situation, delivering pragmatic value to both business decision-makers and regulatory bodies who seek financial prudence combined with stakeholder responsibility. Future studies should pursue in-depth investigations into behavioral and governance-related mediators using the findings presented in this study.