THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY AND BOARD GENDER DIVERSITY ON DEFAULT RISK EVIDENCE FROM SELECTED ASIAN ECONOMIES

Abstract

Corporate default risk remains a significant concern for investors, creditors, managers, and regulatory authorities because it reflects a firm's ability to sustain financial stability and meet its financial commitments. This study examines the relationship between corporate social responsibility (CSR) performance and board gender diversity (BGD) with default risk among listed non-financial firms in Pakistan, India, China, Malaysia, and Thailand over the period 2011 to 2023. The study uses firm-level secondary data collected from Thomson Reuters DataStream, comprising 7,023 firm-year observations. CSR performance is measured through Asset4 environmental and social scores, board gender diversity is assessed using the Blau heterogeneity index, and corporate default risk is evaluated using the Altman Z-score. The Hausman specification test supports the use of the Random Effects model for empirical analysis. The findings indicate that stronger environmental and social performance, along with greater board gender diversity, are positively associated with financial stability and lower default risk. Since a higher Altman Z-score represents better financial health and a reduced likelihood of distress, the results suggest that responsible corporate practices and inclusive governance mechanisms contribute to improving firms' resilience. The analysis further shows that profitability, firm size, liquidity, and operating cash flow enhance financial stability, whereas higher leverage increases financial vulnerability. The model demonstrates substantial explanatory power in predicting variations in corporate default risk. Overall, the findings support stakeholder and agency theory perspectives by highlighting that CSR engagement and diverse board structures can complement traditional financial factors in strengthening corporate sustainability and reducing the likelihood of financial distress.