The CSR moderating effect on the relationship between SG&A expenses and companies’ financial performance

Purpose– The aim of this research is to investigate the impact of selling, general, and administrative (SG&A) expenses on financial performance of companies, and also to examine the impact of corporate social responsibility (CSR) as a moderator variable on the relation between SG&A expenses and companies’ financial performance.
Design/method– Data is collected from a sample of listed companies on the EGX 100 from different sectors through 2010 to 2019. Simple regression analysis is used to test the relationship between SG&A expenses and financial performance of companies. Moreover, moderated regression analysis is used to test the impact of CSR as a moderator variable on the relation between SG&A expenses and financial performance, and also to investigate the role of three control variables in this relation.
Findings– The results show that SG&A expenses is positively and significantly associated with the financial performance of companies and this positive relationship is more pronounced with the existence of CSR as a moderator variable. Furthermore, the statistical analysis results suggest that some of control variables play an important role in enhancing the financial performance of companies. Results revealed that there is a positive and significant impact of company size, measured by companies’ assets / companies’ sales, on the companies’ financial performance. On the other hand, company experience and type of activity have no relation or impact on companies’ financial performance.
Research limitations/implications– Studying the mediating effect of CSR variable on the relationship between SG&A expenses and companies’ financial performance is not addressed in this research. Furthermore, the researcher relied on abstraction in selecting the set of control variables, as it excluded the company’s strategy, the financial leverage and other control variables are excluded in this research.
Originality/value added– The relationship between SG&A expenses and the financial performance of companies has not been addressed in many accounting studies in Egypt. Moreover, the moderator effect of the CSR on the relationship between SG&A expenses and the financial performance of companies in Egypt also was not addressed.