The impact of culture and religion on financing decisions: Moderating role of CSR

The corporate social responsibility (CSR) plays a vital role in enhancing culture and religious activities which are critical factors of firms' financing decisions. This study investigates the moderating role of CSR on the relationship of culture, religion and financing decisions in Asian emerging economies. Findings suggest that predominant religion as well as cultural traits have a substantial bearing on the proportion of a firm's capital structure. Cultural dimensions such as power distance and uncertainty avoidance have negative while individualism has positive effect on firms' capital structure. Further, the firms operating in Islamic religion countries have less debt ratios as compared to the firms operating in Christianity and Hinduism that rely more on debt financing. CSR negatively moderates the relationship of culture, religion and firms' financing decisions. Capital structure disparities between enterprises with distinct country-of-origin cultures and religions should be better understood to have the optimal level of financing.