Does it pay to do good? A Swedish study on the relationship between corporate social performance, stock market return, and the role of gender diversity on the Board of Directors

Abstract: This study investigates the relationship between corporate social performance (CSP) and stock market return, and how gender diversity on the Board of Directors (BoD) moderate this relationship. We use two different models based on data for the years 2007-2021 and 2007-2019 respectively, with datasets consisting of firms listed on the Swedish Stock Exchange. Our results indicate a weak relationship between CSP and stock market return, with the exception of companies with excellent CSP, where a significant negative correlation was observed. Furthermore, gender diversity appeared to have a moderating effect on the relationship between CSP and stock market return, enhancing the negative effect of CSP on stock market return. This is in line with a small collection of previous literature but opposes the majority of literature on the effect of CSP on corporate financial performance (CFP). Our study contributes with further insights into the contentious relationship between CSP and CFP and the mechanisms affecting it.