Impact of Firm Financial Ratios on Financial Distress: Moderating Role of Corporate Social Responsibility


  • Asad Ali GC University Faisalabad, Pakistan
  • Syed Muhammad Ahmad Hassan Gillani GC University Faisalabad, Pakistan
  • Ahsan Riaz GC University Faisalabad, Pakistan


Corporate Social Responsibility, Bank Default, Financial ratio, Financial Distress


Purpose: Corporations fall into financial distress or even go into bankruptcy due to many reasons; financial factors are one of the most important factors for financial distress. In previous literature, this element is ignored that those companies are engaged in social activities. Therefore, this study invested the moderating effect of CSR actives.

Design and Methodology: This research focuses on non-financial companies that are listed on the Pakistan Stock Exchange (PSX). This study is quantitative and it deals with secondary data. This comprises data from the year 2012 to 2021. Descriptive statistics, correlation analysis, ANOVA, multiple logistic regressions, and multiple moderated logistic regressions are applied.

Findings: In the overall sample, liquidity, profitability, and activity are found significant and leverage are insignificant at firm-level financial variables. Moreover, CSR only moderates the relationship liquidity and financial distress at 10% level of significance but not moderated with other financial ratios.

Implications and Future Direction: The study's findings will help financial institutions evaluate financial distress and estimate minimum capital requirements to lower the cost of financial risk. The most important limitation lies, in this study is that it only includes non-financial firms listed on the Pakistan Stock Exchange, this study measured CSR as a quantitative approach by measuring the CSR spending ratio. However, future research may also use a qualitative approach (CSR index) for better CSR measurement.


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How to Cite

Asad Ali, Syed Muhammad Ahmad Hassan Gillani, & Riaz, A. (2022). Impact of Firm Financial Ratios on Financial Distress: Moderating Role of Corporate Social Responsibility. UW Journal of Management Sciences, 6(1), 148–165. Retrieved from