Corporate Governance and Corporate Performance with a Mediating Role of Corporate Social Responsibility—Case Study of Companies Listed on Saudi Arabian Exchange

The goal of the research was to find out how Corporate Governance, Corporate Social Responsibility, and Corporate Performance are linked in Saudi Arabian capital market. Domestic companies registered on the Arabian stock exchange make up the majority of the population. The research spans 11 years and includes data from 2010 to 2020. Data was extracted from audited annual reports of domestic companies listed on Saudi Arabian Exchange (SAE). The Hausman Test was used to determine that the Random Effect model was the best fit. To find endogeneity, we employed the Durbin-WU-Hausman test and the TSLS rather than the OLS. A model has been proposed to examine the relationship between corporate governance and performance, as well as that of corporate social responsibility (CSR) that acts as a partial mediator. This study has implications for the current and potential investors of the firms in the Kingdom Saudi Arabia in the context of choosing “socially participating” firms for their investment. Theoretically, this study also contributes to our understanding of some related concepts that have not been explored in previous researches concerning CG, CP and CSR. This can also be deduced from the finding that CSR partially contribute to enhance a firm’s performance in the context of Saudi companies.


Introduction
Companies employ corporate governance (CG) and corporate social responsibility (CSR) to improve their financial success. CSR and CG are important factors in developing countries' long-term growth. The importance of being socially responsible lies in its financial gain for the firms. "Corporate Governance" and "Corporate Performance" are investigated extensively by the researchers, using different methodologies, indicators, and contexts and using different intervening variables. One of the intervening variables that is often ignored and seems to have its influence over corporate performance is "Corporate Social Responsibility'. Many researchers have conducted research to evaluate the effect of corporate governance on a firm's performance. Numerous studies indicate positive and negative direct and indirect links between corporate governance (CG) and corporate performance (CP). There are also some studies which indicate no relationship between them. The results of such studies are based on different theories, methodologies, indicators, and contexts. Saudi Arabia in the context of choosing "socially participating" firms for their investment. The theories on which previous researches are based include agency theory, stewardship theory, resources dependency theory, signaling theory and stakeholder theory (Rodriguez-Fernandez, 2016). The concept of "corporate social responsibility" is a relatively new concept in the business world. Researchers are increasingly studying the effects of CSR on business performance. The results from previous studies are debatable because of the many intervening variables outside of the context of these studies. CSR is defined as the obligation of businesses to use their limited resources in ways to benefit society. CSR aims to maximize shareholders' wealth, through committed participation as a member of society. Researchers are increasingly studying the effects of CSR on business performance and value for society. Carson (1993) is the pioneer of CSR theory with extremely important and influential position. His first position was stated in "Capitalism and Freedom" and second was stated in "Social Responsibility of Business". According to his first formulation, CSR is the obligation of business to maximize its profits while engaging in "open and free competition without deception or fraud". The second formulation states that business executives are obligated to follow the wishes of shareholders (which will generally be to make as much money as possible) while obeying the laws and the "ethical customs" of the society (Carson, 1993). Brin and Nehme (2019) compared three theories of CSR: (Carroll, Theoretical Economics Letters such as customers, suppliers, environment, the community, employees, etc.
Once it is fulfilled, the firms' can win the loyalty and trust of their stakeholders, which is reflected in their business performance. This is particularly important since existing literature is silent on the effect of corporate governance mechanisms on improving performance indicators through CSR activities. This study distinguishes itself from others by expanding existing literature with a different insight and incorporating the mediating effect of CSR.
The study aims to examine how corporate governance influences operating, market, and financial performance of Saudi companies, using corporate social responsibility as a mediating variable. Further, along with the pursuance of the primary objective, other objectives of this study are: 1) To explore the direct relationship between corporate governance (CG) and corporate performance (CP).
2) To explore the direct relationship between corporate governance (CG) and corporate social responsibility (CSR).
3) To explore the relationship between corporate social responsibility (CSR) and corporate performance (CP). 4) To extend the literature by adding understanding of some meaningful concepts CSR that seems to be related to CG and CP, specifically, in the context of Saudi Arabia. 5) To provide a guide to executives and manager about their investment decisions in social causes. 6) To provide investors with valuables information regarding the role of CSR in organizational performance.
The following are the research questions: 1) What elements are utilized to assess corporate governance?
2) What factors are utilized to assess the financial, accounting, market, and The following is a breakdown of the paper's structure. The literature on corporate governance, corporate social responsibility, and financial performance measurements is examined in Section 1. The gap analysis and variables chosen for this study, justification of study, Conceptual Model and complete list of hypotheses to be used to achieve the objectives of the study are covered in Section 2. Section 3 contains the data analysis and methodology, as well as the results and output. The findings, discussion and conclusion of major findings are outlined in Section (4). The limits and guidelines for future investigations will be A. Sarwar et al. DOI: 10.4236/tel.2022.124062 1141 Theoretical Economics Letters discussed in Section (5).

Literature Review and Hypothesis Development
The theories, on which this study is based, are summarized here.
Agency theory explains the relationship between a principal and his agent.
Agency theory states that in firms where the CEO and Chairman are two different persons, the Chairman requires the managers to engage and invest in social activities. In other words, the separate role of CEO and chairman can reduce agency problem and increase the CSR disclosure (Cherian et al., 2020).
The stakeholder theory asserts that the firms seek to balance the interest of multiple stakeholders that can directly or indirectly affect company's outcome.
These stakeholders include customer, supplier, employees, shareholders, community, environment etc. By adopting transparent policy, a firm tries to gain the trust and loyalty of all stakeholders (Brin and Nehme, 2019).
The signaling theory states that corporations try to reduce information asymmetries between them and their stakeholders by disclosing information about their engagement and investment in social activities. This action pays the corporations in the form of increased sales and performance (Su et al., 2016).
This portion will consider the variables under study and their linkages in the different studies in Saudi Arabia and other markets. First of all, we will discuss corporate governance and corporate performance. Second, we will investigate the relationship between corporate governance and corporate social responsibility; third, we will investigate studies on corporate social responsibility and corporate performance; and finally, we will discuss the role of CSR as a mediator in previous studies.

Corporate Governance (CG) and Corporate Performance (CP)
The previous studies proved positive direct and indirect relationship between corporate governance and corporate performance. These include the work done by (Esteban-Sanchez et al., 2017;Gaio & Henriques, 2020;Jain et al., 2017;Malik & Kanwal, 2018;Mishra & Suar, 2010). On the other hand, the studies that establish the negative direct and indirect relationship between the aforementioned variables include (Adeusi et al., 2013;Al-ahdal et al., 2020;Palaniappan, 2017;Rossi, Nerino, and Capasso, 2015). Further, the literature which proves no relationship at all between the variables includes the research paper by (Shahwan, 2015). In sum, the research performed on the study variables produced conflicting results due to different methodologies, proxy variables, measurement approaches, and the contexts used in these studies.
With the right corporate governance mechanisms, the financial performance of a firm can be improved (Kyere and Ausloos, 2021 Literature indicates that the firms perform worse with increasing board and audit committee size and audit committee meetings, presence of independent members on board and the presence of CEO role duality (CEO also acting as chairman of the board) and vice versa (Basuony et al., 2015). Another study concluded that the corporate governance does not improve financial performance consistently, but through exploiting intangible resources. Firms that announce the enactment of corporate governance guidelines experience increased stock prices immediately after the announcement (i.e., days 1 -4) as compared to other firms that only referenced the guidelines' enactment (days 8 -10) (Picou and Rubach, 2006). Usually, the firms are ranked by market information intermediaries based on their adoption and implementation of CG rules and regulations. These rankings affect firm market as well as accounting results of (Berthelot, Morris, and Morrill, 2010) and (Kara, Erdur, and Karabıyık, 2015).
According to Awan & Jamali (2016), board size and audit committees have positive connection with profit margin and ROE. But, according to Palaniappan (2017), board size has significant negative relationship with TobinQ, ROA, ROE and this relationship is moderated by board independence and meeting frequency. According to Lekaram (2014), board size is negatively related to ROA and OE for listed manufacturing firms in Kenya.
Foreign and director ownership have significant positive influence firm financial performance measures i.e., ROA and ROE, TOBINQ and MTB (Rashid, 2020). Institutional ownership has significant positive relationship only with specific performance measures i.e., ROA (Rashid, 2020). Further, there exit significant positive association between ownership structure and board characteristics variables, and board characteristics and firm performance variables.
Board ownership, board education and experience, effectiveness and CEO role-duality has positive association with the firm's ROA, ROE, MTB, TobinQ, while board size has negative, whereas, independence of directors has no relationship between with firm's performance (Ali, 2018). CGQI is negatively related with Tobin's Q while positively related with ROE (Rossi et al., 2015).  (Ali et al., 2020). In China, the ownership concentration and degree of board independence are closely related to a firm's performance-but only in the case of larger companies. The expertise of the supervisory board is not significant (Shan and McIver, 2011). In case of turkey, institutional ownership has positive influence on financial performance. This relationship is strong for firms listed on the corporate governance index (Gürbüz, Aybars, and Kutlu, 2010). In case of Saudi Arabia, corporate governance is not related to ROA, but related to Tobin's Q and market value of equity. Furthermore, this relationship is positive (Fallatah & Dickins, 2012). In case of Nairobi listed companies, specific aspects of board composition, experience, skills, expertise and separation of the role of CEO and Chair and leverage are positively associated with insurance firm financial performance, listed at the NSE (Mwangi, 2013). Some researches, for example, (Shahwan, 2015) found insignificant and negative correlation between corporate governance and firm performance measure by TobinQ. According to (Adekunle, 2020), the composition and size of board have significant impact on a firm's performance, while the status of CEO has insignificant positive effect on firm performance. The ownership concentration of companies is negatively correlated with return on asset (ROA) but positive correlated with profit margin (PM). He recommends policy makers to have independent directors on board and the board size must be according to corporate size and activities. The presence of external directors, foreign institutional stockholders and domestic financial institutional stockholders are important factors to improve financial performance (Huang, 2010). The external directors and specific ownership have the greatest impact on the social performance of a firm's worker, customer, supplier, community and the society. Foreign institutional stockholders help to increase worker and supplier performance by paying more attention to employee policies and supply chain relationships. The government shareholders will be more likely to request that companies fulfill their social responsibilities. From the discussion above, it can be hypothesized that corporate governance and financial performance are positively related.

Corporate Governance (CG) and Corporate Social Responsibility (CSR)
Corporate governance mechanisms play a vital role in ensuring organizational legitimacy through CSR disclosures. The study conducted by (Filatotchev and Nakajima, 2014) indicated that linkage between CSR strategies and CG variables  (Le et al., 2013). The relationship between CSR and CG is widely researched, but the results are ambiguous and doubtful (Berber, Slavić, and Aleksić, 2019).
The composition of the board and the ownership scheme also contribute to how organizations behave towards society. The studies conducted by (Wang and Coffey, 1992) and (Zhang, Zhu, and Ding, 2013) revealed that the ratio of insiders to outsiders, the percentage of insider stock ownership, and the presence and proportion of female and minority in the board are positively and significantly associated with firms' charitable contributions. Nevertheless, stakeholder oriented directors, whether internal or external, are more inclined towards playing their role of DR-CSR which is directors role in CSR (Hung, 2011).
The power inherent in the role of manager/CEO also plays its role in determining the tendency of organizations of their CSR disclosure. The agency theory states that powerful CEOs may promote transparency about banks' CSR activities for their private benefits. While, on the other hand, they might abuse their power by providing a high degree of CSR disclosure, it could also be a sign of managerial risk aversion or managers' private reputational concerns (Jizi et al., 2014), (Sial et al., 2018), and (Szegedi, Khan, and Lentner, 2020).
Similar to CG, CSR is also responsive to country differences. In a developed country such as Singapore, with more public ownership of companies, more effective corporate governance structures, more international investment, and citizen voice and action, the nature of CSR is likely to be similar to that of multinational firms in the U.S. and U.K. However, in developing country like Turkey, private ownership of firms dominates that prefers to hold a broader notion of CSR as FDI increases and as it continues to seek membership in the EU (Robertson, 2009

Corporate Social Responsibility (CSR) and Corporate Performance (CP)
The contradictions in literature about the relationship between CSR and CP can be attributed to different measurement approaches used by different researchers and researcher's subjectivity and selection bias (Galant and Cadez, 2017 Some of the studies exhibiting positive, negative or no relationship between CSR and CP are listed under this section. Broadly, CSR governance generate good CSR outcomes that in return influence companies' financial performance (Wang and Sarkis, 2017). Social performance of an organization is positively associated with organization's prior and future financial performance. Prior relationship supports the theory of slack resource availability whereas future relationship supports the theory of good management (Waddock and Graves, 1997). CSR related benefits arise due to two main reasons. First, CSR causes increase in revenues from enhanced sales and increased price margins. Second, the CSR induces decrease in cost due to tax concessions, reduced duties by the government to promote CSR activities, efficiency gains from environment-friendly technologies, and reduced cost of capital. A stakeholder-oriented firm while generating value for its stakeholders also generates value for its shareholders (Mishra and Suar, 2010).

Mangers of public listed companies often invest in CSR activities in order to
maximize market value (Mackey, Mackey, and Barney, 2007). Stakeholders' awareness of CSR initiatives taken by the companies results in financial gain (Rhou, Singal, and Koh, 2016). Direct relationship between CG, CSR and corporate performance as measured through ROA was reported by (Baig et al., 2021). Singh and Misra (2021) said that the CSR is linked with organizational performance and this linkage of CSR tends to vary between firms with high and week reputation.
Different results have been reported in the contexts of developing and developed countries. In case of the developing countries such as Eritrea, Pakistan, Turkey and Bangladesh, CSR has significant influence on the organizational performance (Bahta et al., 2021;Szegedi et al., 2020;Akben-Selcuk, 2019). Firms in these countries are increasingly share CSR disclosure in pursuit of improved financial results such as the case of pharmaceutical industry of Pakistan (Malik and Kanwal, 2018). Corporate social responsibility can build better corporate image through good controls and monitoring system hence improve firm performance (Marić et al., 2021).
In an empirical research conducted by Worokinasih and Zaini (2020)

Corporate Social Responsibility (CSR) as a Mediator
Different results have been reported, when it comes to discuss the mediating effect of CSR upon the relationship between CG and CP. A few, entailing different proxies for CG, CSR and CP, are listed under this section.
The board composition comprising of more sophisticated board of director and the boards which include family or foreign members provide more CSR disclosure which in return leads to greater stock returns (Abdelfattah and Aboud, 2020 (Purbawangsa et al., 2020). The choice of CSR disclosure is positively related with the internal and external corporate governance and monitoring mechanisms, including board leadership, board independence, institutional ownership, analyst following, and anti-takeover provisions. (Cohen, Holder-Webb, and Khalil, 2017) asserted that Investment decisions are affected by CSR performance and that governance strength exerts a marginal effect on the investment decision only when CSR performance is strong. Further, the developing countries (Lebanese) appear to be more sensitive to weak performance (both CSR and governance) than developed countries (U.S.).
Company's size, the board commitment and profitability are positively associated with the extent of CSR disclosure. Financial leverage is associated negatively with the extent of CSR disclosure (Giannarakis, 2014). Corporate governance is positively linked to corporate sustainability performance, which leads to improved financial performance. Further, corporate sustainability performance mediates the link between corporate governance and financial performance (Asma et al., 2019). Hence, from this discussion, it is hypothesized that Corporate Social Responsibility mediates the relationship between Corporate Governance and Corporate Performance.

Research Gap Analysis and Justification of the Study
The following  On the basis of the above discussion and to test the hypotheses developed, the researchers proposed the model presented in Figure 1.

Data Collection
This study spans over 11 years incorporating data for 2010-2020. The "purposive sampling" method was adopted in this study based on some considerations.  for eligible-to-study firms (whose reports are available in English) is given in Table 3.
The following Table 4 shows the list of companies included in the study and their sector.
The variables for which the values were not available were removed from the In order to assess the relationship between CG, and FP, the following models are drawn: ( ) where "I" is cross-section dimensions (i = 1…N), t is time dimension (1, 5), Y is the dependent variable (CP) for companies I and period t, x is a vector of explanatory variables, β is vector of parameters to be estimated and e is the error term. On the basis of research formulated the empirical model for banks I in period "t" can be written as:

Market value of equity TobinQ
Book value of equity = The mediating variable "corporate social responsibility" was measured through Corporate Social Responsibility Disclosure Index (CSDRI). In order to calculate CSRDI, this study used a checklist of CSR items taken from previous studies (Ezat et al., 2020). This checklist contains 7 CSR components that are: Environmental Component which includes 11 items, Employee Information component which includes 15 items, Community Involvement Information which includes 17 items, Products Information which includes 4 items, Customer Information which includes 6 items, Energy Information which includes 3 items, and finally Other Disclosures Regarding the Saudi Arabian Environment which includes 4 items. The CSRDI was estimated by means of un-weighted dichotomous scoring method; an item gets score of 1 if it is disclosed by the company, otherwise it gets 0. Scoring was based on content analysis of annual reports of the companies.
Issuance of stand-alone CSR reports as proxy of non-financial disclosure plays a role complementary to financial disclosure as the issuance of stand-alone CSR reports is associated with lower analyst forecast error. This relationship is stronger in countries that are more stakeholder-oriented and for firms and countries with more opaque financial disclosure (Dhaliwal et al., 2012). The ad-

Results and Interpretation
This study uses the "SMART-PLS" to test the proposed hypotheses which have the ability of incorporating small samples for analysis. (Hair et al., 2019) recommended to use 11 times observations of number of indicators used in this study, which is true in this study (154 observations). Therefore, the data is sufficient to carry out analysis using SMART-PLS.
Common factor bias was checked through Herman's single factor test. This test revealed that a single factor solution only explains 23.91% of total variance, which is much below the threshold value of 50%. This result showed that common factor bias is not a problem in this study and the data is ready for further analysis.
Next, this part of the paper presents the results from data analysis using SMART-PLS. PLS SEM is comprised of two models; measurement model and structural model. The former is used to calculate reliability and validity of the construct whereas the latter is used to evaluate the significance of the hypotheses that are developed to test relationships among variable. The hypotheses subject to testing, in this case study, are the following:

Measurement Model and Its Assessment
The quality of constructs used in the study is evaluated through its measurement model that is based on factor's loadings and is followed by constructs reliability and validity.

 Factor Loadings
The factor loadings measure the extent to which each item in the correlation matrix correlate to principal concept. Its value ranges from −1 to +1; the value closer to 1 shows high correlation whereas value closer to zero shows week correlation. None of the items showed lesser value than threshold value of 0.5 recommended by Hair et al. (2019). The factor loading is presented in Table 6.  Indicator Multicollinearity The values of VIF exhibit how much multicollinearity exists between indicators. The threshold value for VIF is 5. Multicollinearity is not an issue if its value is below 5 (Hair et al., 2019). All the VIF values, given in Table 7    However, the composite reliability value for CG is above the threshold value of 0.7. Hence, the convergent validity is acceptable. Table 9 shows the AVE values for the constructs of the study.

(ii) Discriminant Validity
It measures the degree of uniqueness found between different constructs. It is established through Fornell and Larcket criterion; the square root of AVE of a construct is higher than its correlation with other constructs. Based on analysis, the constructs in this study have shown discriminant validity (Table 10). HTMT ratios in this study lie below the threshold value, hence, discriminant validity establishes as shown in Table 12.

 Goodness of Fit
In order to check predictive capabilities of the model, the coefficient of determination (R 2 ), effect size (F 2 ) was analyzed. The results gave R 2 equal to 0.553 (Table 13) for CP which shows 55.3% variation in CP is due to CG and CSR.
The value of R 2 is greater than cut-off value of 0.1. In this study, two predictors were used to assess their influence on CP. According to Hair et al. (2019), it is recommended to assess F 2 too, which is used to determine the effect of removal of an independent variable from the model on A. Sarwar et al. DOI: 10.4236/tel.2022.124062 1156 Theoretical Economics Letters   In addition, SRMR-Standardized Root Mean Square Residual is also used to assess goodness of fit. The threshold value for SRMR is 0.8 or 0.10. The SRMR value that is less than or equal to the threshold value is considered a good fit. In this study the value is 0.10.
Overall, the reliability and validity test performed to test measurement model are satisfactory, suggesting that the items used to measure constructs in this study are valid and fit to measure predictive parameters in the structural model.

Testing of Hypotheses
First of all, we will discuss the hypotheses related to Hausman test and see which model is suitable for this study. Second, we will see if any of the independent variable's is endogenous, that will help us to decide which of the two methods will be used for this study, i.e., Ordinary Least Square (OLS)   As the p value is greater than 0.05 in all three situations examined above, Random tests are independent of explanatory variables. As a result, the results support the RE model. The RE and FE estimators of β will converge to the same result if the specific effects are random, but the RE estimator is more efficient.
All the three equations developed are given below:  Endogeneity, which is an essential assumption in any Classical Linear Regression Model, is a concern in many sectors of business and management research that rely on regression analysis to draw causal inference (CLRM). Endogeneity is assessed using the Durbin-WU-Hausman test (augmented regression test) or the  This test helps us decide whether to use OLS or TSLS. We have found the endogeneity among our independent variables, so we will use TSLS.
Due to endogeneity among our independent variables, we will apply the TSLS.
The results of TSLS for all the three dependent variables are as follows (Table   19-21):   Value of R 2 (Coefficient of Determination) is 0.068 which means that one unit change in "IV" will bring 6.8% change in the dependent variable which is operating profit in the above-mentioned case. The results revealed that CG has a significant effect on CSR (β = 0.451, t = 9.703, p < 0.05). Hence, H 4 was supported.
H 5 : There is a significant impact of Corporate Social Responsibility on Corporate Performance.
The results revealed that CSR has a significant effect on CP (β = 0.163, t = 2.425, p < 0.05). Hence, H 5 was (not) supported. The results of Hypotheses confirmation are given in Table 22. The results (see Table 23) revealed that CSR partially mediates the relationship between CG and CP (β = 0.074, t = 2.141, p < 0.05). Hence, H 4 is supported. The total effect of CG on CP is significant (β = 0.303, t = 3.238, p < 0.05). With the inclusion of CSR, the direct effect is also significant (β = 0.230, t = 2.242, p < 0.05). Hence, CSR acts as a partial mediator. The results are organized in Table   23 and the structural model is given in Figure 2.

Results and Findings
Random Effect Model was confirmed as a suitable model for our data rather than the Fixed Effect Model. Endogeneity existed among the independent variables therefore we used TSLS instead of OLS and discussed.
There is a statistically significant relation between CG and corporate performance of the companies. Overall relation of CG with corporate performance was significant. CG is also statistically significant and positive relation with CSR, whereas, CSR is statistically significant but negative relation with corporate performance. This confirms the existence of the role of CSR as a partial mediator.

Discussion
Corporate governance has a significant effect on corporate performance (H: β = 0.230, t = 2.242, p < 0.05), confirming the earlier studies by (Fallatah & Dickins, 2012) and (Bazhair, 2021) and negating (Buallay et al., 2017). The confirmation of H 3 supports the notion that those companies that actively focus on CG practices outperform operationally, financially and in market-based terms.  (Su et al., 2016).
Corporate social responsibility has mediating effect on the relationship between corporate governance and corporate performance (H 4 : β = 0.074, t = 2.141, p < 0.05) Corporate social responsibility acts as a partial mediator that strengthens the effect of corporate governance to enhance business performance.
Corporate governance bodies of firms put pressure on firms' management to disclose information regarding their investment and engagement in social activities either in their annual reports or standalone CSR reports, which reduces the information asymmetries between firms and their stakeholders. This leads the firms win hearts of various stakeholders which reflect in firms' improved sales and performance depicted by their improved ROA, ROE and TobinQ. Table 2 presents the findings of current and previous related researches.
The findings for overall data revealed a positive and direct relationship be-

Conclusion
This study is an initiative to start considering and incorporating the effect of corporate social responsibility while formulating effective corporate governance Firms' involvement in CSR activities tends to instill favorable customer attitudes required to increase sales and hence, profitability, ROA, ROE, and TobinQ based on market value of a firm. The firms in the kingdom should invest in CSR practices to build and sustain a strong relationship with its stakeholders.
Management should also focus on having good corporate governance mechanisms in place to improve company's performance by supervising and monitoring of the company's operations and to ensure the fulfillment to the stakeholder's interest. The firms in the kingdom are, therefore, suggested to concentrate on socially oriented activities.

Implications
Theoretically, this study contributes to our understanding of some related concepts that have not been explored in previous researches concerning CG, CP and CSR in reference to Saudi listed companies.
Hence, trying to developing a better understanding of the impact of CG on CP through CSR is the key contribution to the literature.
As far as managerial implications are concerned, it is evident from this research that CG affects CP through CSR. The direct as well as indirect relationship between CG and CP is significant. This can be deduced from this finding that CSR partially contribute to enhance a firm's performance in Saudi context.

Study Limitations
This study investigates the relationships among corporate governance, corporate social responsibility and corporate performance and confirms the mediator role of corporate social responsibility on the relationship between the other two. The empirical result is authentic and verifiable but not without limitation.
1) First, this research only uses the data of only those domestic companies listed on Saudi Arabian stock exchange for which data is readily available in English language and may create different results when incorporating data for more or all companies.
2) Secondly, this research used CSRDI as a sole proxy to overall corporate social responsibility and confirms the hypothesis about the mediating role of CSR upon CG and CP, hence, ignores the effect of individual indicators of CSR (i.e., environmental employee, product, community involvement etc.) on CG and CP.
3) Different modes of collecting data were not used to know the real scenario.
4) This study uses three measures for financial performance (ROA, ROR and TobinQ), while other measures of performance are not included.
5) CSR is a recent phenomenon; therefore, only latest years data were included so that CSR data is available.
6) Only published data is used to measure CSR, there is a gap to examine ac-

Future Directions
1) Researchers can also analyse the lagged influence of CG and leverage on CSR activities, as well as social and financial performance, using the longitudinal data set.
2) Financial, operational, and marking performance can all be included in corporate studies. Other aspects of performance could be evaluated as well.
3) Because it is not clearly articulated in literature, especially in the context of emerging economies, the notion of CG is suited to explain a firm's CSR performance. There is a conceptual and empirical research gap that could be filled in the future. 4) You can study level of investment required in CSR for achieving optimal performance by companies so that demand of different stakeholders can be met.

5)
Most of the researches are done on financial and operating performances of firms, there is a gap to study the impact of corporate governance on non-financial indicators such as customer trust, brand image and loyalty.
6) Several studies have been conducted on the overall performance of companies in a certain industry that are publicly traded in a country.
7) The research should focus on different industrial sectors to examine if the results of different industries in a country are consistent or vary. In future investigations, Type of Industry could be used as a moderator. 8) The potential researchers might consider large sample size to verify the results. 9) In order to deal with human error, inescapable in collecting primary data, the future studies can also use ESG (Environmental, Social and Governance) rankings of companies issued by various international agencies (i.e., Moody's and S&P Global) as a standardized proxy to corporate social responsibility to verify mediating effect of the same.