The goal of this study was to analyze the influence of corporate social responsibility on dividend pay-out while considering the role of corporate governance quality on mutual funds operating in Pakistan. This study used a two-step system generalized method of moments (GMM) to control not only endogeneity problems caused by inclusion of firm-specific variables, but also the endogeneity caused by dividend pay-out selection. The findings are that mutual funds that engage in higher levels of corporate social responsibility pay greater dividends. The quality of corporate governance not only has a strong positive impact on mutual fund's dividend pay-outs, but also moderates the association between dividend pay-out and corporate social responsibility. Furthermore, differences exist between socially responsible Islamic and conventional mutual funds in terms of dividend pay-out policy. These findings imply that the quality of corporate governance performs a substantial role in dividend decisions. Policymakers and regulators should also encourage asset management firms to improve corporate governance quality and engage in more socially responsible activities, which can lead to improved fund performance and dividend pay-out.
