Purpose – This study aims to assess the relationship between managerial entrenchment, social responsibility and risk-taking of the firm and shareholders’ activity. Design/methodology/approach – The study is carried out based on the disclosed information of listed firms on Tehran and Iraq Stock Exchanges during 2011–2017 from a sample of 121 firms on the Iranian side and 37 firms on the Iraqi side. The hypothesis testing is performed using panel estimators of the adjusted regression models. Findings – The obtained results from hypothesis testing show that there is a significant relationship between managerial entrenchment, social responsibility disclosure, social responsibility growth of the firm and risk-taking and shareholders’ activity in the Iranian Stock Exchange firms. Moreover, in the case of Iraqi firms, a significant relationship is observed between managerial entrenchment, social responsibility disclosure, social responsibility growth of the firm but the relationship between firm risk-taking and shareholders’ activity was not evident. Originality/value – The current study is almost is the first study conducted on two Islamic countries and the outcomes of the study may help other Muslim countries on the subject of the study

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