Can Political Connection and Corporate Social Responsibility Affect the Information Disclosure Quality?

Abstract

Higher information disclosure quality of enterprises plays an important role in promoting capital marketization reform and optimizing financial service system. However, the research on how government-enterprise relationship and social responsibility affect the behavior choice of information disclosure is not sufficient, especially whether the fulfillment of corporate social responsibility can exert moderating effect on outward information disclosure quality under the existing social relations is still unknown. This paper takes the A-share mainboard listed companies of China’s Shenzhen stock exchange from 2011 to 2016 as samples, and studies the relationship between political connection, corporate social responsibility and information disclosure quality based on the unique property rights differences of Chinese enterprises. It is found that, political connection is negatively related to information disclosure quality, while corporate social responsibility is positively related to information disclosure quality. The better the enterprise’s social responsibility performance, the weaker the negative correlation between political connection and information disclosure quality. And further analysis shows that compared with state-owned enterprises, non-state-owned enterprises have a stronger negative correlation between political connection and information disclosure quality. Social responsibility performance of both types of enterprises can improve information disclosure quality. Meanwhile, social responsibility performance can also effectively suppress the negative impact of political connection on information disclosure quality.