Corporate Social Responsibility and Financial Performance: A Quantile Regression Approach

Bowen Da,Huiying Chen,Linna Guan,Chuanzhe Liu,Nana Liu,Quan Guo

doi:10.3390/su11133717

Bowen Da, Huiying Chen + Show 4 more

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https://doi.org/10.3390/su11133717

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Journal: Sustainability	Publication Date: Jul 8, 2019
Citations: 14	License type: CC BY 4.0

Affiliation: China University of Mining and Technology

Abstract

A prominent claim within the literature is that corporate social responsibility-disclosured firms are fundamentally more resilient to financial shocks, relative to firms that take no corporate social responsibility action. To test this, we examine the impact of corporate social responsibility (CSR) information disclosure on financial constraints (FC). Our sample is composed of A-share publicly listed firms from Shanghai and Shenzhen in China during 2013–2017. We find that CSR disclosure influences negatively financial constraints. The quantile regression results also indicate that the influences would more obvious when a company faces stronger financial constraints. Further, CSR disclosure influences negatively financial constraints in financially opaque firms, and the effect of financial opaque on the relationship strengthens when the company faces great financial constraints. After considering the problems of missing variables and endogenous, changing the level of CSR and FC measurement, using 2SLS and two-step GMM methods, the conclusion is still robust. However, the results should not be generalized, since the sample was based on 434 A-share publicly listed firms for 2013–2017. From the perspective of FC, this study contributes to the literature in the field of CSR and expands the empirical research on the economic consequences of CSR. It also can encourage enterprises to voluntarily disclose social responsibility information and it is of great significance to promote the stable development of the capital market and society.

Highlights

There has been increasing attention given to the consequences of rapid economic development such as social and environmental problems
The OLS model described the average relationship between corporate social responsibility (CSR) disclosures and financial constraints (FC) based on the conditional mean of cash flows
The results indicate that changing the conditional distribution, the effect of CSR disclosures changes on cash flows varies in size

Summary

Introduction

There has been increasing attention given to the consequences of rapid economic development such as social and environmental problems. Corporate social responsibility is a complex term broadly defined as the active and (sometimes) voluntary contribution of enterprise resources to actions that are aimed at achieving environmental, social and economic improvements [1]. This issue has attracted more attention, as organizations have realized the strategic importance of such activities. In this study we hope to provide a different perspective to that presented in the current literature with regard to the relationship between CSR and corporate finance performance by adopting a quantile regression approach. This method allows us to analyze the separate responses of finance performance to CSR at different quantiles of financial constraint distribution

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