CSR and Firm Value: Evidence from China

Yuanyuan Hu,Shouming Chen,Su Gao,Yuexin Shao

doi:10.3390/su10124597

Yuanyuan Hu, Shouming Chen + Show 2 more

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https://doi.org/10.3390/su10124597

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Abstract

This study attempts to investigate the influence of corporate social responsibility (CSR) on firm value. Drawing upon stakeholder theory and a resource-based view, we argue that corporate social responsibility is expected to positively affect firm value because it helps firms gain positive stakeholder responses. Based on longitudinal data of Chinese manufacturing firms listed at Shanghai and Shenzhen Stock Exchange between 2010 and 2015, we use multiple linear regression to find that corporate social responsibility has a positive relationship with firm value and that the relationship between CSR and firm value is weakened for firms with higher advertising intensity, as CSR by these firms gains negative stakeholder responses. State-owned firms were shown to benefit more from CSR, as CSR by these firms gains positive stakeholder responses for such firms.

Highlights

Corporate social responsibility (CSR)—firm behavior that improves the value of stakeholders or society [1,2]—has become a new metric of corporate financial performance
Other scholars believe that corporate social responsibility (CSR) activities have a negative net impact on corporate financial performance, because it may represent a pure corporate expenditure in an area unrelated to operation, which reduces the efficiency of the use of corporate resources [9]
Applying the resource dependence theory, we argue that state-owned enterprises will exceed the expectations of stakeholders and get positive responses from stakeholders based on having more political resources, which are more likely to benefit from corporate social responsibility [32,33]

Summary

Introduction

Corporate social responsibility (CSR)—firm behavior that improves the value of stakeholders or society [1,2]—has become a new metric of corporate financial performance. The percentage of Fortune Global 250 firms dedicating a section of their annual reports and CSR reporting to CSR activities increased from 44% in 2011 to 78% in 2017 (KPMG, 2011, 2017), demonstrating the importance they attach to these activities Do these activities create more benefits for shareholders, or do they focus too much on other stakeholders, thereby reducing the value of the company? We hypothesize that the biggest corporate social responsibility is to realize sustainable development which requires corporations to consider the satisfaction of other stakeholders as well as to be responsible to their shareholders. They should pursue the maximization of the common benefits to stakeholders [20]. The sustainability of these countries needs to be further studied [3,18,21]

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