CSR Disclosure, Financing Constraints and the Mediating Role of Institutional Investors: Evidence from China

Abstract

AbstractChinese regulatory authorities have successively formulated and issued a series of policies and regulations related to corporate social responsibility disclosure since 2006, which require listed companies to disclose corporate social responsibility reports. On the other hand, corporate stakeholders demand that companies fulfill their social responsibilities and increase transparency. The quality of social responsibility information disclosure has begun to become an important factor in measuring and evaluating a company. Based on the data of 2016–2020 Chinese public firms, we examine the relationship between the quality of CSR disclosure and financing constraints. Results show that the higher the quality of corporate social responsibility information disclosure, the lower the financing constraints level. The effect of the quality of social responsibility information disclosure on alleviating financing constraints is more pronounced for non-state-owned firms. Further research indicates a positive effect of CSR disclosure on the investment of institutional investors, which in turn significantly contributes to alleviating financing constraints. The higher the quality of corporate social responsibility disclosure, the easier it is to obtain investment from institutional investors, thereby alleviating financing constraints. Overall, this study contributes to the literature by documenting how the quality of social responsibility information disclosure help firms to alleviate financing constraints.KeywordsCorporate social performanceFinancing problemsInvestmentsInformation displaysCorporate managementInvestors