CSR preference, market competition, and corporate financial performance

Abstract

AbstractAlthough the relationship between corporate social responsibility (CSR) and corporate financial performance has been concerned by academia, little is known about how to fulfill CSR. Using a sample of 2111 A‐share public firms in China, this research examines the effects of the way of fulfilling CSR on corporate financial performance and the moderating effects of market competition environments. The results show that firms' CSR behavior of preferred primary stakeholders has a positive effect on corporate financial performance whereas that of preferred secondary stakeholders harms corporate financial performance. Furthermore, this research finds that the stronger the market competition faced by the firm, the more obvious the effect will be, whether it is positive or negative. The findings are helpful to guide the managers on how to better fulfill their CSR, which is of great significance for the sustainable development of CSR.