Does corporate social responsibility affect stock liquidity? Evidence from China

Abstract

This study investigates the impact of corporate social responsibility (CSR) on stock liquidity, utilizing a sample of Chinese listed enterprises from 2010 to 2021. The findings reveal that CSR endeavors facilitate an uplift in stock liquidity. Crucial intermediaries through which CSR exerts influence on stock liquidity are identified, including media coverage, corporate operations, and agency cost, with media coverage having a predominant impact. Notably, this liquidity-boosting effect of CSR is more pronounced during periods characterized by heightened economic policy uncertainty. Furthermore, heterogeneity analysis suggests that the CSR effect is more pronounced within non-state-owned enterprises. When examining CSR's components, shareholder and employee-focused CSR practices emerge as the most influential on stock liquidity.