Abstract
Compared to the rapid development of Corporate Social Responsibility (CSR) practices in developing countries, especially in China, the research about the effect of CSR on firm value has evolved more slowly. This paper examines the relationship between CSR and firm value used by listed Chinese companies from 2010 to 2017. The results for the whole sample show CSR significantly reduces firm value. Additionally, there are no significant differences for the effect of CSR on firm value between state owned enterprises (SOEs) and non-SOEs or sensitive industry and non-sensitive industry. To explore whether the relationship changes over time, we divided the period into two sub-periods. During 2010–2014, the results are similar with those obtained by the whole sample. However, the results significantly change during 2015–2017. Specifically, the negative and significant relationship between CSR and firm value becomes non-significant in the second sub-period. Compared to the weakening effect of CSR for non-SOEs on firm value, CSR for SOEs alleviates the effect, and CSR of SOEs increases firm value significantly. Similar results are obtained for non-sensitive industry and sensitive industry. The changes are the result of increasing awareness by government, companies, and investors on sustainable development after 2015. This finding enriches the research on the dynamic effect of CSR on firm value in developing countries.
Highlights
Nowadays, sustainable development has been an essential part of government governance and enterprise development, and been an academic focus
We explore the relationship between Corporate Social Responsibility (CSR) of companies listed in China and their firm value based on the ESG score provided by Bloomberg [10,11,12,13] from 2010 to 2017
Based on the reality that Chinese government value quantitatively leapt more than qualitative improvement a few years earlier, and the regulation is not in place for sensitive industries, we suppose that the firms with higher CSR performance may bear a lot of costs, which will have a negative effect on firm value
Summary
Sustainable development has been an essential part of government governance and enterprise development, and been an academic focus. Whether the above impact changes over time with the rapid development of CSR practice, especially after the year 2015 when the economic environment, capital market, and regulatory policy in China changed significantly. To address these questions, we explore the relationship between CSR of companies listed in China and their firm value based on the ESG score provided by Bloomberg [10,11,12,13] from 2010 to 2017. We explore the impact of CSR of Chinese listed companies on firm value by different perspectives with the latest data, such as firm ownership (SOEs or non-SOEs), firm industry (sensitive industry or non-sensitive industry), and different time periods.
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