Does internationalization matter for corporate social performance of Chinese firms?

Abstract

AbstractThe purpose of this paper is to explore the relationship between the internationalization of Chinese firms and their corporate social performance (CSP), a topic that remains largely unexplored for Chinese firms. Based on a sample of 325 firms listed on the China A‐shares market from 2010 to 2017, we find a positive relationship between the degree of internationalization (DOI) and CSP of Chinese firms. A positive relationship is also confirmed between corporate financial performance (CFP) and CSP in Chinese firms. However, we find that the interaction between CFP and DOI correlates negatively with CSP, indicating that during internationalization, CFP might not be conducive to improving CSP. Most listed firms in China are state‐owned enterprises (SOEs), and we find that their CSP is inferior to that of non‐SOEs. Finally, we find that hiring one of the four major accounting firms to conduct audits is conducive to a significant improvement in CSP. Managerial and policy implications derived from the results are discussed.