Financial regulation and corporate social responsibility: Evidence from China

Abstract

Corporate social responsibility (CSR) is a crucial force driving sustainable economic development. Against the backdrop of China's market transformation, scientifically studying CSR from the perspective of the capital market is crucial for promoting high-quality economic development. We investigate the impact of financial regulation on CSR through the difference-in-differences method. We discover that financial regulation significantly improves CSR. We further uncover that the mechanisms of reduced corporate financial assets and managerial myopia explain the increase in CSR, and analyze the heterogeneous effects on firms with different characteristics.