Abstract
This paper employs the data of corporate social responsibility rating score of A-share listed companies in China from 2009 to 2018 as a sample to verify the impacts of foreign ownership on corporate social responsibility. Furthermore, this paper explores the moderating role of legal institutional distance and economic institutional distance in the impact of foreign ownership on corporate social responsibility. The empirical results of panel data models show that: Firstly, foreign ownership has a significant positive impact on corporate social responsibility. Secondly, legal institutional distance and economic institutional distance have a positive moderating role in the impacts of foreign ownership on corporate social responsibility. The results of propensity score matching, two-stage least squares and alternative variables methods also give strong backing to the above conclusions. Finally, this paper puts forward that China’s listed companies are supposed to make full use of the supervision power of foreign ownership to promote corporate social responsibility.
Highlights
The traditional profit maximization goal of companies leads to a whole string of social problems, such as employee rights and interests, food safety and quality and environmental pollution, which impede the healthy pullulating of companies
The interaction coefficient is significant and positive (p < 0.01), documenting that economic institutional distance promotes the positive impact of foreign ownership on corporate social responsibility (CSR)
The results in Column 2 of Table 6 demonstrate that the coefficient of FO × Legal Institutional Distance (LD) is 164.304 and significant at the 5% level, proving that legal institutional distance promotes the positive impact of foreign ownership on CSR
Summary
The traditional profit maximization goal of companies leads to a whole string of social problems, such as employee rights and interests, food safety and quality and environmental pollution, which impede the healthy pullulating of companies. With the processive strengthening of global economic communications, the institutional distances among countries will affect the flow of information and capital in different countries, affecting the strategic decision-making and value of companies. How to use foreign capital to achieve better implementation mechanism of CSR and how to carry out CSR activities according to the characteristics and attributes of foreign investors are of great significance to the sustainable development of enterprises and society (Wang and Lee [7]). The conclusions can provide theoretical guidance for China to formulate relevant policies to manage the entry of foreign investment This makes good sense for improving the CSR performance of companies with foreign ownership and promoting sustainable development.
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