The effect of ultimate owner and regulation policy on corporate social responsibility information disclosure: Evidence from China

Abstract

In the process of economic development, how to achieve the goal of harmonious development between society and companies is an important issue for the government. In China, the government ultimately owns more than half of the listed companies. Thus, the government plays a critical role in firms’ disclosure of social responsibility information. Although, the Chinese government enacted such disclosure policies in 2006, there are some slight differences in the details between the Shenzhen Stock Exchange and the Shanghai Stock Exchange. It provides us with a unique context to test the effectiveness of explicit regulation policy. Thus, this paper investigated the impact of ultimate owner and regulation policy on the social responsibility reporting of publicly listed companies. Using the sample of 446 listed companies that disclosed the social responsibility and ultimate owner information in Shanghai and Shenzhen Stock Exchange, this paper found that firms under the two stock exchanges do report differently on social responsibility. Besides, compared with voluntary disclosure firms, those under mandatory disclosure requirements do provide more social responsibility information. In addition, it was found that state ownership and voting rights have a positive effect on the disclosure of social responsibility information. Key words: Regulation policy, ultimate owner, social responsibility, information disclosure.