Abstract
This paper explores the impact of corporate social responsibility (CSR) and financial distress on corporate financial performance (CFP) in Chinese listed companies of the manufacturing industry. Covering a total of 1445 manufacturing observations from 2013 to 2018 by matching the China Stock Market & Accounting Research Database (CSMAR) and Ranking CSR Ratings (RKS) database and regression models, we find that CSR has a significant positive impact on CFP, and the relationship is more pronounced for firms that are more stable. Further, the win-win relationship of CSR and CFP is also stronger in state-owned enterprises (SOEs). These empirical results suggest that enterprises should actively embrace CSR in response to the call of the country. At the same time, corporate stability should be increased to enhance the role of CSR in promoting CFP. We provide a quantitative analysis of the CSR, CFP, and financial distress of listed firms, and help to alleviate managers’ concern of CSR fulfillment and risk control.
Highlights
In recent decades, social responsibility has become a key issue that cannot be ignored, but cannot get enough attention from developing countries [1]
The regression results show that the corporate social responsibility (CSR) is significantly positively correlated with Return on Assets (ROA) at the level of 0.01, and the correlation coefficient is 0.000835, indicating that CSR will significantly promote corporate financial performance (CFP)
Despite the abundant empirical evidence on the CSP–CFP relationship, few studies focus on the relationship between CSR and CFP and the role of financial distress in such a relationship in Chinese listed companies of manufacturing
Summary
Social responsibility has become a key issue that cannot be ignored, but cannot get enough attention from developing countries [1]. As the main supplier of global raw materials and commodities and the hub of the global supply chain, the fulfillment of corporate social responsibility (CSR) in China’s manufacturing industry is a valuable research issue. Would corporate financial performance (CFP) be hurt or promoted if firms pursue CSR activities? In order to rationalize CSR on reasonable economic grounds and alleviate the worries of managers, the relationship between the two is a hotly debated topic in research [2]. If the high cost of corporate social responsibility cannot bring economic benefits to an enterprise, any amount of appeal is just moral preaching [3]. The conclusion is still controversial among the classical theoretical and empirical research when it comes to the link between social responsibility and CFP. An increase in social spending will improve stakeholder relationships, which is conducive to reducing the social costs of Sustainability 2020, 12, 6799; doi:10.3390/su12176799 www.mdpi.com/journal/sustainability
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