The impact of explicit CSR regulation: evidence from China’s mining firms

Abstract

Purpose– With its rapid economic expansion and its growing environmental and social issues, China has introduced explicit corporate social responsibility (CSR) regulations since 2006 as part of its social harmony policy. The purpose of this paper is to examine the CSR disclosure practices of the historically unaccountable mining firms in China’s current regulatory context.Design/methodology/approach– The sample covers all 60 listed mining firms on the Shanghai and Shenzhen Stock Exchanges between 2007 and 2012, totalling 360 firm-year observations. The authors adopt the “Chinese CSR Report Preparation Guide” as the benchmark for content analysis. To strengthen the analysis, the authors apply binary logistic regression with the determinants of state government, social responsibility index, and cross-listing overseas status.Findings– The authors discover that mining firms rapidly adopt CSR disclosure in response to the regulatory pressures from the state government and the stock exchanges to maintain legitimacy and survival prospects. However, the quality of CSR disclosures becomes a new concern.Research limitations/implications– The most environmentally and socially sensitive mining sector can provide good samples of firm CSR practice in the second largest economy. Although mandatory requirements may result in the firms’ passive compliance, strict regulation is still the key to the changes in corporate accountability and transparency. China may need to strengthen its CSR regulation for its sustainable growth in the coming Asian Era.Practical implications– In the institutional context of China, the imposition of strict regulation seems to be the key to improving CSR practice. However, the mandatory requirements may also result in passive compliance without effective change in corporate accountability and transparency. The sustainable development of the mining sector and advocacy of CSR behaviour require cooperation at national, social and corporate levels.Originality/value– This study contributes to the evolving CSR literature about China and the literature from an industry perspective where governance and regulation are highly influential. The methodology may also enrich future research in the area with a fairly long sample period.