Corporate Social Responsibility Performance Of Firms Research Articles

Board Gender Diversity and CSR Performance: Do Societal Harmony/Mastery Orientation and Cultural Tightness‐Looseness Matter?

AbstractThe purpose of this study is two‐fold: (1) to investigate the moderating effect of the cultural value orientation of harmony/mastery on the relationship between board gender diversity (BGD) and corporate social responsibility (CSR) performance; and (2) to examine further whether cultural tightness amplifies the moderating effect of harmony/mastery orientation. Using a sample of 5135 firms across 25 countries during the period 2002–2021, our interaction model run with panel regression showed that the association between BGD and CSR performance is positively (negatively) moderated by harmony (mastery) orientation. Moreover, our test of a three‐way interaction among BGD, harmony (mastery), and cultural tightness–looseness on CSR performance revealed that the moderating effect of harmony (mastery) orientation is amplified when cultural tightness increases. The findings suggest that harmony/mastery orientation matters more for the effects of BGD on firm CSR performance under tight cultural conditions. We discuss the theoretical and practical implications of the study.

De‐politicization and corporate social responsibility: Empirical evidence from China

AbstractGiven the lack of consensus in the existing studies about the impact of political resources on corporate social responsibility (CSR), we delve into this relationship and analyze the underlying mechanisms. To address the endogenous problems associated with political connection, this paper explores the consequence of de‐politicization and adopts an exogenous event in China. Results indicate that de‐politicization significantly enhances the CSR performance of firms. Specifically, de‐politicization can lead to a 1.474 increase in CSR scores. This finding is further supported by various robustness tests. Additionally, this paper probes into the reasons for the positive influence focusing on prerequisite and driving forces. For one thing, de‐politicization reduces the rent‐seeking expenses of politically connected firms, thereby granting these firms enough financial resources to improve their CSR performance. For another thing, CSR practices can convey positive information, improve financial performance, and enhance competitiveness, which motivates firms to actively participate in CSR issues to alleviate the adverse influence of losing political connection. This paper enriches the existing research on political connections and provides theoretical guidance and policy recommendations for improving CSR in developing countries.

Revisiting the nexus between corporate social responsibility and corporate value: Evidence from China

AbstractPurposeUnder the concept of sustainable development guided by ‘carbon peak’ and ‘carbon neutral’, corporate social responsibility (CSR) performance has become the focus of attention in all sectors of society. With the gradual deepening of China's ‘new economic normal’ development, firms face increasing environmental uncertainty in the market. This study aims to embed CSR, financial flexibility (FF), institutional investors (INST), and corporate value into the same theoretical framework and conduct heterogeneity analysis on the nature of property rights, heavily polluting industries, and marketisation level.Design/Methodology/ApproachBased upon the observation data of listed firms in Shanghai and Shenzhen A‐shares in China from 2011 to 2021, this study uses Stata software for data processing, analysis, and two‐stage least‐squares (2SLS) models to solve endogenous problems.FindingsThe research results show that improving CSR performance increases corporate value, while INST and FF moderate the relationship between them. Further heterogeneity analysis found that the nature of property rights, heavily polluting industries, and marketisation level have different impacts on these moderating effects. This result provides ideas for clarifying the economic impact of enhancing the firms' CSR performance in the current era.Originality/ValueFirst, from the standpoint of CSR performance, it enhances the literature on the key corporate values in China. Second, from the perspective of corporate value, it has enriched the CSR literature and provided a new perspective for further clarifying the significance of improving the CSR performance of firms at this stage. Third, from the perspective of INST and FF, this research examines the moderating mechanism of CSR performance on corporate value. Hence, it provides a reference for further improving the efficiency of resource allocation in the capital markets.

Do foreign institutions avoid investing in poorly CSR-performing firms?

We examine the impact of corporate social responsibility (CSR) on the investment decisions of foreign institutional investors. Using institutional investor holdings data domiciled in emerging markets, we find a positive and economically significant impact of firm CSR performance on foreign institutional ownership. We further document that independent foreign investors are affected by firm CSR performance, while gray foreign investors do not consider firm CSR performance when forming portfolios. Cross-sectional tests indicate a more potent positive impact of CSR on foreign institutional investor holdings for firms domiciled in countries with stronger disclosure and better governance. Moreover, investors domiciled in countries with common law consider firm CSR performance when forming portfolios. The results are robust to exogenous shocks, instrumental variable tests, and alternate specifications.

Circular economy practices and corporate social responsibility performance: the role of sense-giving

ABSTRACT The circular economy (CE) has recently emerged as an innovative business model for firms to transform corporate social responsibility (CSR) into actions. Existing research tends to examine the CSR advantages of short-term CE practice adoptions, remaining silent on the benefits and drivers of their long-term implementation. This study fills the gaps by investigating the impact of the long-term adoption of eco-design (ECO) and reverse logistic (RL) practices on firm CSR performance and exploring the moderating roles of four sense-giving activities. Using a balanced panel dataset of 132 manufacturing public firms in China and a fixed-effects model, we find that: 1) the frequency of ECO and RL practice adoptions significantly improves firm CSR performance; 2) goal setting for CE performance, CE education and training, and employee feedback on CE practices positively moderate the RL-CSR relationship, while employee feedback on CE practices positively moderates the ECO-CSR relationship. This study has significant implications for both research and practice in the increasingly important domains of CE and CSR management.

Do political incentives promote or inhibit corporate social responsibility? The role of local officials' tenure.

The existing literature on corporate social responsibility (CSR) drivers focuses on firm- and institution-level factors and rarely on the role of political incentives. Public officials control enormous resources in China, and their political incentives substantially shape certain firm behaviors. As CSR is one of the critical measures that the central government uses to evaluate the performance of local government, local officials have the incentive to channel firms into accomplishing their political goals. Correspondingly, local firms may strategically implement CSR to build a good relationship with local governments. This study investigates the impact of local officials' political incentives (measured by tenure) on firms' CSR. Using a panel of publicly listed Chinese firms covering 2009-2019, it documents a U-shaped effect of government officials' tenure on the CSR performance of firms within their jurisdiction. To wit, the firm's CSR decreases first and then increases with the growth of tenure. Moreover, this U-shaped effect will be strengthened in regions with a high priority of gross domestic product (GDP) growth and will be weakened in regions with good market development. In addition, there is no significant evidence that party officials' tenure affects firms' CSR. Overall, this study advances our understanding of the political determinants of CSR in emerging markets.

Politically connected independent directors are ‘helping hand’ and ‘grabbing hand’ for CSR performance of firms in Pakistan

This study aims to determine the impact of different categories of politically connected independent directors (PCOIDs) on corporate social responsibility (CSR) performance. Furthermore, the study identifies rent-seekers among different categories of PCOIDs. This study uses data on politically connected firms in Pakistan from 2008 to 2017. This study applies a two-step generalised method of moments (GMM) to capture the relationship between the corporate social responsibility performance of the firm and PCOIDs. The overall results suggest that PCOIDs and their category of ex-government officers seem to be non-rent-seekers for CSR performance. While the Ex armed officer’s category of PCOIDs not only serves as social capital for the CSR performance of the firm but also come in ‘helping hand’ and ‘grabbing hand’ scenarios of rent-seeking.

Executive alumni and corporate social responsibility in China

PurposeThis study investigates whether corporate executives, who are university alumni, influence each other's firm corporate social responsibility (CSR) performance.Design/methodology/approachDrawing on social network theory, the authors hypothesise that a firm's CSR performance is positively associated with its peer firms' average CSR performance when the executives of the firm and its peer firms are university alumni. The study employs data from 1,685 listed firms and 4,906 executives who graduated from 585 different universities in China and runs multivariate regressions.FindingsThe results reveal a sizeable university peer influence on CSR performance. Such influence is even stronger for executives who graduated from elite universities (e.g. 985 or 211 universities), and universities or programmes that provide more opportunities for alumni reunions or networking (e.g. MBAs/EMBAs). Executives who are more influential in making firm decisions (e.g. CEOs/CFOs), as well as firms that are more likely to mimic the behaviour of others, also show higher degrees of university peer influence.Practical implicationsThe results highlight the role of education in ethical decision-making.Originality/valueThis study documents evidence on a new determinant of firm CSR performance. The study sheds light on the impact of non-institutionalised personal ties, for example, university alumni networks, on CSR performance.

Chinese Merchant Group Culture, Corporate Social Responsibility, and Cost of Debt: Evidence from Private Listed Firms in China

Chinese merchant groups are commercial organizations that have developed over thousands of years. Given the importance of private firms to China’s sustainable development, this study investigates the impact of the traditional Chinese concept of merchant groups on corporate social responsibility (CSR) performance and cost of debt, using Chinese private listed firms during 2008–2020. We measure merchant group culture based on the company’s geographic location. Ordinary least squares regression models are used to test the hypotheses. According to the results, the CSR performance of firms from five traditional Chinese merchant groups is better than non-members. A positive relationship exists between the strength of merchant group culture and CSR performance; this relationship is stronger among merchant group companies. The closer the culture to CSR values, the better the CSR performance, which is negatively related to the cost of debt. The findings are in line with the peer effect theory. Therefore, the study provides evidence that it is essential to consider the traditional Chinese merchant group culture for firms’ CSR strategies beyond formal financial and regulatory factors in China. This study is a first step in exploring the impact of merchant group culture in China on CSR performance and the economic application of this relationship.

Teachers in the Top Management Team and Corporate Social Responsibility

Firms are required to consider all stakeholders’ interests and achieve coordinated development of the company, society, and the environment. Teachers are often associated with high moral standards and dedication to others. Top managers in the top management team (TMT) are responsible as corporate executives for corporate governance and outcomes. How top managers’ teaching experience affects corporate social responsibility (CSR) therefore becomes a meaningful question. Based on A-share listed firms in China from 2010 to 2019, we empirically analyze the effects of teachers as top managers on firm CSR performance. According to our sample, 13.75% of A-share listed firms have top managers with teaching experience in the TMT. We find that the occurrence of teachers in the TMT has a positive impact on CSR, especially on sub-indicators like shareholder responsibility; employee responsibility; supplier, customer, and consumer responsibility; and environmental responsibility. Firms with more teachers in the TMT exhibit higher CSR performance. Further results indicate that this effect is significant only when top managers are also directors on the board. We use the propensity score matching method to alleviate the endogeneity problem and obtain robust results.

How far the ownership structure is relevant for CSR performance? An empirical investigation

PurposeTaking hints from the lacunas in the field of ownership structure and corporate social responsibility (CSR) performance of the firms in India, especially when the moderating effect of certain corporate governance mechanism comes into play, this study aims to attempt to fulfill the gap by exploring the ownership structure of the firm (i.e. foreign ownership, institutional ownership and government ownership) and the CSR performance of the firm, when moderated by board independence of the firm. In an additional analysis, the study explores the non-linear effect of foreign ownership structure on the CSR performance in the Indian context.Design/methodology/approachThe study incorporates a strongly balanced panel data set of 280 non-financial National Stock Exchange 500 listed firms for the study period of 2013–2019. The study uses both static and Arellano–Bond dynamic panel model under generalized method of moments (GMMs) framework to establish the relationship between the studied variables.FindingsThe study acknowledges a positive impact of the foreign investors in the CSR performance of Indian firms with a higher proportion of independent directors on the board. The study further finds a contrarian role of government ownership in Indian context among the sampled firms. The study also in its extended analysis finds a non-linear inverted U-shaped relationship between foreign ownership (FO) and the CSR performance, which shows that FO positively impacts the CSR performance until a threshold level of 34% after which the curve starts declining.Practical implicationsOne of the major implications this study provides for the corporate policymakers is that the firms with a string penchant for philanthropic activities such as CSR should be concerned with attracting more foreign investors in their shareholding. Also, a higher proportion of independent directors on the board boost the engagement of the firm in CSR works.Originality/valueThe moderating effect of board independence in the ownership structure–CSR relationship attempted by this study is a rare attempt in a developing economy, such as India, and offers a fresh dimension to the study. Also, the non-linearity relationship between FO and the CSR performance and the threshold level providing the twofold effect of the variables is an innovative research attempt, especially in regard to a developing country like India.

Foreign direct investment and corporate social responsibility: evidence from South African listed firms

This study investigates empirically the impact of inward FDI on host firm Corporate Social Responsibility (CSR) performance in South Africa. The data used for the study was sourced from the Johannesburg Stock Exchange and the Public Investment Corporation Governance Survey index for a period of 3 years ranging from 2011 to 2013. The study employs Panel Corrected Standard Errors (PCSE) and Seemingly Unrelated Regression (SUR) to estimate the effect of FDI on CSR and thus addresses contemporaneous cross-correlations across the panel cross-sections as well as endogeneity between FDI and CSR. It is established from the study that FDI has a strong positive impact on firm CSR performance. When CSR is decomposed further into its major components, FDI positively impacts social and environmental components but has no impact on governance components.

Sustainability with high-speed rails: The effects of transportation infrastructure development on firms’ CSR performance

By using the unbalanced data of 1,433 listed firms from 2008 to 2018, this paper examines the relationship between high-speed rails (HSRs) and corporate social responsibility (CSR) in China. Building on institution theory and resource dependency theory, we argue that the development of HSRs can accelerate information flow and human mobility, thus improving the CSR performance of firms. The underlying mechanisms include public pressure and potential investment opportunities, which are associated with the intention to engage in CSR practices, and the diffusion of managerial practice, which is associated with the capability of implementing CSR practices. The relationship is moderated by resource dependence on external stakeholders. Specifically, when a firm perceives that it has strong capabilities and does not need to rely heavily on external stakeholders, the relationship between HSRs and CSR will be weakened. Moreover, when a firm operates in an uncertain and competitive environment, the positive impacts of HSRs on CSR implementation will be enhanced. Supplementary analyses based on firms’ sensitivity to public pressure, investment opportunities and diffusion of managerial practice also indicate that the HSR-effects in consumer-sensitive firms, younger firms, and firms with interlock board members are stronger.

Board reforms around the world: The effect on corporate social responsibility

AbstractResearch Question/IssueThis study examines the effects of major board reforms on firms' corporate social responsibility (CSR) performance in countries around the world.Research Findings/InsightsUsing a difference‐in‐differences design, we find robust evidence that worldwide board reforms can have significant effects on various stakeholders, resulting in increased firm CSR performance in both the environmental and social dimensions. Relative to countries that have implemented comply‐or‐explain reforms, countries with rule‐based reforms tend to drive the increase in CSR performance post‐reform. Our results hold for both first board reforms and major reforms, across different types of reforms, and across various dimensions of CSR performance. In addition, the effect of reforms on CSR performance is more pronounced for firms with higher levels of institutional ownership or lower levels of insider ownership and in countries with weaker CSR awareness and more stringent legal and regulatory environments. Further analyses show that reforms strengthen the relationship between CSR performance and future financial performance. Finally, we explore the possible mechanism through which board reforms could have a significant effect on firms' CSR performance. We find that board reforms increase a firm's likelihood of integrating CSR criteria in executive compensation.Theoretical/Academic ImplicationsThe findings of this study suggest that worldwide board reforms that aim to increase shareholders' value can also have significant effects on various stakeholders, resulting in increased firm CSR performance in both the environmental and social dimensions, a non‐financial dimension of firm performance.Practitioner/Policy ImplicationsOur evidence suggests that increases in CSR performance are an important channel through which board reforms can increase shareholder value. In addition, our findings suggest that the effectiveness of reforms on CSR varies with both firm‐ and country‐level characteristics related to the relative influence of external shareholders. Thus, this study offers insights to policy makers interested in enhancing CSR performance in their country.

Board Reforms around the World: The Effect on Corporate Social Responsibility

This study examines the effects of major board reforms on firms’ corporate social responsibility (CSR) performance in countries around the world. Using a difference-in-differences design, we find robust evidence that worldwide board reforms can have significant effects on various stakeholders, resulting in increased firm CSR performance in both the environmental and social dimensions. Relative to countries that have implemented comply-or-explain reforms, countries with rule-based reforms tend to drive the increase in CSR performance post-reform. In addition, the effect of reforms on CSR performance is more pronounced for firms with higher levels of institutional ownership or lower levels of insider ownership and in countries with weaker CSR awareness and more stringent legal and regulatory environments. Further analyses show that reforms strengthen the relationship between CSR performance and future financial performance. Finally, we explore the possible mechanism through which board reforms could have a significant effect on firms’ CSR performance. We find that board reforms increase a firm’s likelihood of integrating CSR criteria in executive compensation.

A Dual-Agency Model of Firm CSR in Response to Institutional Pressure: Evidence from Chinese Publicly Listed Firms

Findings from prior studies regarding the relationship between government corporate social responsibility (CSR) initiatives and firm CSR performance have been mixed. To address this research gap, w...

Information asymmetry in CSR reporting: publicly-traded versus privately-held firms

PurposeThis paper aims to investigate the motivations behind the publication of corporate social responsibility (CSR) reports, and particularly the effect of information asymmetry between firms and their owners.Design/methodology/approachA natural experiment contrasting the CSR reporting of private vs public firms is used to test whether the degree of information asymmetry is a significant factor in the decision to publish CSR reports. Using a hand-collected sample of the 239 largest US private companies matched with publicly-traded firms, the effect of these inherently different information environments on CSR reporting is tested through logistic regression. Factors suggested by stakeholder and legitimacy theories are tested for their differential impact on private vs public firms’ decisions to publish a CSR report.FindingsResults indicate that private firms are less likely to publish a CSR report than similar public firms. Public firms also follow Global Reporting Initiative guidelines more frequently, consistent with signaling report quality to dispersed investors. A subsample of private companies facing greater information asymmetry is found to be similar to public firms in their reporting behavior, reinforcing the link between information asymmetry and CSR disclosure. Further analysis suggests that non-owner stakeholders play an important role in private companies’ CSR reporting decisions.Practical implicationsIn addition to accounting and governance scholars, the findings should interest private firm managers preparing for an initial public offering (IPO), as the evidence suggests that CSR reporting is used to communicate information to dispersed investors. The insight into reporting motivations should be useful to accountants engaged in CSR consultation and assurance.Social implicationsWith the growing attention paid to the CSR performance of firms, demonstrated by the growth in socially responsible investing, the study provides evidence that effective communication of CSR information to investors may play a key role in CSR-engaged firms’ disclosure strategies.Originality/valueTo the best of the author’s knowledge, this study is the first to analyze the CSR reporting decisions of a large sample of publicly-traded and privately-held firms. The results add to our understanding of what motivates firms to publish CSR reports, highlighting the importance of information asymmetry between the firm and its owners.

Do institutional investors have homogeneous influence on corporate social responsibility? Evidence from investor investment horizon

PurposeThe purpose of this paper is to investigate the relation between the investment horizon of institutional investors and corporate social responsibility (CSR).Design/methodology/approachUtilizing unique datasets on CSR and the investor horizon measures (Gaspar et al., 2005), the authors categorize institutional investors into long-term and short-term investors. This method captures the heterogeneity of investors.FindingsThe authors show that long-term institutional investors promote CSR engagement, while short-term investors discourage it. The authors further document that shareholders’ ownership horizon has implications on corporate decisions in the CSR framework. The presence of long (short)-term institutional investors is positively (negatively) associated with dividend payout, discourages (encourages) managerial misbehaviors and enhances (reduces) firm valuation, only for firms with high CSR performance.Research limitations/implicationsDifferent from previous studies that treat institutional investors homogeneously, this paper provides empirical support that investors are indeed different in influencing CSR.Originality/valueFew prior studies address the question of whether active engagement by institutional shareholders on CSR issues differs by the types of institutional ownership. The study attempts to fill this gap by examining the effects of institutions’ investment horizon, one of the major ways to classify institutional shareholders, on the CSR performance of firms.

Corporate social responsibility performance of small and medium enterprises in regional Japan: an empirical examination

PurposeThis paper aims to examine the extent of corporate social responsibility (CSR) performance of small- and medium-sized enterprises (SMEs) in regional Japan. It also aims to examine the impact of firm size, industry, CSR awareness, firm origin and firm’s strategic focus on CSR.Design/methodology/approachThe study measures the CSR performance using a CSR index and seven sub-indexes designed on the global CSR standard – ISO26000. Data were collected through a questionnaire survey of 146 firms. The indexes were analysed using Kruskal–Wallis one-way ANOVA and Mann–Whitney U tests.FindingsThe results indicate that CSR performance of firms in regional Japan is low across all main areas of CSR and is significantly lower in SMEs relative to large firms. Further, CSR performance of SMEs differs across various industries and firms established in the region display significantly lower CSR performance compared to their metropolitan counterparts.Research limitations/implicationsLittle research exists on the role SME’s play in improving CSR practices in Japan, especially regarding SMEs in regional areas. The findings highlight the need for improving CSR performance of SMEs and promoting the use of ISO26000 as a guiding tool for measuring CSR performance.Originality/valueThis paper is one of the first papers that critically examine the CSR performance of SMEs in regional Japan. It highlights that despite the recent CSR boom and regulatory initiatives in Japan, CSR performance of SMEs in regional Japan remained low.

Investment Professionalss Use of Corporate Social Responsibility Disclosures

We conduct an experiment to examine investment professionals’ use of corporate social responsibility (CSR) disclosures when making personal investment decisions or Investment recommendations to clients. We predict and find that investment professionals are more willing to personally invest and recommend investment to a client when a firm discloses positive CSR performance than when it makes no CSR disclosures. Investment professionals’ decisions and recommendations are influenced by CSR disclosures both because, on average, they believe that better CSR performance results in better current and longer-term financial performance and because they value the societal benefits of CSR activities. We also find that Investment professionals’ general beliefs regarding whether CSR activities benefit society affect how they assess firms’ CSR performance and their view of the relation between CSR performance and financial performance. Finally, investment professionals’ experience appears to protect them from the potential biasing effect of appealing pictures that accompany many CSR disclosures.