Higher Corporate Social Responsibility Research Articles

Green credit policies and heavily polluting enterprises’ maturity mismatch between investment and financing: a difference-in-differences approach

ABSTRACT Taking the Green Credit Guidelines as a natural experiment, we explore the effect of green credit policies on heavily polluting enterprises’ maturity mismatch between investment and financing using the difference-in-differences method. We investigate the influencing mechanism of green credit policies on heavily polluting enterprises’ maturity mismatch in investment and financing from the new perspective of overinvestment. We find that green credit policies alleviate heavily polluting enterprises’ maturity mismatch between investment and financing by inhibiting overinvestment. In addition, we find that the effect of green credit policies on the maturity mismatch between investment and financing is more significant for the enterprises in the cities with higher digital financial inclusion, higher corporate social responsibility, and higher green innovation. Further, we find that green credit policies can help promote heavily polluting enterprises to increase green investment.

HOW DOES CSR STRATEGY IMPACT CORPORATE CASH POLICY IN EMERGING MARKETS? EVIDENCE FROM THE COVID-19 OUTBREAK

This study investigates the impact of corporate social responsibility (CSR) strategy on corporate cash policy in emerging markets, with a specific focus on the COVID-19 pandemic period. By analysing data from 7,731 firm-years across 30 developing countries during the period 2002-2021, the study finds that CSR has a negative effect on cash holdings. In other words, firms with lower CSR investment tend to hold more cash. However, an interesting finding is that the negative impact of CSR on cash holdings lost its significance during the COVID-19pandemic. This suggests that during this unprecedented period of economic uncertainty and disruption caused by the pandemic, firms with higher CSR were more inclined to hoard cash as a precautionary measure. In contrast, in normal times, the dominant motive for holding cash appears to be related to agency concerns. Furthermore, the study identifies countryspecific variations in the relationship between CSR and cash holdings. For instance, firms in Brazil and Saudi Arabia tend to use cash retention as a response to higher CSR, while firms in Argentina, Malaysia, Mexico, Poland, Taiwan, and Turkiye exhibit the opposite behaviour, using higher CSR as a signal for reduced cash holdings. Additionally, the study sheds light on industry-specific differences in the relationship between CSR and cash holdings. Beverage, construction and material, industrial material, oil, gas, and coal, technology hardware and equipment, telecommunications service provider, and travel and leisure firms are more likely to use cash holdings as a substitute for CSR, while alternative energy and media firms show the opposite pattern, using higher CSR as a signal for reduced cash holdings.

Compromise in hard times? The impact of deglobalization on corporate social responsibility in the US–China supply chain

AbstractThis study examines the effect of the US–China trade tensions on the corporate social responsibility (CSR) performance of the Chinese suppliers most affected by the 2018 US tariff surges. Using a difference‐in‐differences approach, we find that Chinese suppliers with direct US corporate customers experience a significant decline in CSR performance, compared with their peers without direct US corporate customers. We also show that the adverse effect of tariff surges on Chinese suppliers’ CSR performance is concentrated among those with a strong cost leadership strategy. However, the CSR performance of Chinese suppliers that have direct US corporate customers with high CSR awareness is not affected by the tariff surges. Further analyses reveal that the negative effects of the trade tensions on CSR performance are felt most strongly by the employees of Chinese suppliers. Taken together, despite the challenges posed by the deglobalization wave to the diffusion of CSR across global supply chains, the increasing demand for CSR involvement from US corporate customers can exert significant pressure on Chinese suppliers’ CSR performance.

Digital transformation and governance heterogeneity as determinants of CSR disclosure: insights from Chinese A-share companies

Purpose In this fast-changing world, digitization has become crucial to organizations, allowing decision-makers to alter corporate processes. Companies with a higher corporate social responsibility (CSR) level not only help encourage employees to focus on their goals, but they also show that they take their social responsibility seriously, which is increasingly important in today’s digital economy. So, this study aims to examine the relationship between digital transformation and CSR disclosure of Chinese A-share companies. Furthermore, this research investigates the moderating impact of governance heterogeneity, including CEO power and corporate internal control (INT) mechanisms. Design/methodology/approach This study used fixed effect estimation with robust standard errors to examine the relationship between digital transformation and CSR disclosure and the moderating effect of governance heterogeneity among Chinese A-share companies from 2010 to 2020. The whole sample consists of 17,266 firms, including 5,038 state-owned enterprise (SOE) company records and 12,228 non-SOE records. The whole sample data is collected from the China Stock Market and Accounting Research, the Chinese Research Data Services and the WIND databases. Findings The regression results lead us to three conclusions after classifying the sample into non-SOE and SOE groups. First, Chinese A-share businesses with greater levels of digitalization have lower CSR disclosures. Both SOE and non-SOE are consistent with these findings. Second, increasing CEO authority creates a more centralized company decision-making structure (Breuer et al., 2022; Freire, 2019), which improves the negative association between digitalization and CSR disclosure. These conclusions, however, also apply to non-SOE. Finally, INT reinforces the association between corporate digitization and CSR disclosure, which is especially obvious in SOEs. These findings are robust to alternative HEXUN CSR disclosure index. Heterogeneity analysis shows that the negative relationship between corporate digitalization and CSR disclosures is more pronounced in bigger, highly levered and highly financialized firms. Originality/value Digitalization and CSR disclosure are well studied, but few have examined their interactions from a governance heterogeneity perspective in China. Practitioners and policymakers may use these insights to help business owners implement suitable digital policies for firm development from diverse business perspectives.

Impact of target firm’s social performance on acquisition premiums

This study investigates whether a target firm’s corporate social responsibility (CSR) influences the acquisition premium paid by an acquirer. Using the US public mergers and acquisitions (M&A) deals, this study finds that acquisition premium increases as targets’ perceived CSR quality increases, an effect incremental to previously documented drivers of such premiums. Additional findings reveal that the positive association between targets’ CSR quality and acquisition premiums is stronger for large targets and acquirers with high CSR performance. The study also documents that targets’ environmental performance has the strongest effects on acquisition premiums compared to other dimensions of CSR such as community, employees, diversity, or product. This study contributes to the literature by documenting the value of CSR in an unconventional manner using evidence from the M&A market. The findings are robust after controlling for the target-specific, acquirer-specific, deal-specific, and macro-economic variables and by using different proxies for CSR and acquisition premiums.

Entry accommodation strategies in a shipping supply chain with corporate social responsibility

Carriers often enter new shipping markets and undertake corporate social responsibility (CSR) activities to attract more shippers. CSR generally refers to the integration of social and environmental factors by a firm into its business decision-making. This paper constructs a shipping supply chain composed of one port, one carrier, and one potential entrant carrier, where both carriers are committed to CSR activities. Two possible channel structures of the incumbent supply chain are considered: centralization and decentralization. Under both structure settings, we study the entry strategy of the entrant, accommodation strategy of the port, and impacts of entry on consumer surplus and social welfare. Our results show that (i) the entry and accommodation strategies depend on the CSR levels of carriers; (ii) downstream entry improves social welfare under centralization but may decrease it under decentralization; (iii) the entrant has more incentive to enter under decentralization than under centralization when the incumbent carrier has a high CSR level. However, the port might have less incentive to accommodate entry under decentralization; (iv) channel decentralization may improve consumer surplus and social welfare when the port accommodates the entry, while hurts these when the port deters the entry. Additionally, we find that under the case of endogenous CSR level, the entry and accommodation strategies depend on the CSR investment cost coefficient; and the entrant has a stronger entering incentive under uniform pricing than under differentiated pricing if the incumbent carrier has a low CSR level.

Social Impact of Corporate Social Responsibility: A Case Study of Selected Public Sector Undertakings

This study analyses the social impact of Corporate Social Responsibility (CSR) spending undertaken by the major Public Sector Undertakings (PSUs) in India. An attempt has been made to measure the social impact of CSR spending on selected PSUs by taking suitable proxies. A comparative study of the social impact of the selected PSUs with respect to CSR spending has been made by four-quadrant approach, taking high and low CSR spending and high and low social impact after normalising the data. Multiple regression analysis is used to measure the social impacts of different CSR activities. CSR activities have been ranked in terms of their social impact.

Are country-level political uncertainty and power distance important to the CSR-audit report lag nexus? Evidence from the GCC region

ABSTRACT This study examines the effect of corporate social responsibility (CSR) performance on audit report lag and whether political uncertainty and power distance levels impact such association. We find that audit report lag is significantly lower for firms with a high CSR performance. We further find that the impact is evident only for large firms and those whose financial reports are audited by highquality auditors. However, our analysis suggests that political uncertainty and power distance intensity do not moderate the association between CSR performance and audit report lag. Our results remain robust after excluding some control variables, addressing the endogeneity issues, and using alternative audit report lag measures. This study contributes to audit delay literature by recognising CSR practices as a determinant of audit report lag in the GCC setting. The findings of this study carry valuable practical implications for regulatory bodies, policymakers, investors, and managers in the GCC region.

Can CSR mitigate negative regional public sentiment? Evidence from major violent crimes in China

In the information age, major negative events can spread quickly and affect investors' perceptions and decisions. Using data on major violent crime events in China, we investigate the role of corporate social responsibility (CSR) in mitigating negative regional public sentiment. We find that firms with high CSR performance have better stock returns on event days. We also find that investors react more positively to firms engaging in technical CSR activities (those targeting a firm's primary stakeholders) than to those engaging in institutional CSR activities (those serving the public). Moreover, this effect is more pronounced in firms with better internal control and higher information transparency. This study documents the positive role of CSR in securing firm value in the face of negative public sentiment.

Independent directors' ownership and CSR performance: the moderating roles of factors impacting directors' attention

PurposeThis study aims to examine the impact of independent directors' ownership on corporate social responsibility (CSR) performance. In line with the stakeholder-agency paradigm's prediction, the authors propose that higher independent directors' ownership is associated with higher CSR performance. By drawing on the attention-based view, the authors further examine firm-level conditions that impact the situated attention of independent directors holding high equity ownership as they are active agents.Design/methodology/approachThe authors collected data covering the years 2009–2013 for firms listed in the S&P 500 index. The authors tested the hypotheses using firm fixed-effects models.FindingsThe results show that higher independent directors' ownership is associated with higher CSR performance. Prior firm performance and available slack resources are found to have diverse impacts on the association between independent directors holding high equity ownership and CSR performance.Originality/valueThis study highlights the importance of examining the performance-based incentives of independent directors on firms' CSR performance. This study also provides a better understanding of factors impacting independent directors' situated attention as boundary conditions.

Is unfit CSR novel? Exploring the impact of CSR knowledge, brand–cause fit, and perceived novelty on consumer response

Three experimental studies were carried out to understand how consumer knowledge of corporate social responsibility (CSR) affects their responses to a brand’s social initiatives for high versus low brand–cause fit. Studies 1 and 2 examined the effects of subjective CSR knowledge on consumer responses. Study 1 indicated that consumers with low CSR knowledge showed more favorable responses to high brand–cause fit CSR, whereas consumers with high CSR knowledge preferred low brand–cause fit CSR. In Study 2, the perceived novelty of a brand’s CSR initiative mediated the interaction effect on attitudes toward advertisements and brands. Study 3 replicated the results of Study 2 using a real brand and measuring objective CSR knowledge. The findings of the three experimental studies provide both theoretical and practical insights into how consumers’ knowledge of CSR affects their response to CSR initiatives, especially regarding different types of brand–cause fit.

An empirical study on the cushioning effect of corporate social responsibility on the negative impact of COVID‐19 on firm performance

AbstractEmbedded in the legitimacy and stakeholder theories in the context of corporate social responsibility (CSR), this study investigates the impact of COVID‐19 on firm performance, and the cushioning effect of CSR on the relationship between COVID‐19 pandemic and firm performance. The sample covers non‐financial firms listed on the Johannesburg Stock Exchange (JSE), South Africa. Data covering the period 2018–2021 were analyzed using multivariate linear fixed‐effect regression techniques. COVID‐19 has had a negative impact on firm performance, proxied by Tobin's Q and Sales Turnover, while CSR has a positive impact on firm performance. We also found that the negative impact of COVID‐19 on firm performance differs between high and low CSR performing firms. Additionally, based on an industry‐level analysis, we provide insight into the most affected and most resilient sectors. The findings should motivate more firms to take CSR issues more seriously and adopt such practices as part of their long‐term strategic tools to gain competitive advantage and enhance profitability in the long run.

Effect of Corporate Social Responsibility on Portfolio Performance: Evidence From Turkey

This study investigates the performance of corporate social responsibility (CSR) portfolios based on ESG scores of stocks traded in Borsa Istanbul (BIST). It also evaluates the performance of a trading strategy that represents buying portfolios that include companies with high CSR performance and selling portfolios comprising companies with low CSR performance. Therefore, two portfolios with high and low CSR performance were formed from stocks traded in Borsa Istanbul. These portfolios’ performances were compared from July 2010 to June 2020. The findings show that the alpha coefficient of the portfolio containing stocks of companies with high CSR performance is generally positive and significant. Thus, companies’ past CSR performances provide valuable information for investors. Additionally, based on this, investors can achieve a superior performance against the market. However, the alpha of the difference portfolio, which shows the difference between the two portfolios’ performance, is, in most cases, insignificant. This suggests that there is no proof that the portfolio comprising companies with high CSR performance is superior to the portfolio including companies with low CSR performance. These findings are supported by additional testing. Consequently, our result provides supporting evidence for the “no effect” hypothesis.

Does country sustainability improve firm ESG reporting transparency? The moderating role of firm industry and CSR engagement

Sustainable development is a crucial topic of public debate, and the private sector is essential to achieving the United Nations' 17 Sustainable Development Goals (SDGs). Previous research has shown that Environmental, Social, and Governance (ESG) reporting can encourage firms to better integrate sustainability in their strategy. In such context, this study investigates the relationship between a country's SDG achievements and firms' engagement in ESG reporting by analysing a large sample of 1327 firms in 14 countries from 2016 to 2020. Our main finding reveals a significant positive relationship between a country's SDG achievement and firms' ESG disclosure transparency scores. This effect is particularly strong for firms in light industries, firms with a higher Corporate Social Responsibility (CSR) engagement, and those with the presence of women on their boards of directors. We conducted multiple sensitivity analyses, and our findings are robust, which can provide useful recommendations for firms, investors, and policymakers.

Not all stakeholders are equal: Corporate social responsibility variability and corporate financial performance

AbstractThe advocates of “doing well by doing good” have advised firms to invest in corporate social responsibility (CSR), but firms may get lost on how to invest their limited resources in it since CSR is a complex concept involving many activities and different types of stakeholders. In this work, we draw upon the perspective of stakeholder saliency and the stakeholder resource‐based view (SRBV) to propose that stakeholders may have different levels of expectations for CSR and contribute to firm value creation differently. Therefore, firms using different CSR to treat different stakeholders (high CSR variability) will have better financial performance. We further propose that context, in particular media coverage and state ownership, moderates the relationship between CSR variability and firm performance, as stakeholders of highly visible firms and state‐owned enterprises (SOEs) may frown upon a discriminate treatment in CSR. Findings based on a sample of 3313 publicly listed firms and 15,324 firm‐year observations in China's stock markets during the 2010–2018 period provide good support for our predictions.

Examining the effects of CSR on organizational attractiveness: perception study of job seekers in India

PurposeThe purpose of this paper is to study the effect of corporate social responsibility (CSR) effectiveness on job seekers’ organizational attractiveness (JSA). Deriving inspiration from Carroll’s theory, the study specifically tries to measure the impact of CSR on JSA with the four dimensions pertaining to economics (PECO), pertaining to legal compliance (PLCO), pertaining to ethics (PETH) and pertaining to philanthropic (PPH). Furthermore, the paper also tries to examine the moderating role of company selection (COM SEL) done based on high or low CSR reputation and JSA.Design/methodology/approachManagement and engineering students enrolled in premier institutions and universities of Western Odisha in India are surveyed for their perceptions of CSR and JSA. Purposive and convenience sampling are applied to collect data from 456 job seekers. Based on the analysis, the study proposes two main models (Models 1 and 2) wherein Model 1 tries to measure the effect of CSR on JSA and Model 2 checks the moderating effect of COM SEL on CSR and JSA. In addition, robustness of the study is tested using control variables (Models 3 and 4). Data is treated through SmartPLS 3.3 software. The structural equation modelling (partial least squares-SEM) method is applied to test the hypotheses and for further analysis.FindingsThe result reveals an interesting insight. There is a positive and significant effect of PECO, PLCO and PPH on JSA. Moreover, no such significant effect is observed between PETH and JSA. Further, the findings are contrary with respect to COM SEL, that partially moderates the effect of CSR on JSA. However, the results reveal that COM SEL has a substantial moderating effect on the PPH dimension of CSR and JSA.Practical implicationsThe results highlight that CSR positively and significantly affects JSA in terms of PECO, PLCO and PPH, thereby emphasizing that organizations must be more focused on these perspectives of CSR. Further, though the results did not exhibit any significance with PETH, it is essential that organizations should strengthen the ethical aspects of CSR as well and align them with the CSR strategic actions. The study also confirms the moderating effect of COM SEL on PPH dimension of CSR and JSA, thereby supporting the philanthropic approach in this domain. Further, the organizations should foresee the philanthropic factor of CSR as a competitive advantage to attract potential job seekers.Originality/valueThis research attempts to contribute to CSR and HR literature in two ways. First, it is the first attempt to use PLS-SEM with an attempt to understand job seekers’ perception of CSR and JSA with Indian data consisting of students belonging to premier business management and engineering institutes. Second, the study is an attempt to empirically measure the moderating effect of COM SEL on JSA. To sum up, the study will provide insights to organizations to help craft CSR strategies for attracting more job seekers.

Pricing and corporate social responsibility investment strategies for a manufacturer under information asymmetry

AbstractWe consider a supply chain comprising a dominant manufacturer and a supplier where both firms are socially concerned. The corporate social responsibility (CSR) cost of the supplier is private information. The manufacturer can determine its sales price before the supplier starts production (committed pricing) or postpone its pricing decision until after receiving components from the supplier (noncommitted pricing). Moreover, the manufacturer can determine its CSR investment level before (ex ante CSR investment) or after (ex post CSR investment) the supplier. Four scenarios are investigated to examine the optimal pricing and CSR investment strategies of the manufacturer. We find the following: First, under a noncommitted pricing strategy, the manufacturer always prefers ex post CSR investment. However, the reverse holds under the committed pricing strategy. Second, under the ex post CSR investment strategy, committed pricing benefits the manufacturer for most parameter combinations whereas noncommitted pricing benefits the manufacturer when facing consumers with high CSR awareness and low price awareness. Under the ex ante CSR investment strategy, the manufacturer always prefers committed pricing. Finally, the joint committed pricing with ex ante CSR investment strategy is optimal for the manufacturer.

The Moderating Role of Online Social Media in the Relationship between Corporate Social Responsibility Disclosure and Investment Decisions: Evidence from Egypt

Despite the spread and progress in the literature related to the disclosure of corporate social responsibility (CSR) performance around the world as one of the most essential tools for achieving sustainable development in society, its value relevance is still uncertain. Using a survey approach involving investors dealing in stocks of 60 enterprises listed on the Egyptian Stock Exchange (EGX) and included in the environmental, social, and governance index (S&P/EGX ESG index) and the equal-weight index (EGX100 EWI index), we empirically examine the importance of CSR financial performance disclosure by examining the extent to which it can influence investors’ choices. In addition, we assess whether company reputation acquired through online social media (OSM) influences the extent to which CSR performance disclosure influences such judgments. To examine these matters, we conduct two tests: the first examines the influence of disclosure of company environmental activities on investors’ decisions and the other examines the influence of disclosure of company social activities on investor decisions. Turning to our key results, we find that investment decision makers in both experiments tend to invest only in companies that have higher CSR performance scores. In the context of OSM, we provide and discuss empirical evidence that investment decision makers are more responsive to investing in companies included in the S&P/EGX ESG index, which have a positive e-reputation for CSR performance, than companies included in the EGX100 EWI index, which do not have such a reputation, which confirms that e-reputation, as one of the most important outputs of OSM, has a marginal impact on investment decisions and moderates the relation between disclosure of high CSR scores and investors’ decisions. Therefore, this paper presents a modern starting point for CSR experts and academics, particularly in the emerging markets. In general, our paper expands the CSR-related investment literature. In line with the affect-as-information theory, our paper also expands the OSM literature by indicating that the effects of OSM depend on the information context, where failure to provide information to investors or other stakeholders in a timely manner may render the information useless.

The Dual Effect of Participation Level on Consumer Participation in Participatory CSR: The Role of CSR Fit and Social Support

Corporate social responsibility (CSR) provides companies with two benefits: creating social value and strengthening consumer relationships. Companies implement various types of CSR to maximize the positive effects of CSR, participatory CSR being one of these types. However, although the number of companies using participatory CSR in practice is increasing, academic interest in the effectiveness of participatory CSR has been insufficient. In particular, prior studies on the consumer perception of the participation level presented in participatory CSR do not show clear results. This study examines the influence of the participation level based on CSR fit and social support. The results of this study indicate that when there is a high CSR fit, consumers perceive the participation level as a benefit. However, when the CSR fit is low, consumers perceive the participation level as a cost. Additionally, the results show that the interactive effect of the participation level and CSR fit occurs only when there is less social support. When there is strong social support, consumers perceive the participation level as a benefit regardless of the CSR fit. Finally, the academic and practical implications of the results of this study are presented.

Corporate Social Responsibility and Tax Avoidance: Evidence from the 2018 Tax Reform in Taiwan

This paper examines the relation between corporate social responsibility (CSR) performance and corporate tax avoidance in the context of Taiwan’s change from an imputation to classical tax system in 2018. Using a sample of 1,277 listed firms from 2015 to 2020, I determine that, after 2018, firms engage in tax avoidance to a greater extent. Furthermore, firms that perform well in CSR are less likely to engage in tax avoidance. After the 2018 legislative change, firms with high CSR performance are less likely to engage in tax avoidance to a greater extent. These results are consistent with the stakeholder theory and withstand a battery of robustness checks.