Building trust after pollution emergency: A strategic perspective on corporate social responsibility

Yechi Ma, Yibing Ding, Zilong Wang and Wenjing Zhang

Energy Economics, 2023, vol. 126, issue C

Abstract: We use extreme regional pollution emergencies to provide new evidence regarding the motivations for corporate social responsibility (CSR). We document that local firms strategically improve CSR to build trust following pollution emergencies, and this is specifically true for highly polluting firms. Firms face different intensities of external pressure from their stakeholders. In particular, following pollution emergencies, political dependency, institutional investors and public monitoring are the main sources of stakeholder pressure and drivers of the increased CSR. We further find that firms that gain trust through CSR activities after pollution emergencies are rewarded. CSR serves as a buffer against financial constraints, financing distress and the negative profitability effect following emergencies. This study contributes to the CSR literature on trust-building-motivated CSR strategies.

Keywords: Extreme regional pollution emergencies; Corporate social responsibility (CSR); China (search for similar items in EconPapers)
JEL-codes: D22 G32 M14 Q53 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:126:y:2023:i:c:s0140988323004875

DOI: 10.1016/j.eneco.2023.106989

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