Does CSR Moderate the Relationship between Corporate Governance and Chinese Firm’s Financial Performance? Evidence from the Shanghai Stock Exchange (SSE) Firms

Rizwan Ali, Muhammad Safdar Sial, Talles Vianna Brugni, Jinsoo Hwang, Nguyen Vinh Khuong and Thai Hong Thuy Khanh
Additional contact information
Rizwan Ali: School of Electronic Commerce, Wuhan Technology and Business University, Wuhan 430065, China
Muhammad Safdar Sial: Department of Management Sciences, COMSATS University Islamabad (CUI), Islamabad 44000, Pakistan
Talles Vianna Brugni: Accounting Department, FUCAPE Business School, Av. Fernando Ferrari, 1358, Boa Vista, Vitória–ES 29075-505, Brazil
Jinsoo Hwang: The College of Hospitality and Tourism Management, Sejong University, 98 Gunja-Dong, Gwanjin-Gu, Seoul 143-747, Korea
Nguyen Vinh Khuong: Faculty of Accounting and Auditing, University of Economics and Law, VNU-HCM, Ho Chi Minh City 700000, Vietnam
Thai Hong Thuy Khanh: Faculty of Finance and Accounting, Nguyen Tat Thanh University, Ho Chi Minh City 700000, Vietnam

Sustainability, 2019, vol. 12, issue 1, 1-17

Abstract: We have performed a focalized investigation to explore how corporate social responsibility (CSR) moderates the relationship between corporate governance and firms’ financial performance. We applied a panel regression to examine this relationship from a sample of 3400 Shanghai Stock Exchange (SSE) listed firms, based on yearly observations from 2009 to 2018. Our results show that the presence of female directors on the board is associated with improved firms’ performance and that corporate social responsibility (CSR) moderates this relation, thus indicating that sharing strategic decision-making with female board members revealed a better relationship between CSR and firms’ financial performance. Our findings showed that foreign institutional investors positively influenced firms’ financial performance and that CSR moderates the relation between foreign institutional shareholders and the firm’s financial performance. Supported by corporate governance theories, such as resource dependence and stakeholder theory, our results help to better understand the nexus among corporate governance, firms’ performance and corporate social responsibility. These findings are advantageous to government departments in emerging countries in terms of encouraging marketing practitioners and participants to implement CSR practices and change the attitude associated with CSR implications. This study highlighted the problems of the foreign institutional investors’ scheme, which was the main contribution to the financial market reform of China after 2003. These findings offer significant implications to corporate affairs executives and managers, practitioners, academicians, state officials, and policy-makers, and might provide China with the opportunity to extend its market liberalization to the global markets. This research also contributes to the existing literature, which investigates how CSR moderates the relationship between corporate governance and firms’ financial performance in the Chinese market context.

Keywords: corporate social responsibility (CSR); corporate governance; female directors; foreign institutional investors; Chinese firms’ financial performance (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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