 Corporate social responsibility, the cost of equity capital and ownership structure: An analysis of Chinese listed firmsShan Xu, Duchi Liu and Jianbai Huang Australian Journal of Management, 2015, vol. 40, issue 2, 245-276 Abstract: This study examines the effect of corporate social responsibility (CSR) towards primary stakeholders on the cost of equity capital in Chinese listed firms, and divides the sample into state-owned enterprises (SOEs) and non-state-owned enterprises (NSOEs) for comparison. We construct a set of CSR index systems to measure the quality of the CSR practices and use several approaches to estimate firms’ ex ante cost of equity capital. The results show that firms with higher CSR scores have significantly lower cost of equity capital. In particular, we find that investments in improving CSR towards investors make the greatest contribution to reducing firms’ equity financing costs, and the cost of capital effects of CSR is more significant in recessions than in economic booms. In addition, SOEs have better CSR and lower cost of equity capital than NSOEs, but the effect of CSR in reducing the cost of equity capital is greater for NSOEs than for SOEs. The findings suggest that CSR toward primary stakeholders can be profitable and beneficial to Chinese firms. Keywords: Chinese listed firms; corporate social responsibility; cost of equity capital; financial performance; ownership structure; stakeholder theory (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:40:y:2015:i:2:p:245-276 Access Statistics for this article More articles in Australian Journal of Management from Australian School of Business |
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