Can political connections promote corporate social responsibility? Evidence from targeted poverty alleviation programs

Chen Weng and Jie Chen

International Review of Financial Analysis, 2025, vol. 104, issue PA

Abstract: Using sample data of A-share listed companies in the Shanghai and Shenzhen Stock Exchanges from 2016 to 2020, this study empirically explores the impact of political connections on corporate fulfilment of social responsibility for targeted poverty alleviation based on the panel regression model. The results showed that political connections can effectively encourage enterprises to fulfil social responsibility for targeted poverty alleviation. We conducted multiple robustness tests using propensity score matching and instrumental variable methods to address the sample selection bias and endogeneity, changing the explained and explanatory variables, and adding regional control variables. The mechanism test showed that political connections encourage enterprises to fulfil their social responsibility for targeted poverty alleviation mainly by easing financing constraints and increasing government subsidies obtained by enterprises. Heterogeneity analysis showed that political connections significantly impact non-state-owned enterprises, firms with a shorter history, and higher managerial ownership. Therefore, the government should reasonably guide enterprises to fulfil their social responsibilities and actively serve the national rural revitalisation strategy by setting an example for entrepreneurs who contribute to poverty alleviation, reduce resource allocation intervention, optimise the business environment of enterprises, and appropriately provide resources to enterprises that actively participate in targeted poverty alleviation.

Keywords: Political connections; Targeted poverty alleviation; Social responsibility (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:104:y:2025:i:pa:s1057521925003515

DOI: 10.1016/j.irfa.2025.104264

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