Do Reputation Incentives Matter? Busy Directors and Corporate Social Responsibility in China

Qi Wang (), Maoxia Sun and Kongwen Wang
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Qi Wang: Business School, Southwest University of Political Science and Law, Chongqing 401120, China
Maoxia Sun: Business School, Southwest University of Political Science and Law, Chongqing 401120, China
Kongwen Wang: Business School, Southwest University of Political Science and Law, Chongqing 401120, China

Sustainability, 2023, vol. 15, issue 6, 1-17

Abstract: This paper aims to examine the effect of busy directors on corporate social responsibility (CSR) based on their directorships’ reputation incentives. Using the panel data of Chinese-listed companies in the Shanghai and Shenzhen stock exchange between 2016 and 2021, fixed-effects panel regression analysis is employed as the empirical methodology. In so doing, we find that the effect of busy directors on CSR appears to be nonlinear. Then, by focusing on the relative size of the firms served by busy directors, our study further shows that busy directors can improve CSR in their relatively more prestigious directorships. Nevertheless, busy directors may induce negative CSR in their relatively less prestigious directorships. These results together identify reputation incentives as one factor in determining whether busy directors affect CSR. Therefore, we conclude that reputation is an effective mechanism that can motivate busy directors to monitor and advise CSR.

Keywords: corporate social responsibility; busy directors; reputation incentives (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
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