The impact of corporate social responsibility on corporate financialization

Kun Su and Yue Lu

The European Journal of Finance, 2023, vol. 29, issue 17, 2047-2073

Abstract: We examine the impact of corporate social responsibility (CSR) on corporate financialization. Corporate financialization refers to the phenomenon where managers divert corporate resources from the core business to financial assets. Using a sample of Chinese firms between 2010 and 2018, we find that firms with better CSR scores have higher levels of corporate financialization. This result remains valid after a series of tests for robustness and endogeneity issues, suggesting a casual effect of CSR on corporate financialization. We also find that this effect is mitigated in private firms and firms with better internal control, higher management shareholding, and more financial analyst followings. We further explore the economic channel through which CSR promotes corporate financialization and find that CSR relieves financial constraints and enables firms to invest more in financial assets. Finally, we show that both CSR and financialization have significantly negative impacts on firm value.

Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://hdl.handle.net/10.1080/1351847X.2023.2175704 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:eurjfi:v:29:y:2023:i:17:p:2047-2073

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/REJF20

DOI: 10.1080/1351847X.2023.2175704

Access Statistics for this article

The European Journal of Finance is currently edited by Chris Adcock

More articles in The European Journal of Finance from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().