The politics of corporate social responsibility disclosure: Evidence from China

Chenyu Zhang, Aimin Qian, Xu Lou and Guiling Zhang

Economic Analysis and Policy, 2024, vol. 82, issue C, 1406-1428

Abstract: While businesses fluctuate with politics, firms try to find ways to deal with uncertainty. We investigate how political incentives shape corporate social responsibility (CSR) reporting activities using the setting of China. Based on a sample of non-mandatory CSR disclosure firms, we find that firms experiencing political turnover are more inclined to issue CSR reports voluntarily, supporting the political connection demand hypothesis rather than the political cost hypothesis. Such effects are more prominent when the political turnover is unexpected and successors are non-locals. Meanwhile, non-SOEs, not politically connected enterprises, and firms located in low government efficiency areas are more likely to issue CSR reports. Further analysis shows that these firms disclosed CSR information experiencing political turnover fail to ensure the reporting quality but can obtain resources in the future. Overall, we highlight that CSR disclosure is a way for firms to establish political connections with politicians. Our study sheds light on the determinants of voluntary CSR disclosure from a political perspective.

Keywords: Political turnover; Corporate social responsibility; Nonfinancial reporting; Voluntary disclosure; Political connection (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:82:y:2024:i:c:p:1406-1428

DOI: 10.1016/j.eap.2024.05.019

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