Is corporate social responsibility engagement influenced by nearby firms? Evidence from China

Jingbin He and Xinru Ma

International Review of Financial Analysis, 2023, vol. 86, issue C

Abstract: This paper explores whether the CSR engagement of a focal firm is influenced by the CSR density formed by nearby firms. Using a sample of listed firms from 2010 to 2019 in China, we find a positive relationship between the local CSR density and the CSR engagement of a focal firm. Based on the heterogeneous analysis, we find that the impact of local CSR density is more pronounced for firms with worse financial conditions (i.e., lower profits, cash to debt, sales to inventory, and higher leverage), less corporate investment (i.e., lower capital expenditure growth, organization capital investment, employee growth) and fewer market shares. The primary findings are robust after addressing potential concerns. Overall, our findings provide evidence of the effect of firms' locations in the context of CSR engagement and have insightful implications for managers and governments seeking CSR improvement in emerging markets.

Keywords: Corporate social responsibility; Financial condition; Corporate investment; Market share (search for similar items in EconPapers)
JEL-codes: D83 G30 M14 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:86:y:2023:i:c:s1057521923000674

DOI: 10.1016/j.irfa.2023.102551

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