The relationship between CSR and performance: Evidence in China

Erin H. Kao, Chih-Chuan Yeh, Li-Hsun Wang and Hung-Gay Fung

Pacific-Basin Finance Journal, 2018, vol. 51, issue C, 155-170

Abstract: This study uses a system of simultaneous equations to investigate various hypotheses on the relationship between corporate social responsibility (CSR) and firm performance for state-owned enterprises (SOEs) and non-SOEs in China. The results show variations in market response to CSR engagement by firm ownership type. That is, the market responds favorably to CSR by market-oriented non-SOEs but neutrally to CSR by SOEs with substantial agency costs. The Chinese firms are able to link their CSR activities to firm performance over time, likely recognizing the long-term benefits of CSR. Our study demonstrates the important role of ownership in the dynamic CSR-performance relationship.

Keywords: Corporate social responsibility; Simultaneous equation modeling; Agency cost theory; Stakeholder theory; Window dressing (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (71)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:51:y:2018:i:c:p:155-170

DOI: 10.1016/j.pacfin.2018.04.006

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