Mandatory corporate social responsibility disclosure and financial constraints: Evidence from China

Xiao Liang and Xiaomeng Charlene Chen

International Review of Economics & Finance, 2024, vol. 89, issue PA, 954-974

Abstract: We investigate the impact of mandatory CSR disclosures on firms' financial constraints in China, where CSR reporting is mandated for a subset of listed firms. Employing a difference-in-differences approach, we find that mandatory CSR reporting firms experience greater financial constraints after the mandate. We identify controlling shareholder expropriation as a plausible channel through which the mandate affects financial constraints. Further analyses reveal that mandatory CSR reporting firms with political connections or located in more marketized regions/provinces can alleviate their financial constraints. Our findings add evidence to the economic implications of CSR disclosure mandates. Given the prevailing global trend toward enforcing CSR disclosures and the call for more research on mandatory CSR reporting, our study sheds light on how these mandates shape firms’ access to finance.

Keywords: Corporate social responsibility; Mandatory CSR disclosure; Financial constraints (search for similar items in EconPapers)
JEL-codes: G32 M14 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:89:y:2024:i:pa:p:954-974

DOI: 10.1016/j.iref.2023.08.011

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