Do Private Benefits of Control Affect Corporate Social Responsibility? Evidence from China

Qiang Liu, Guoqing Ge, Chong Ning, Xiaobo Tao and Yongbo Sun
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Qiang Liu: School of Economics and Business Administration, Chongqing University, Chongqing 400044, China
Guoqing Ge: School of Economics and Management, Tsinghua University, Beijing 100084, China
Chong Ning: School of Economics and Business Administration, Chongqing University, Chongqing 400044, China
Xiaobo Tao: School of Economics and Management, North China University of Technology, Beijing 100144, China
Yongbo Sun: Business School, Beijing Technology and Business University, Beijing 102488, China

Sustainability, 2018, vol. 10, issue 9, 1-19

Abstract: In this study, we examined whether private benefits of control can influence corporate social responsibility performance. We used both separations between cash flow and control rights and the length of the longest control chain to measure private benefits of control. Consistent with the private benefits motive, we found that firms with greater divergence between cash-flow rights and control rights, with longer control chains, are associated with lower corporate social responsibility performance. Further, we found that earnings management and capital occupation by the controlling shareholder are the two effective channels through which private benefits of control affect corporate social responsibility. Additionally, this negative association is more pronounced for firms located in regions with low degree of law environment and with CEOs appointed by the largest shareholder. Additional robustness tests using alternative CSR measurements, and two-stage least squares (2SLS) regression support the main findings. This study highlights a new determination channel of private benefits of control and practically guides the introduction of corporate social responsibility activities in emerging markets.

Keywords: private benefits of control; shareholder; corporate social responsibility performance; sustainable development (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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