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Moderating Effect of Political Embeddedness on the Relationship between Resources Base and Quality of CSR Disclosure in China

Fawad Rauf (), Cosmina Lelia Voinea (), Hammad Bin Azam Hashmi () and Cosmin Fratostiteanu ()
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Fawad Rauf: School of Management, Xi’an Jiaotong University, Xi’an 710049, China
Cosmina Lelia Voinea: Faculty of Management, Open University of the Netherlands, 6419 Heerlen, The Netherlands
Hammad Bin Azam Hashmi: School of Management, Xi’an Jiaotong University, Xi’an 710049, China
Cosmin Fratostiteanu: Faculty of Economics and Business Administration, University of Craiova, 200585 Craiova, Romania

Sustainability, 2020, vol. 12, issue 8, 1-19

Abstract: This study investigates the relationship between corporate political embeddedness and the quality of corporate social responsibility (CSR) disclosure for Chinese listed A-share firms. The study applies the legitimacy theory to the diffusion of CSR in Chinese companies, which otherwise have a differentiating characteristic from Western companies: part of their property being owned by the government. We used 21,295 firm-year observations from Chinese listed firms between 2010 and 2016. The findings reveal that political embeddedness moderates the relationship between firms’ resource base and CSR disclosure quality, such that the effect of resource base on CSR quality was found to be weak for firms with a higher level of political embeddedness. Furthermore, firms with a higher level of political embeddedness will disclose CSR with a lower quality, whilst firms with a higher resource base report CSR with a higher quality. The findings of this study contribute significantly to the literature on CSR disclosure by recognizing the positive impact of political embeddedness and resource base on CSR disclosure quality.

Keywords: corporate social responsibility (CSR); disclosure quality; CSR reports; resource base; political embeddedness (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
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