Internal Governance and Corporate Social Responsibility: Evidence from Chinese Companies

Farman Ullah Khan, Vanina Adoriana Trifan, Mioara Florina Pantea, Junrui Zhang and Muhammad Nouman
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Farman Ullah Khan: School of Management, Xi’an Jiaotong University, Xi’an 710000, China
Vanina Adoriana Trifan: Department of Economic Disciplines, Aurel Vlaicu University of Arad, 310130 Arad, Romania
Mioara Florina Pantea: Department of Economic Disciplines, Aurel Vlaicu University of Arad, 310130 Arad, Romania
Junrui Zhang: School of Management, Xi’an Jiaotong University, Xi’an 710000, China
Muhammad Nouman: Institute of Business and Management Sciences (IBMS), The University of Agriculture Peshawar, Peshawar 25130, Pakistan

Sustainability, 2022, vol. 14, issue 4, 1-20

Abstract: Stakeholder management researchers have recently put a lot of effort into figuring out why organizations facing extensive pressure respond differently to social responsibilities. In particular, ethics researchers believe that senior management must drive corporate social responsibility since their attitudes toward such issues are so important. In line with this sentiment, our study develops a framework of management power, composed of CEOs’ power and the organizations’ power, and explores how managerial power heterogeneity affects the corporate social responsibility (CSR) performance of a firm. Using sample data from the largest emerging market—China—for the period 2010–2018, we submit that CEOs with structural power and shareholders with the highest concentration tend to show a lower commitment to CSR activities. On the other hand, we recognize that the ownership, expertise, and prestige power of CEOs’, the supervision, monitoring, and political power of the board can improve a firms’ CSR performance. These results are also validated by using a fixed effect model, two stage least square (2-SLS) regression, and the propensity score matching (PSM) technique. Our results imply that the implementation of social policies fundamentally results not only from powerful CEOs, but also from powerful boards and shareholders. Moreover, our study provides useful implications with regard to the social outcomes of power authorized by CEOs and the organizations.

Keywords: CEO power; board power; internal governance; shareholders; corporate social responsibility; 2-SLS; PSM (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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