Chinese Merchant Group Culture, Corporate Social Responsibility, and Cost of Debt: Evidence from Private Listed Firms in China

Haifei Wang, Hongjun Wu and Peter Humphreys
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Haifei Wang: Accounting School, Jilin University of Finance and Economics, Changchun 130117, China
Hongjun Wu: School of Management, Xiamen University, Xiamen 361005, China
Peter Humphreys: School of Business, Western Sydney University, Sydney, NSW 2150, Australia

Sustainability, 2022, vol. 14, issue 5, 1-18

Abstract: Chinese merchant groups are commercial organizations that have developed over thousands of years. Given the importance of private firms to China’s sustainable development, this study investigates the impact of the traditional Chinese concept of merchant groups on corporate social responsibility (CSR) performance and cost of debt, using Chinese private listed firms during 2008–2020. We measure merchant group culture based on the company’s geographic location. Ordinary least squares regression models are used to test the hypotheses. According to the results, the CSR performance of firms from five traditional Chinese merchant groups is better than non-members. A positive relationship exists between the strength of merchant group culture and CSR performance; this relationship is stronger among merchant group companies. The closer the culture to CSR values, the better the CSR performance, which is negatively related to the cost of debt. The findings are in line with the peer effect theory. Therefore, the study provides evidence that it is essential to consider the traditional Chinese merchant group culture for firms’ CSR strategies beyond formal financial and regulatory factors in China. This study is a first step in exploring the impact of merchant group culture in China on CSR performance and the economic application of this relationship.

Keywords: Chinese merchant group; merchant group culture; corporate social responsibility; debt cost; informal institution (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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