Corporate Social Responsibility Disclosure Quality and Firms’ Investment Efficiency: Evidence from Chinese Listed Companies

Xiaomei Guo, Rui Xu (), Xin Li () and Qi Ban
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Xiaomei Guo: School of Law, Chengdu University of Technology, Chengdu 610059, China
Rui Xu: Global Development Institute, University of Manchester, Manchester M13 9PL, UK
Xin Li: Department of Sociology, University of Manchester, Manchester M13 9PL, UK
Qi Ban: Postdoctoral Station of Applied Economics, Fudan University, Shanghai 200433, China

Sustainability, 2024, vol. 16, issue 14, 1-19

Abstract: In China, where the corporate social responsibility (CSR) process is relatively underdeveloped, the government has promulgated a series of laws and regulations on CSR disclosure in recent years to promote the sustainable transformation of the economy. Using data from A-share listed Chinese firms from 2009 to 2021, this study empirically examines the relationship between CSR disclosure quality and firm investment efficiency in China. The results indicate that (1) improvements in CSR disclosure quality significantly mitigate firms’ underinvestment and overinvestment, thereby enhancing investment efficiency. (2) Further analysis shows that high-quality CSR information also promotes investment efficiency by reducing agency costs and financing constraints and improving media evaluations of firms. (3) A heterogeneity analysis suggests that the positive effect of CSR disclosure on investment efficiency is stronger for firms with lower equity incentives, more severe financing constraints, and higher media attention. Our study extends the understanding of the mechanisms through which CSR disclosure affects firms’ investment efficiency, potentially providing insights for research in related fields and guiding future CSR disclosure practices in other developing countries.

Keywords: CSR information; corporate investment; financing constraints; agency costs; media evaluation (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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