The brighter side of being socially responsible: CSR ratings and financial distress among Chinese state and non-state owned firms

Yasir Shahab, Collins Ntim and Farid Ullah

Applied Economics Letters, 2019, vol. 26, issue 3, 180-186

Abstract: We examine the effect of corporate social responsibility (CSR) quality ratings on the financial distress levels of Chinese enterprises by using the previously unexplored new China-specific Altman ‘ZChina Score’ in the context of CSR and data from 749 firms over the 2009–2014 period. First, we find that CSR quality ratings significantly reduce Chinese firms’ distress levels. Second, we find that the ability of CSR to reduce distress levels in non-state-owned Chinese firms is higher than state-owned ones. Finally, we find similar results when we divide the data into high-low CSR ratings and levels of distress. Our results are robust to potential endogeneities.

Date: 2019
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DOI: 10.1080/13504851.2018.1450480

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