Kindness or hypocrisy: political mindset and corporate social responsibility decoupling in Chinese firms

Zhi Wang, Gerhard Kling and Peter Rejchrt

The European Journal of Finance, 2024, vol. 30, issue 5, 524-548

Abstract: This study examines the effects of executives’ political mindsets on their Corporate Social Responsibility (CSR), which has corporate and societal implications. We focus on the Chinese market, where political connections shape business activities. We find that executives with a promotion or ideology-oriented mindset issue more substantive CSR reports than their peers. However, only executives with ideology-oriented mindsets contribute to society, whereas promotion-oriented executives are associated with lower societal impact. This ‘CSR decoupling' also manifests itself in firms’ CSR activities. Chairpersons with political connections are more likely to pursue financial performance at the expense of societal contributions than their unconnected peers. In contrast, chairpersons with party membership are less likely to do so than their unaffiliated peers. Lastly, this paper shows that executives’ political perception affects the relationship between political mindset and CSR.

Date: 2024
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DOI: 10.1080/1351847X.2023.2208621

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