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Lie of the Weak: Inconsistent Corporate Social Responsibility Activities of Chinese Zombie Firms

Shaozhen Han, Guoming Li, Michel Lubrano () and Zhou Xun
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Shaozhen Han: Northwest University (Xi'an)
Guoming Li: JUFE - Jiangxi University of Finance and Economics
Zhou Xun: JUFE - Jiangxi University of Finance and Economics

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Abstract: This study investigates the differences between zombie firms and non-zombie firms in corporate social responsibility activities such as reporting, disclosure and fulfillment. Using Chinese listing company data collected from 2009 to 2016, we apply a three stage model with a double Heckman correction to deal with potential self-selection/endogeneity bias and to measure the differences consistently. We found that zombie firms are less willing to release standalone corporate social responsibility reports than non-zombie firms. Among companies that release standalone corporate social responsibility reports, the corporate social responsibility disclosure of zombie firms is at least not worse than non-zombie firms, but the corporate social responsibility fulfillment is significantly lower. We conclude from this gap between disclosure and fulfillment to the hypocritical behavior of zombie firms, due to the absence of control in corporate social responsibility. We suggest that government should enhance supervision over zombie firms' corporate social responsibility activities and subsidies towards them in order to lower their economic damage. Supplementary analyses provide some clues concerning the heterogeneity of inconsistence in term of external support characteristics, ownership and censorship which require further studies.

Keywords: corporate social responsibility; zombie firms; reports; disclosure; fulfillment; hypocrisy (search for similar items in EconPapers)
Date: 2020-01
New Economics Papers: this item is included in nep-tra
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Working Paper: Lie of the weak: Inconsistent corporate social responsibility activities of Chinese zombie firms (2020)
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