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Corporate Social Responsibility and Insider Trading: Evidence from China

Author

Listed:
  • Chao Lu

    (School of Economics and Management, Beijing Jiaotong University, Beijing 100044, China)

  • Xuetong Zhao

    (School of Economics and Management, Beijing Jiaotong University, Beijing 100044, China)

  • Jingwen Dai

    (School of Economics and Management, Beijing Jiaotong University, Beijing 100044, China)

Abstract

Corporate Social Responsibility (CSR) is the obligation of a company to pursue long-term goals, and is an important part of a sustainable society. It is related not only to the survival and sustainable development of the company, but also to the expectations of the public. CSR is an important way for companies to disclose non-financial information. Information disclosure can alleviate information asymmetry effectively, improve the quality of internal control, and affect the occurrence of insider trading. However, the existing research has paid less attention to the impact of non-financial information on CSR and insider trading, as well as the impact of the corporate nature and disclosure motivation on this relationship. This paper takes China’s 2011–2016 Shanghai and Shenzhen A-share listed companies as a sample to study the relationship between CSR and insider trading. The results show the following. (1) CSR and insider trading have a significant negative correlation. (2) From the perspective of the nature of the enterprise, the CSR of non-state-owned enterprises can significantly suppress the occurrence of insider trading, while the relationship is not significant for state-owned enterprises. (3) From the perspective of disclosure motivation, voluntary disclosure can significantly suppress the occurrence of insider trading. However, mandatory disclosure and semi-mandatory disclosure are not significant. The research in this paper is of great significance to encourage enterprises to fulfill their social responsibilities and improve the supervision of illegal insider trading.

Suggested Citation

  • Chao Lu & Xuetong Zhao & Jingwen Dai, 2018. "Corporate Social Responsibility and Insider Trading: Evidence from China," Sustainability, MDPI, vol. 10(9), pages 1-17, September.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:9:p:3163-:d:167738
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    References listed on IDEAS

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    2. Farman Ullah Khan & Junrui Zhang & Muhammad Usman & Alina Badulescu & Muhammad Safdar Sial, 2019. "Ownership Reduction in State-Owned Enterprises and Corporate Social Responsibility: Perspective from Secondary Privatization in China," Sustainability, MDPI, vol. 11(4), pages 1-13, February.
    3. Wenxiu Hu & Jinzhu Du & Weiguo Zhang, 2020. "Corporate Social Responsibility Information Disclosure and Innovation Sustainability: Evidence from China," Sustainability, MDPI, vol. 12(1), pages 1-19, January.
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    5. Shangkun Deng & Chenguang Wang & Zhe Fu & Mingyue Wang, 2021. "An Intelligent System for Insider Trading Identification in Chinese Security Market," Computational Economics, Springer;Society for Computational Economics, vol. 57(2), pages 593-616, February.
    6. Yuanyuan Hu & Shouming Chen & Jian Wang, 2018. "Managerial Humanistic Attention and CSR: Do Firm Characteristics Matter?," Sustainability, MDPI, vol. 10(11), pages 1-18, November.
    7. Jingwen Dai & Chao Lu & Jipeng Qi, 2019. "Corporate Social Responsibility Disclosure and Stock Price Crash Risk: Evidence from China," Sustainability, MDPI, vol. 11(2), pages 1-20, January.
    8. Keling Wang & Yaqiong Miao & Ching-Hui (Joan) Su & Ming-Hsiang Chen & Zhongjun Wu & Tie Wang, 2019. "Does Corporate Charitable Giving Help Sustain Corporate Performance in China?," Sustainability, MDPI, vol. 11(5), pages 1-17, March.
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