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Subjective perception of economic policy uncertainty and corporate social responsibility: Evidence from China

Author

Listed:
  • Li, Jing
  • Nie, Huihua
  • Ruan, Rui
  • Shen, Xinyi

Abstract

While existing literature explores factors affecting corporate social responsibility (CSR) from various perspectives, the role of economic policy uncertainty perception has never been studied to our knowledge. In this paper, we study the effect of Chinese firms' subjective perception of economic policy uncertainty (SEPU) on their CSR engagement. Our model proves that SEPU reduces the benefits of maintaining relationships between shareholders and stakeholders, thus decreases corporate CSR engagement. This negative relationship is more pronounced for firms that are highly influenced by the government. We empirically examine these two predictions using the sample of Chinese A-share listed companies. We address endogenous concerns by using the US-China trade war as an exogenous uncertainty shock, and including a Bartik instrumental variable.

Suggested Citation

  • Li, Jing & Nie, Huihua & Ruan, Rui & Shen, Xinyi, 2024. "Subjective perception of economic policy uncertainty and corporate social responsibility: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 91(C).
    • Handle: RePEc:eee:finana:v:91:y:2024:i:c:s1057521923005380
    DOI: 10.1016/j.irfa.2023.103022
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    More about this item

    Keywords

    CSR; Economic policy uncertainty; Relational contract; China;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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