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Do good firms price better? Unpacking the corporate social responsibility-asset pricing nexus in China’s capital market

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  • Guo, Tingting
  • Zhu, Wenzhong

Abstract

Does corporate social responsibility (CSR) commitment translate into efficient stock pricing? This study investigates the relationship between CSR and asset pricing efficiency (APE) using a comprehensive panel of Chinese publicly listed firms spanning 2013–2023. Applying double fixed effects estimation, firms with stronger CSR performance exhibit significantly lower price delays, indicating faster incorporation of market information into stock prices. To examine the underlying mechanism, we conduct mediation analysis and note that market risk premium is a partial mediating mechanism through which socially responsible firms face reduced investor risk perceptions, subsequently accelerating price adjustment based on new information. Our findings hold after extensive robustness testing through alternative variable specifications, propensity score matching, and Heckman selection correction. Cross-sectional analysis reveals meaningful variation across firm ownership types and scale, with state-owned enterprises and larger firms demonstrating a stronger CSR-APE correlation. Our findings have practical relevance for regulators strengthening market transparency and for corporate managers enhancing firm valuation through strategic CSR investment.

Suggested Citation

  • Guo, Tingting & Zhu, Wenzhong, 2026. "Do good firms price better? Unpacking the corporate social responsibility-asset pricing nexus in China’s capital market," Finance Research Letters, Elsevier, vol. 96(C).
    • Handle: RePEc:eee:finlet:v:96:y:2026:i:c:s1544612326000899
    DOI: 10.1016/j.frl.2026.109558
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