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The relationship between CSR and performance: Evidence in China

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  • Kao, Erin H.
  • Yeh, Chih-Chuan
  • Wang, Li-Hsun
  • Fung, Hung-Gay

Abstract

This study uses a system of simultaneous equations to investigate various hypotheses on the relationship between corporate social responsibility (CSR) and firm performance for state-owned enterprises (SOEs) and non-SOEs in China. The results show variations in market response to CSR engagement by firm ownership type. That is, the market responds favorably to CSR by market-oriented non-SOEs but neutrally to CSR by SOEs with substantial agency costs. The Chinese firms are able to link their CSR activities to firm performance over time, likely recognizing the long-term benefits of CSR. Our study demonstrates the important role of ownership in the dynamic CSR-performance relationship.

Suggested Citation

  • Kao, Erin H. & Yeh, Chih-Chuan & Wang, Li-Hsun & Fung, Hung-Gay, 2018. "The relationship between CSR and performance: Evidence in China," Pacific-Basin Finance Journal, Elsevier, vol. 51(C), pages 155-170.
    • Handle: RePEc:eee:pacfin:v:51:y:2018:i:c:p:155-170
    DOI: 10.1016/j.pacfin.2018.04.006
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