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Corporate social responsibility and corporate fraud in China: The perspective of moderating effect of board gender diversity

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  • Chu, Shaner
  • Oldford, Erin
  • Wang, Jun

Abstract

This paper examines the effect of corporate social responsibility (CSR) on corporate fraud and the moderating role of board gender diversity. Using a Chinese panel of 23,169 firm-year observations from 2010 to 2019, we find that CSR reduces the intensity and likelihood of corporate fraud. Further, we explore the sub-indicators of CSR and find that firms with higher shareholder- and social-related CSR have lower intensity and likelihood of corporate fraud. The results remain unchanged after addressing endogeneity concerns by employing IV-2SLS method and propensity score matching (PSM) approach. Findings are also robust to alternative model specification, different variable definitions, subsample analyses, etc. Moreover, we find that female directors, particularly female executive directors, act to amplify the negative relation between CSR and intensity of corporate fraud. This moderating effect is further accentuated in firms located in regions with higher gender equality, higher female representation of the government, and higher GDP per capita. Taken together, this paper provides promising evidence that CSR can help curb corporate fraud, with board gender diversity also playing a helpful role.

Suggested Citation

  • Chu, Shaner & Oldford, Erin & Wang, Jun, 2023. "Corporate social responsibility and corporate fraud in China: The perspective of moderating effect of board gender diversity," International Review of Economics & Finance, Elsevier, vol. 88(C), pages 1582-1601.
    • Handle: RePEc:eee:reveco:v:88:y:2023:i:c:p:1582-1601
    DOI: 10.1016/j.iref.2023.07.062
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    References listed on IDEAS

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    1. Allen, Franklin & Qian, Jun & Qian, Meijun, 2005. "Law, finance, and economic growth in China," Journal of Financial Economics, Elsevier, vol. 77(1), pages 57-116, July.
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    4. Shaner Chu & Erin Oldford, 2023. "Female directors, R&D activities and firms’ investment efficiency: evidence from China," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 30(4), pages 890-911, July.
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    Cited by:

    1. Ding, Shusheng & Du, Min & Cui, Tianxiang & Zhang, Yongmin & Duygun, Meryem, 2024. "Impact of board diversity on Chinese firms’ cross-border M&A performance: An artificial intelligence approach," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 1321-1335.
    2. IWASAKI, Ichiro & MA, Xinxin & MIZOBATA, Satoshi, 2024. "Board Gender Diversity in China and Eastern Europe," CEI Working Paper Series 2023-09, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    3. Li, Taoying & Peng, Mengyin & Zhang, Jianjiang & Zheng, Long & Chen, Qiang, 2024. "Legal environment and natural resource dependence: The role of fintech and green innovation in China," Resources Policy, Elsevier, vol. 90(C).
    4. Treepongkaruna, Sirimon & Jiraporn, Pornsit & Kyaw, Khine & Padungsaksawasdi, Chaiyuth, 2024. "Climate change exposure and corporate culture: A text-based approach," International Review of Economics & Finance, Elsevier, vol. 95(C).
    5. Li, Peng & Li, Qinghai & Du, Shanxing, 2024. "Does digital literacy help residents avoid becoming victims of frauds? Empirical evidence based on a survey of residents in six provinces of east China," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 364-377.

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    More about this item

    Keywords

    Corporate social responsibility; Corporate fraud; Board gender diversity; Gender equality; Female representation of the government;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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