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

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.