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Can social responsibility reduce operational risk: Empirical analysis of Chinese listed companies

Author

Listed:
  • Zhao, Chunguang
  • Song, Hang
  • Chen, Wanyi

Abstract

After 30years of rapid development, China has made great strides in economic growth but at the expense of high environmental and social costs. Listed companies should fulfill their social responsibilities not only to meet the expectations of stakeholders but also to improve management effectiveness, cultivate competitive advantage, create a good image, and achieve sustainable development. Because the influence of corporate social responsibility is expanding gradually in China, the relationship among listed companies’ fulfillment of social responsibilities, information disclosure, and operational risk needs to be explored further. This study uses data on Chinese A-share listed companies from 2007 to 2009 and makes four main findings. First, listed companies improving their social responsibilities fulfillment face significantly lower operational risk. Second, listed companies publishing independent social responsibility reports face significantly increased operational risk. Third, high risk companies improving social responsibility fulfillment can significantly reduce their operational risk, while publishing independent social responsibility reports leads to significantly increased operational risk. Finally, low risk companies improving their social responsibilities fulfillment and publishing independent social responsibility reports experience changes in operational risk; however, the direction of the change varies by company. Companies with different operational risk have different effect because the company's majority shareholder is individual who lack of distinguishing news ability and CSR format is unified that is not enough to emphasize important disclosure issues.

Suggested Citation

  • Zhao, Chunguang & Song, Hang & Chen, Wanyi, 2016. "Can social responsibility reduce operational risk: Empirical analysis of Chinese listed companies," Technological Forecasting and Social Change, Elsevier, vol. 112(C), pages 145-154.
    • Handle: RePEc:eee:tefoso:v:112:y:2016:i:c:p:145-154
    DOI: 10.1016/j.techfore.2016.08.023
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    References listed on IDEAS

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    1. Johnson, Homer H., 2003. "Does it pay to be good? Social responsibility and financial performance," Business Horizons, Elsevier, vol. 46(6), pages 34-40.
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    Cited by:

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    2. Xue Yang & Yuandi Wang & Die Hu & Yongqiang Gao, 2018. "How industry peers improve your sustainable development? The role of listed firms in environmental strategies," Business Strategy and the Environment, Wiley Blackwell, vol. 27(8), pages 1313-1333, December.
    3. Yu, Wantao & Ramanathan, Ramakrishnan & Nath, Prithwiraj, 2017. "Environmental pressures and performance: An analysis of the roles of environmental innovation strategy and marketing capability," Technological Forecasting and Social Change, Elsevier, vol. 117(C), pages 160-169.
    4. Zhifang Zhou & Hong Zhou & Huixiang Zeng & Xiaohong Chen, 2018. "The impact of water information disclosure on the cost of capital: An empirical study of China's capital market," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(6), pages 1332-1349, November.
    5. Fuzhen Liu & Kee-hung Lai & Wei Cai, 2021. "Responsible Production for Sustainability: Concept Analysis and Bibliometric Review," Sustainability, MDPI, vol. 13(3), pages 1-27, January.
    6. Farah, Tazrina & Li, Jialong & Li, Zhicheng & Shamsuddin, Abul, 2021. "The non-linear effect of CSR on firms’ systematic risk: International evidence," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 71(C).
    7. Sánchez-Infante Hernández, Juan Pablo & Yañez-Araque, Benito & Moreno-García, Juan, 2020. "Moderating effect of firm size on the influence of corporate social responsibility in the economic performance of micro-, small- and medium-sized enterprises," Technological Forecasting and Social Change, Elsevier, vol. 151(C).
    8. Márkus, Martin, 2023. "A társadalmi felelősségi pontszámok és a működési kockázat kapcsolata kockázati kategóriák szerint [The relationship between the ESG score and operational risk in different risk categories]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 746-771.
    9. Guo, Chunying & Yang, Baochen & Fan, Ying, 2022. "Does mandatory CSR disclosure improve stock price informativeness? Evidence from China," Research in International Business and Finance, Elsevier, vol. 62(C).
    10. Armando Calabrese & Roberta Costa & Nathan Levialdi & Tamara Menichini & Roberth Andres Villazon Montalvan, 2020. "Does More Mean Better? Exploring the Relationship between Report Completeness and Environmental Sustainability," Sustainability, MDPI, vol. 12(24), pages 1-16, December.

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