IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v13y2021i18p10038-d631102.html
   My bibliography  Save this article

The Relationship between Corporate Social Responsibility Reporting and Firm Performance and the Moderating Role of Firm Life Cycle Stages: Evidence from China

Author

Listed:
  • Naveed Jan

    (Department of Management Science, Shandong Normal University, Jinan 250000, China)

  • Arodh Lal Karn

    (School of Management, Northwestern Polytechnical University, Xi’an 710072, China)

  • Zeyun Li

    (School of Humanity, Universiti Sains Malaysia, Gelugor 11800, Malaysia)

  • Xiyu Liu

    (Department of Management Science, Shandong Normal University, Jinan 250000, China)

Abstract

This study aims to investigate the relationship of firm performance and corporate social responsibility reporting and the moderating role of a firm’s life cycle stages in Chinese listed companies. We used the sample of all A-share listed firms on the Shanghai and Shenzhen stock exchanges for the period 2010 to 2020. The authors used pooled ordinary least squares (OLS) regression as a baseline methodology. Our regression results show that positive Corporate social responsibility (CSR) activity significantly reduces the performance of the firm. In addition, the negative link between positive Corporate social responsibility and a firm’s performance is more pronounced for firms in mature life cycle stages. Our results are robust to alternative proxy measures of ROA for firm performance, corporate social responsibility reporting, and life cycle stages. To control the possible problem of endogeneity, we use a one-year lag and 2SLS least squares regression. We find that firm performance has a statistically significant influence on CSR reporting. Moreover, we see that firms with high performance are more likely to report CSR activities than low-performance firms. Additionally, six out of ten control variables (Independent Director, Board Shares, State Owned Enterprise, Board Meeting, Chief executive officer Duality, and Firm Growth) have positive influences on CSR reporting. These findings hold for a set of robustness tests. Our results have implications for the development of CSR reporting in developing countries such as China. Our research suggests that, in China, firms with better financial performance undertake more CSR reporting. This paper contributes to the existing literature by investigating the effect of firm performance on CSR reporting and the moderating role of a firm’s life cycle stages in Chinese listed companies. Additionally, this paper enriches the current literature on CSR reporting and highlights the importance of a firm’s financial performance for better environmental performance and reporting.

Suggested Citation

  • Naveed Jan & Arodh Lal Karn & Zeyun Li & Xiyu Liu, 2021. "The Relationship between Corporate Social Responsibility Reporting and Firm Performance and the Moderating Role of Firm Life Cycle Stages: Evidence from China," Sustainability, MDPI, vol. 13(18), pages 1-13, September.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:18:p:10038-:d:631102
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/13/18/10038/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/13/18/10038/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sean Valentine & Gary Fleischman, 2008. "Ethics Programs, Perceived Corporate Social Responsibility and Job Satisfaction," Journal of Business Ethics, Springer, vol. 77(2), pages 159-172, January.
    2. Wang, David Han-Min & Chen, Pei-Hua & Yu, Tiffany Hui-Kuang & Hsiao, Chih-Yi, 2015. "The effects of corporate social responsibility on brand equity and firm performance," Journal of Business Research, Elsevier, vol. 68(11), pages 2232-2236.
    3. Pattanaik, Arpita & Rajeswari Sengupta, 2018. "Business cycle effect on leverage: A study of Indian non-financial firms," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2018-001, Indira Gandhi Institute of Development Research, Mumbai, India.
    4. 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.
    5. Ron Bird & Anthony D. Hall & Francesco Momentè & Francesco Reggiani, 2007. "What Corporate Social Responsibility Activities are Valued by the Market?," Journal of Business Ethics, Springer, vol. 76(2), pages 189-206, December.
    6. Pradit Withisuphakorn & Pornsit Jiraporn, 2016. "The effect of firm maturity on corporate social responsibility (CSR): do older firms invest more in CSR?," Applied Economics Letters, Taylor & Francis Journals, vol. 23(4), pages 298-301, March.
    7. Inoue, Yuhei & Lee, Seoki, 2011. "Effects of different dimensions of corporate social responsibility on corporate financial performance in tourism-related industries," Tourism Management, Elsevier, vol. 32(4), pages 790-804.
    8. Angeloantonio Russo & Francesco Perrini, 2010. "Investigating Stakeholder Theory and Social Capital: CSR in Large Firms and SMEs," Journal of Business Ethics, Springer, vol. 91(2), pages 207-221, January.
    9. Ahsan Habib & Mostafa Monzur Hasan, 2017. "Firm life cycle, corporate risk-taking and investor sentiment," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 57(2), pages 465-497, June.
    10. Francesco Perrini & Angeloantonio Russo & Antonio Tencati, 2007. "CSR Strategies of SMEs and Large Firms. Evidence from Italy," Journal of Business Ethics, Springer, vol. 74(3), pages 285-300, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cheng-Hung Tsai & Eugene Burgos Mutuc, 2020. "Evidence in Asian Food Industry: Intellectual Capital, Corporate Financial Performance, and Corporate Social Responsibility," IJERPH, MDPI, vol. 17(2), pages 1-21, January.
    2. Hasan, Mostafa Monzur & Habib, Ahsan, 2017. "Corporate life cycle, organizational financial resources and corporate social responsibility," Journal of Contemporary Accounting and Economics, Elsevier, vol. 13(1), pages 20-36.
    3. Magrizos, Solon & Apospori, Eleni & Carrigan, Marylyn & Jones, Rosalind, 2021. "Is CSR the panacea for SMEs? A study of socially responsible SMEs during economic crisis," European Management Journal, Elsevier, vol. 39(2), pages 291-303.
    4. Antonio D'Amato & Camilla Falivena, 2020. "Corporate social responsibility and firm value: Do firm size and age matter? Empirical evidence from European listed companies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(2), pages 909-924, March.
    5. Alexandra ZBUCHEA & Florina PÎNZARU, 2017. "Tailoring CSR Strategy to Company Size?," Management Dynamics in the Knowledge Economy, College of Management, National University of Political Studies and Public Administration, vol. 5(3), pages 415-437, September.
    6. Mark Anthony Camilleri, 2020. "Strategic corporate social responsibility in tourism and hospitality," Sustainable Development, John Wiley & Sons, Ltd., vol. 28(3), pages 504-506, May.
    7. Omazic Mislav Ante & Vlahov Rebeka Danijela & Matesic Mirjana, 2013. "Difference Between Wish And Need -- Evidence Of Building Csr Index In Croatia," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 9(2), pages 111-120.
    8. Francesco Perrini & Angeloantonio Russo & Antonio Tencati & Clodia Vurro, 2011. "Deconstructing the Relationship Between Corporate Social and Financial Performance," Journal of Business Ethics, Springer, vol. 102(1), pages 59-76, March.
    9. Longinos Marín & Alicia Rubio & Salvador Ruiz de Maya, 2012. "Competitiveness as a Strategic Outcome of Corporate Social Responsibility," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 19(6), pages 364-376, November.
    10. Brigitte Hoogendoorn & Daniela Guerra & Peter Zwan, 2015. "What drives environmental practices of SMEs?," Small Business Economics, Springer, vol. 44(4), pages 759-781, April.
    11. Andrea Stübner & Svenja Jarchow, 2023. "Family oblige: the link between CSR and succession intention in small and medium family firms," Journal of Business Economics, Springer, vol. 93(3), pages 389-431, April.
    12. Minghui Yang & Yan Wang & Lu Bai & Petra Maresova, 2023. "Corporate social responsibility, family involvement, and stock price crash risk," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(3), pages 1204-1225, May.
    13. Figueira, Sandra & Gauthier, Caroline & Torres de Oliveira, Rui, 2023. "CSR and stakeholder salience in MNE subsidiaries in emerging markets," International Business Review, Elsevier, vol. 32(5).
    14. Laura Broccardo & Elisa Truant & Lèo‐Paul Dana, 2023. "The sustainability orientation in the wine industry: An analysis based on age as a driver," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(3), pages 1300-1313, May.
    15. Govindan, Kannan & Rajeev, A. & Padhi, Sidhartha S. & Pati, Rupesh K., 2020. "Supply chain sustainability and performance of firms: A meta-analysis of the literature," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 137(C).
    16. Youjin Baik & Young-Ryeol Park, 2019. "Managing legitimacy through corporate community involvement: The effects of subsidiary ownership and host country experience in China," Asia Pacific Journal of Management, Springer, vol. 36(4), pages 971-993, December.
    17. Chin-Shien Lin & Ruei-Yuan Chang & Van Thac Dang, 2015. "An Integrated Model to Explain How Corporate Social Responsibility Affects Corporate Financial Performance," Sustainability, MDPI, vol. 7(7), pages 1-20, June.
    18. Angeloantonio Russo & Rosamartina Schena, 2021. "Ambidexterity in the context of SME alliances: Does sustainability have a role?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(2), pages 606-615, March.
    19. Seo, Kwanglim & Moon, Joonho & Lee, Seoki, 2015. "Synergy of corporate social responsibility and service quality for airlines: The moderating role of carrier type," Journal of Air Transport Management, Elsevier, vol. 47(C), pages 126-134.
    20. Maria Jesus Munoz-Torres & Maria Angeles Fernandez-Izquierdo & Luisa Nieto-Soria & Juana Maria Rivera-Lirio & Elena Escrig-Olmedo & Raul Leon-Soriano, 2009. "SMEs and corporate social responsibility. The perspective from Spanish companies," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 1(3), pages 270-288.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:13:y:2021:i:18:p:10038-:d:631102. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.