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Corporate Social Responsibility, Corporate Performance, and Pay-Performance Sensitivity—Evidence from Shanghai Stock Exchange Social Responsibility Index

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  • Yuan Chang
  • Ting-Hsuan Chen
  • Min-Cheng Shu

Abstract

Based on annual data of listed companies on Shanghai Stock Exchange (SSE) through 2009–2013, this article examines three hypotheses: first, whether a firm’s taking corporate social responsibility (CSR) affects corporate performance; second, whether corporate governance and a firm’s age positively moderate the relationship between CSR and performance; and third, whether CSR positively moderates the magnitude/direction of linkage between a firm’s performance and top management/director compensation (pay-performance sensitivity, PPS). Three proxies for CSR engagement are constructed by a firm’s inclusion in the SSE Social Responsibility Index. Empirical evidence generally shows that firms engaging in CSR tend to obtain superior performance in terms of higher profitability. However, firm’s age and sound corporate governance have little additional benefit on the effect of a firm engaging in CSR on performance. Finally, greater CSR engagement is associated with larger PPS. Principal outcome does not shift under two-stage estimation and propensity score matching (PSM) to correct for sample self-selection of CSR engagement.

Suggested Citation

  • Yuan Chang & Ting-Hsuan Chen & Min-Cheng Shu, 2018. "Corporate Social Responsibility, Corporate Performance, and Pay-Performance Sensitivity—Evidence from Shanghai Stock Exchange Social Responsibility Index," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 54(5), pages 1183-1203, April.
  • Handle: RePEc:mes:emfitr:v:54:y:2018:i:5:p:1183-1203
    DOI: 10.1080/1540496X.2016.1273768
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    Cited by:

    1. Chege, Samwel Macharia & Wang, Daoping, 2020. "The influence of technology innovation on SME performance through environmental sustainability practices in Kenya," Technology in Society, Elsevier, vol. 60(C).
    2. Mansour Naser Alraja & Rabia Imran & Basel M. Khashab & Mahmood Shah, 2022. "Technological Innovation, Sustainable Green Practices and SMEs Sustainable Performance in Times of Crisis (COVID-19 pandemic)," Information Systems Frontiers, Springer, vol. 24(4), pages 1081-1105, August.
    3. Muhammad Jawad & Munazza Naz, 2024. "Financial Technological Innovation, Sustainable Operations, and Efficiency: a Study of SMBs in Times of Crisis," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(3), pages 13160-13181, September.
    4. Brzeszczyński, Janusz & Gajdka, Jerzy & Schabek, Tomasz, 2021. "How risky are the socially responsible investment (SRI) stocks? Evidence from the Central and Eastern European (CEE) companies," Finance Research Letters, Elsevier, vol. 42(C).
    5. Borah, Prasad Siba & Iqbal, Shuja & Akhtar, Shamim, 2022. "Linking social media usage and SME's sustainable performance: The role of digital leadership and innovation capabilities," Technology in Society, Elsevier, vol. 68(C).
    6. Qinghua Zhu & Fei Zou & Pan Zhang, 2019. "The role of innovation for performance improvement through corporate social responsibility practices among small and medium‐sized suppliers in China," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(2), pages 341-350, March.
    7. Kweh, Qian Long & Tebourbi, Imen & Lo, Huai-Chun & Huang, Cheng-Tsu, 2022. "CEO compensation and firm performance: Evidence from financially constrained firms," Research in International Business and Finance, Elsevier, vol. 61(C).
    8. Giacomo Buzzao & Francesco Rizzi, 2021. "On the conceptualization and measurement of dynamic capabilities for sustainability: Building theory through a systematic literature review," Business Strategy and the Environment, Wiley Blackwell, vol. 30(1), pages 135-175, January.

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