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This study examines the effect of corporate social responsibility (CSR) towards primary stakeholders on the cost of equity capital in Chinese listed firms, and divides the sample into state-owned enterprises (SOEs) and non-state-owned enterprises (NSOEs) for comparison. We construct a set of CSR index systems to measure the quality of the CSR practices and use several approaches to estimate firms’ ex ante cost of equity capital. The results show that firms with higher CSR scores have significantly lower cost of equity capital. In particular, we find that investments in improving CSR towards investors make the greatest contribution to reducing firms’ equity financing costs, and the cost of capital effects of CSR is more significant in recessions than in economic booms. In addition, SOEs have better CSR and lower cost of equity capital than NSOEs, but the effect of CSR in reducing the cost of equity capital is greater for NSOEs than for SOEs. The findings suggest that CSR toward primary stakeholders can be profitable and beneficial to Chinese firms.

To explore the motivations underpinning corporate social responsibility (CSR) decisions in China, a country characterized by extensive government intervention, this paper investigates whether building a good relationship with the government is a political incentive that is driving firms to conduct CSR by examining the effects of political connections on the latter. Our results indicate that politically connected firms exhibit better CSR. However, the effect is considerably more significant for firms with existing political relationships. Additionally, findings show that the effect is more prominent in firms for which political connections are more valuable, namely, non‐state‐owned enterprises, small firms, and firms operating in less market‐oriented cities, indicating that CSR can serve as a differentiation strategy to compete against other bidders. Dividing CSR activities into economic, environmental and social aspects, we find that the social‐based activities are more likely to be driven by political motivations. By categorizing CSR and political connections, this paper not only expands the scope of political CSR and renders the generated results that have been mixed together more distinguishable, but also provides a more precise understanding of the fundamental drivers of CSR in China from the perspective of resource exchange.

This study examines whether the chief executive officer's (CEO's) poverty experience has an impact on firms' corporate social responsibility (CSR). We find that firms' CSR performance increases with CEOs' poverty experience; specifically, firms with CEOs who experienced early-life poverty are associated with more socially responsible activities and fewer socially irresponsible activities, such as on-the-job consumption, and are more associated with key stakeholder-related rather than community-related CSR. We further find that the positive relationship between the CEO's poverty experience and CSR strengthens for well-educated or powerful CEOs. Our evidence is consistent with our conjecture that CEOs who experienced early-life poverty have stronger compassion and prosocial psychology. Consequently, these CEOs are more willing to make long-term investments in socially beneficial activities, leading to better CSR performance, which further confirms the altruistic motivation of CSR.

This paper examines the impact of internal information quality (IIQ) on corporate cash holdings in China. Employing two widely used IIQ measures (i.e., the earnings announcement speed and the absence of financial restatements), we show a significant and negative association between IIQ and corporate cash holdings. This negative relation is concentrated among complex firms (i.e., firms with more business segments), non-state-owned firms, and firms with poor corporate governance. Our findings are valid after we consider endogeneity issues. This paper suggests that the quality of the internal information environment plays an important role in influencing firms' cash holding decisions.

Corporations increasingly define their corporate social responsibility (CSR) activities as a part of their business. However, is this trend beneficial to investors? Based on an event study methodology and a sample of Chinese listed companies, we extend the literature on voluntary disclosure by exploring the role of CSR disclosure in reducing stock market information asymmetry, as proxied by share price volatility and liquidity. Our results show that the share price volatility after CSR disclosure is lower than before CSR disclosure; however, the trend is that it decreases first and then increases for three months following disclosure. Stock liquidity also significantly improves after CSR disclosure; however, it increases first and then decreases. Additionally, by dividing CSR disclosure into economic (hard) disclosure and generic (soft) disclosure, we find that the reduction in information asymmetry is higher for hard disclosure than soft disclosure, suggesting that although CSR disclosure does indeed have an impact on investors’ behaviour in China, an economic‐based disclosure contributes more substantially. Finally, to better understand the characteristics of the Chinese financial market, we also explore the role of marketisation with results that show that the effect in reducing information asymmetry is greater for companies located in a region with a higher degree of marketisation.

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Using a sample of Chinese listed firms for the period 2009 to 2018, we analyze the relationship between the financialization of non‐financial corporations (NFCs) and corporate performance from both long‐term and short‐term perspectives. Our results show that the impact of financialization on firm performance is not simply a crowding‐out or pulling effect but rather depends on the type of financial assets held by the firms. The holdings of investment financial assets generally have a pulling effect on both the short‐term performance and market expectations of a firm's future profits as proxied by Tobin's Q, but they crowd out the innovation activities that are critical to long‐term performance. Although monetary financial assets positively affect corporate profitability, they inhibit the increase of return on invested capital and long‐term performance. Additionally, compared with monetary financial assets, investment financial assets play a more important role in promoting short‐term performance, although the crowding‐out effect on innovation activities is more prominent for investment financial assets. Furthermore, this paper also concludes that compared with manufacturing and non‐state‐owned enterprises (NSOEs), the role of financialization in promoting the performance of non‐manufacturing and state‐owned enterprises (SOEs) is more significant.