Board Network and CSR Decoupling: Evidence From China

Abstract

This paper investigates the influence of board network centrality on corporate social responsibility (CSR) decoupling. CSR decoupling refers to the gap between corporate internal and external actions in CSR practices. Specifically, we measure CSR decoupling as the difference between corporate social disclosure (CSD) and corporate social performance (CSP). This paper uses a sample of Chinese A-share listed firms during 2009–2018, takes the technical dimension score (T-score) and content dimension score (C-score) of RKS ratings as proxies of CSD and CSP, and obtains CSR decoupling as the difference between CSD and CSP. Our results show that (1) board network centrality is positively related to over-decoupling in the pre-adoption period (2009–2014) of the new environmental law but negatively related to over-decoupling in the post-adoption period (2015–2018) and (2) centrality is not related to under-decoupling in the pre-adoption period but a significantly positive related in the post-adoption period. Our finding reveals a complex role of the board network in CSR practices in China.

Determinants and consequences of corporate social responsibility decoupling—Status quo and limitations of recent empirical quantitative research

“…According to Al‐Shammari et al (2019), CEO narcissism increases externally oriented CSR practices, whereas there is no significant impact on internally oriented CSR actions. Zhao et al (2022) found a positive relationship between board network centrality and greenwashing in the pre‐adoption period of new environmental regulations. Liu et al (2023) documented that mutual fund investors' distraction increases CSR decoupling, more pronounced by negative shocks.…”

“…In more detail, corporate governance can be separated into board composition, ownership, and other stakeholder pressure. Regarding board composition , managerial entrenchment (Garcia‐Sanchez et al, 2020), sustainability board committees (Gull, Hussain, Khan, Khan, & Saeed, 2022), board gender diversity (Eliwa et al, 2023; Gull, Hussain, Khan, Nadeem, & Zalata, 2022), board independence and size (Yu et al, 2020), board network centrality (Zhao et al, 2022), CEO with positions as government officials (Marquis & Qian, 2014), CEO power (Gull et al, 2023; Shahab et al, 2022), CEO overconfidence (Sauerwald & Su, 2019), and CEO narcissism (Al‐Shammari et al, 2019) were included. Ownership structure was recognized as institutional ownership, (Yu et al, 2020), family ownership (Parra‐Dominguez et al, 2021), mutual fund investors' distraction (Liu et al, 2023) and institutional shareholder linkage to the central government and chair/CEO served as delegate to the two most important national political councils (Luo et al, 2017).…”

The impact of penalties for environmental violations on corporate environmental responsibility

“…Although Hexun provides ratings of overall CSR performance from 2010, the environmental dimensions of CSR performance for all listed firms have been zero since 2018 (Zhao et al, 2022; Zhong et al, 2019). Therefore, we do not use the CER ratings provided by Hexun.…”

Air Pollution and Corporate Green Financial Constraints: Evidence from China’s Listed Companies

“…CSMAR is an economic and financial database developed in conjunction with China’s current conditions. It is mainly based on the needs of academic research, drawing on the professional standards of the internationally renowned databases such as CRSP, Compustat, I/B/E/S, Thomson, etc., which are widely used in China’s relevant economic research [ 40 , 41 ]. For example, referring to the existing literature, the data of the dependent variable corporate environmental protection investment in the model come from the corporate financial statement note data in CSMAR.…”