Can earning much lead to doing good? Firm performance implications for corporate social responsibility

Hou, Siyu; Guo, Zhaoyang; Cai, Chuangneng; Xiao-bo, Jiao

doi:10.1108/cms-02-2021-0056

Cited by 4 publications

(6 citation statements)

References 58 publications

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“…According to behavioral theory, the pay gap is an important part of social behavioral psychology, as it has a profound impact on whether executives pursue personal interests or actively achieve organizational goals. Drawing on Hou et al (2021) , this paper takes the percentage of executive compensation with total compensation as the standard to measure the degree of executives’ pursuit of reputation. The higher the value, the higher the monetary remuneration executives have received from the firm.…”

Section: Resultsmentioning

confidence: 99%

“…Where TQ represents firm performance, using market value divided by total assets ( Hou et al, 2021 ). The incremental effect of CSR through the presence of financial redundancy on firm profitability is captured by the interaction term between FEX and CSR.…”

Section: Resultsmentioning

confidence: 99%

“…The total score of Hexun is 100 points. The Hexun CSR score is being increasingly used and recognized as the most authoritative indicator of CSR performance of Chinese listed firms ( Hou et al, 2021 ; Sun et al, 2021 ). Hence, to analyze the CSR performance of listed firms and avoid sample selection bias, the CSR data were obtained from Hexun.…”

Section: Methodsmentioning

confidence: 99%

“…Third, this paper expands the literature on financial status and CSR. Existing studies have discussed the factors influencing CSR performance from a financial perspective ( Waddock and Graves, 1997 ; Lin et al, 2019 ; Hou et al, 2021 ), overlooking the transmission mechanisms in depth. Our study fills this gap by examining the motivations and economic consequences of firms with financially redundant resources engaging in CSR initiatives, and clarifying that the involvement of such firms in CSR initiatives is driven by a combination of social awareness and reputation-seeking motives.…”

Section: Introductionmentioning

confidence: 99%

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The Impact of Financial Redundancy on Corporate Social Responsibility Performance: Evidence From Chinese Listed Firms

Gan

Zhong

2022

Front. Psychol.

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This study examines the impact of financial redundancy on corporate social responsibility (CSR) based on a sample of Chinese listed firms from 2010 to 2020. The results indicate that financial redundancy has a significant positive effect on CSR. However, financially redundant resources are not balanced in terms of how they encourage firms to undertake different dimensions of social responsibility; specifically, firms actively take social responsibility toward shareholders and the public but take less responsibility for employees and the environment. The incentive for firms with financially redundant resources to promote CSR initiatives is attributable to their high level of social awareness and pursuit of reputation. Consistent with their motives, our economic consequence analysis reveals that the incremental effect of CSR driven by financial redundancy improves corporate reputation but has no enhancement effect on corporate performance. Finally, our extended analysis reveals that the relative impact of financial redundancy on CSR depends on several organizational variables that influence a firm’s preferences for CSR investments. The positive impact of financial redundancy on CSR is stronger among firms with high managerial career concerns and firms in regions with high market competition. This research provides a necessary structure for future CSR studies to follow. By delving deeply into the relationship between financial redundancy and CSR, it enables scholars to better address the critical management question of whether wealthy firms do more good for society compared to those that are less wealthy.

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Section: Resultsmentioning

confidence: 99%

Section: Resultsmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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The Impact of Financial Redundancy on Corporate Social Responsibility Performance: Evidence From Chinese Listed Firms

Gan

Zhong

2022

Front. Psychol.

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“…Following previous research, we include control variables in terms of firm characteristics and M&A transaction indicators. We select variables of firm features that include Size, measured as natural logarithm of total assets (Hou et al , 2022); Age, measured as length of listing (Lu, 2021); Growth, measured by the growth ratio of year’s income (Bettinazzi and Zollo, 2017; Wang and Zhang, 2020); ROA, measured by return on assets (Bereskin et al , 2018; Arouri et al , 2019); Lev, measured by the asset–liability ratio (Deng et al , 2013); First, measured by the ratio of firms’ largest shareholder (Meng and Sima, 2023); Dual, categorized as 1 if the CEO also served as the chair of the board of directors, and 0 otherwise (Wang and Zhang, 2020); besides, we controlled a set of M&A transaction indicators factors (i.e. Price, Payment and Major).…”

Section: Methodsmentioning

confidence: 99%

Symbolic or substantive CSR: effect of green mergers and acquisitions premium on firm value in China

Liu,

Zhou,

et al. 2023

CMS

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Purpose As the cost of completing a transaction, the green merger and acquisition (M&A) premium paid on mergers can influence whether the acquisition creates value or not. However, studies linking M&A premiums to firm value have had mixed results, even fewer studies have examined the effect of green M&A premiums on bidders’ firm value. The purpose of this paper is to investigate whether and how green M&A premiums affect firm value in the context of China’s heavy polluters. Design/methodology/approach Using 323 deals between 2008 and 2019 among China’s heavy polluters, this paper estimates with correlation analysis and multiple regression analysis. Findings Green M&A premiums are negatively associated with firm value. The results are more significant when firms adopt symbolic rather than substantive corporate social responsibility (CSR) strategies. Robustness and endogeneity tests corroborate the findings. The negative relation is stronger when acquiring firms have low governmental subsidy and environmental regulation, when firms have overconfident management, when firms are state-owned and when green M&A occurs locally or among provinces in the same region. This study also analyzes agency cost as an intermediary in the relationship between green M&A premium and firm value, which lends support to the agency-view hypothesis. Originality/value This study provides systemic evidence that green M&A premiums damage firm value through agency cost channel and the choice of CSR strategies from the perspective of acquirers. These findings enrich the literature on both the economic consequences of green M&A premiums and the determinants of firm value and provide a plausible explanation for mixed findings on the relationship between green M&A premiums and firm value.

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Corporate social responsibility performance and social reputation via corporate social responsibility awarding: is there a threshold effect?

Kuzey,

Uyar,

Ellili

et al. 2023

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Purpose This study aims to examine the potential threshold effect in the association between corporate social responsibility (CSR) performance and social reputation. Design/methodology/approach This study includes an international and cross-sector sample covering 41 countries, nine sectors and 45,395 firm-year observations. It applies a parabolic relationship, rather than linear regressions, between CSR engagement and social reputation via CSR awarding. This implies that CSR performance should increase until a certain point to gain a social reputation but then should decrease after reaching that threshold point considering limited financial resources. Findings The findings of country-industry-year fixed-effects logistic regressions confirm the threshold effect with an inverted U-shaped relationship between CSR and CSR awarding. More specifically, firms increase their environmental and social engagement until a certain point, and then they reduce it after reaching a social reputation. This finding is confirmed by three dimensions of the environmental pillar (i.e. resource use, emissions and eco-innovation) as well as four dimensions of the social pillar (i.e. workforce, human rights, community and product responsibility). The findings are robust to alternative samples, alternative methodology and endogeneity concerns. Practical implications The findings of this study have implications for firms about the better allocation of available funds between CSR and operations. The findings could be particularly useful for CSR teams/committees of the firms who formulate CSR policies and how to mobilize firm resources for better social enhancement via environmental and social reputation. Originality/value This study examines deeper the nature of the association between CSR engagement and social reputation and considers the possibility of an inverted U-shaped relationship between them. The determination of a threshold effect suggests that CSR engagement increases social reputation, but once it reaches a certain point, social reputation will decrease owing to financial resource constraints.

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Can earning much lead to doing good? Firm performance implications for corporate social responsibility

Cited by 4 publications

References 58 publications

The Impact of Financial Redundancy on Corporate Social Responsibility Performance: Evidence From Chinese Listed Firms

The Impact of Financial Redundancy on Corporate Social Responsibility Performance: Evidence From Chinese Listed Firms

Symbolic or substantive CSR: effect of green mergers and acquisitions premium on firm value in China

Corporate social responsibility performance and social reputation via corporate social responsibility awarding: is there a threshold effect?

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