Corporate social responsibility and firm value: evidence from Chinese targeted poverty alleviation

Abstract

PurposeWhilst the relationship between corporate social responsibility (CSR) and corporate financial performance has been well documented, CSR has rarely been studied from the perspective of corporate poverty alleviation. This study aims to test whether participation in targeted poverty alleviation (TPA) affects firms' market value and to explore how the magnitudes of market value vary in different CSR environments.Design/methodology/approachBased on recent Chinese TPA initiatives and on 108 TPA announcements of Chinese-listed firms from 2016 to 2020, this study adopts an event study method to investigate the impact of firm's TPA announcements on the firm's market value. Then, the authors construct a cross-sectional regression to analyse different CSR factors that may affect market reactions.FindingsThe results demonstrate that TPA announcements can increase a firm's overall market value. Additionally, the results show that TPA way and firm ownership significantly moderate the market reaction, namely the positive reaction is more significant when the TPA announcements involve charity poverty alleviation rather than industrial poverty alleviation and for privately owned firms rather than state-owned firms.Practical implicationsThe empirical results help TPA practitioners obtain a nuanced understanding of whether and when to participate in poverty alleviation is worthwhile. This study also provides a reference for poverty alleviation work in countries with similar backgrounds.Originality/valueThis study not only provides empirical evidence for the consequences of poverty alleviation behaviour of firms in developing countries, but also complements the field of CSR research in developed countries.

Corporate integrity culture on environmental, social, and governance (ESG) performance

“…Finally, we focus on the overall performance of corporate ESG strategies. More specific factors concerning ESG in the Chinese context could be discussed in future studies (Huang et al, 2022). For example, future studies could investigate how corporate integrity culture impacts the participation and intensity of poverty alleviation activities.…”

Targeted poverty alleviation initiatives and corporate sustainable value creation: Determining the role of corporate internal governance control in China

“…Moreover, from the governance perspective, higher management members are more experienced. Studies have shown that older board members are more inclined to make charitable donations [ 3 , 12 ].…”

“…Companies are increasingly expected to adopt socially responsible and sustainable policies and practices, such as fair labor, ethical sourcing, and environmental sustainability. These can reduce the negative impact of business on society and the environment, and support poverty alleviation [ 12 ]. Furthermore, effective internal governance controls can ensure that these social initiatives are well designed, executed, and evaluated to achieve their goals.…”

“…This can build trust with local communities and enhance the reputation of companies in China [ 13 ]. However, the effectiveness of internal governance controls in poverty reduction in China depends on various factors, such as the specific policies and practices of companies, the level of collaboration and engagement with local actors and stakeholders, and the broader social and economic context [ 1 , 12 ].…”

The Bidirectional Relationship between Digital Transformation and Corporate Social Responsibility: A Legitimacy Perspective

“…Legitimacy is important because once firms are perceived by society as illegitimate, they will have difficulty gaining stakeholder support [48]. Conversely, organizations that are perceived as legitimate are able to access scarce resources from stakeholders such as creditors, suppliers, trade associations, and regulators [49]. Therefore, to enhance their likelihood of survival and growth in the marketplace, firms must actively take effective measures to change stakeholders' perceptions of their behavior in order to seek or maintain legitimacy [14].…”