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Corporate social responsibility and corporate financial performance in China: an empirical research from Chinese firms

Corporate social responsibility and corporate financial performance in China: an empirical... Purpose – Although the relationship between corporate social responsibility (CSR) and financial performance has become a hot topic of the Western management community after several decades of arguments, there is still little empirical literature about the relationship between Chinese companies' CSR and financial performance. According to the investigation of Chinese companies, this paper aims to use stakeholder theory to answer this question. Design/methodology/approach – A theoretical framework is proposed based on the stakeholder theory by defining nine kinds of stakeholders and viewing the companies taking CSR as giving responses to the interest requirement of these stakeholders. Some agent variables are also set to depict CFP. Subsequently, this paper uses the data collected in 2007 and 2008 from Chinese firms to explore the relationship between CSR and corporate financial performance (CFP) empirically. Findings – The results show that companies' social responsibility activity can improve their financial performances of the current year, have significant effects on their financial performances of the next year, and vice versa. The variation of CSR and financial performance can also significantly influence each other. Originality/value – This research integrates the factors of time delay and cause‐effect with the relationship of CSR and CFP, and then provides theory support for companies taking CSR. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Corporate Governance Emerald Publishing

Corporate social responsibility and corporate financial performance in China: an empirical research from Chinese firms

Honghui Chen; Xiayang Wang
Corporate Governance , Volume 11 (4): 10 – Aug 9, 2011
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References (38)

Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
1472-0701
DOI
10.1108/14720701111159217
Publisher site
See Article on Publisher Site

Abstract

Purpose – Although the relationship between corporate social responsibility (CSR) and financial performance has become a hot topic of the Western management community after several decades of arguments, there is still little empirical literature about the relationship between Chinese companies' CSR and financial performance. According to the investigation of Chinese companies, this paper aims to use stakeholder theory to answer this question. Design/methodology/approach – A theoretical framework is proposed based on the stakeholder theory by defining nine kinds of stakeholders and viewing the companies taking CSR as giving responses to the interest requirement of these stakeholders. Some agent variables are also set to depict CFP. Subsequently, this paper uses the data collected in 2007 and 2008 from Chinese firms to explore the relationship between CSR and corporate financial performance (CFP) empirically. Findings – The results show that companies' social responsibility activity can improve their financial performances of the current year, have significant effects on their financial performances of the next year, and vice versa. The variation of CSR and financial performance can also significantly influence each other. Originality/value – This research integrates the factors of time delay and cause‐effect with the relationship of CSR and CFP, and then provides theory support for companies taking CSR.

Journal

Corporate Governance – Emerald Publishing

Published: Aug 9, 2011

Keywords: Stakeholders; Corporate social responsibility; Corporate financial performance; Social responsibility

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