Business Group-Affiliation and Corporate Social Responsibility: Evidence from Listed Companies in China

Abstract

Business groups have played a vital role in the development of emerging markets. However, we share very limited understanding in the role of business group that act on affiliated firms’ CSR performance. Using manually sorted data on A-share listed companies and business groups in China from 2010–2017, we examine whether a company’s business group-affiliation affects its corporate social responsibility (CSR) performance and the mediating mechanisms of this association. Our empirical models show that group companies bear a higher level of social responsibility compared to independent companies. This positive relationship between group-affiliation and social responsibility relies on resource allocation through internal capital markets, rent-seeking initiatives, and consideration of corporate reputation. Moreover, group affiliation benefits the firm’s CSR performance in employee’s responsibilities, consumers’ responsibilities and environmental responsibilities, while significantly lower the shareholders’ responsibilities. Our empirical valuation of group companies’ CSR levels can serve as a benchmark for emerging market companies implementing social responsibility policies.

CSR Spending in India: Exploring the Linkages With Business Group Affiliation and Product Portfolio Diversification

“…The findings of the study reveal a positive association between group affiliation status and CSR spending. It indicates that group-affiliated firms engage more in CSR activities than non-group-affiliated firms supporting the prior literature (Choi et al, 2018;Huang et al, 2021;Manogna & Mishra, 2021;Panicker, 2017). The extension of the baseline model to test the impact of group size reveals a significant positive impact on CSR spending.…”

“…With reference to agency theory and socio-emotional wealth perspective, the present study hypothesizes a positive association between group affiliation status and CSR spending. The prior literature supports the positive impact of group affiliation status on CSR spending (Choi et al, 2018;Huang et al, 2021;Manogna & Mishra, 2021;Panicker, 2017).…”

“…The literature review identified the following studies examining the relationship between group-affiliated firms and their CSR spending (Choi et al,2018;Guo et al, 2018;Huang et al, 2021;Lee, 2018;Manogna and Mishra, 2021;Panicker,2017).…”

“…According to Huang et al (2021), companies with ties to larger groups are more likely to prioritize social welfare than those operating independently. The findings showed a positive link between membership in a group and CSR spending.…”

Corporate social responsibility regulation in capital market and environmental information disclosure of listed companies: A quasi-natural experiment from China

“…However, China's capital market needs to consolidate the "barometer" function of economic development unremittingly, continue to enhance opening level, and steadily improve multi-level capital market system (Yan and Qi, 2021). The regulatory history of CSR and environmental information disclosure in China's capital market can be roughly divided into three stages (Akbar et al, 2021;Huang et al, 2021) (Han et al, 2019), which required companies listed on the SSE Corporate Governance Index, companies issuing overseas-listed foreign shares, and financial companies to disclose CSR reports, and required listed companies included in the SZSE 100 Index to disclose CSR reports, and encourages other companies to disclose CSR reports. In 2002, China Securities Regulatory Commission (CSRC) issued the Code on Governance of Listed Companies, which clarified listed companies' social responsibility for the first time (Sun et al, 2022).…”