Does CSR Moderate the Relationship between Corporate Governance and Chinese Firm’s Financial Performance? Evidence from the Shanghai Stock Exchange (SSE) Firms

Abstract

We have performed a focalized investigation to explore how corporate social responsibility (CSR) moderates the relationship between corporate governance and firms’ financial performance. We applied a panel regression to examine this relationship from a sample of 3400 Shanghai Stock Exchange (SSE) listed firms, based on yearly observations from 2009 to 2018. Our results show that the presence of female directors on the board is associated with improved firms’ performance and that corporate social responsibility (CSR) moderates this relation, thus indicating that sharing strategic decision-making with female board members revealed a better relationship between CSR and firms’ financial performance. Our findings showed that foreign institutional investors positively influenced firms’ financial performance and that CSR moderates the relation between foreign institutional shareholders and the firm’s financial performance. Supported by corporate governance theories, such as resource dependence and stakeholder theory, our results help to better understand the nexus among corporate governance, firms’ performance and corporate social responsibility. These findings are advantageous to government departments in emerging countries in terms of encouraging marketing practitioners and participants to implement CSR practices and change the attitude associated with CSR implications. This study highlighted the problems of the foreign institutional investors’ scheme, which was the main contribution to the financial market reform of China after 2003. These findings offer significant implications to corporate affairs executives and managers, practitioners, academicians, state officials, and policy-makers, and might provide China with the opportunity to extend its market liberalization to the global markets. This research also contributes to the existing literature, which investigates how CSR moderates the relationship between corporate governance and firms’ financial performance in the Chinese market context.

Firm Characteristics and Corporate Social Responsibility: The Case of Czech Transportation and Storage Industry

“…These models enable us to distinguish the firms having good financial health and businesses that are in financial distress and are threatened by bankruptcy. We used two bankruptcy models: Altman's Z-Score model and index IN05 ( [2,48]). Z-Score model is the best known and most frequently used bankruptcy model, index IN05 represents the model that was designed by Inka Neumaierová and Ivan Neumaier for the Czech conditions [49].…”

Do Board Gender Diversity and Non-Executive Directors Affect CSR Reporting? Insight from Agency Theory Perspective

“…According to Ali and Sial [61] and Sial and Zheng [62], the presence of females in boards of directors improves the overall effectiveness of corporate governance. The differences related to demography, including the gender of the CEO, is an important variable for gauging the effectiveness of monitoring activities of the Board [63], but there is no universal consensus of its impact on the CSR of the firms [64].…”

The Strength of CEOs’Influence on CSR in Chinese listed Companies. New Insights from an Agency Theory Perspective

“…Following previous studies [14,54], regression analysis was conducted in order to examine the impact of CEO power on CSR disclosure level. Variance inflation factor (VIF) was used to test basic underlying assumptions of the regression model to be utilized, as per suggestions of Ali, Sial [54], who held that variables should have variance inflation factors in excess of 10 and also suggested that multicollinearity does not have any impact on the interpretation of the results obtained from a regression model.…”