The Effect of Independent Director Reputation Incentives on Corporate Social Responsibility: Evidence from China

Abstract

This paper examines the effect of independent director reputation incentives on corporate social responsibility (CSR). Using an unbalanced panel of 3765 Chinese-listed firms between 2009 and 2014, this study suggests that independent director reputation incentives improve CSR. Furthermore, it is found that this effect is more pronounced in non-state-owned enterprises (non-SOEs) than in state-owned enterprises (SOEs). In addition, our results also show that the effect of independent director reputation incentives on CSR is moderated by firm size, and this effect is much stronger in relatively larger firms. Together, these results suggest that reputation is an effective mechanism that can motivate independent directors to fulfill their role of monitoring and advising CSR, especially in non-SOEs and relatively larger firms. We add new insights to the research on the topics of independent director system, protection of the stakeholders’ interests, and CSR enhancement.

Sub-National Institutional Contingencies and Corporate Social Responsibility Performance: Evidence from China

“…The results are consistent with previous literature; a large portion of an independent director or board share tend to be more socially responsible [109][110][111]. The results of economic variables such as Size and TobinQ remain significant and positive, supporting the notion that larger and more profitable firms invest more in CSR than others do [52,110,111]. The coefficients of F_Age and BTMA remain significantly negative, which indicates that younger and high growth opportunity corporates tend to do more CSR as compared to firms which are older and have fewer growth opportunities [24,102].…”

“…However, the coefficients of Ind_Dir and B_Share remain significant and positive in this study, which suggests that having independent directors on board and high board ownership affect companies' CSR investment positively. The results are consistent with previous literature; a large portion of an independent director or board share tend to be more socially responsible [109][110][111]. The results of economic variables such as Size and TobinQ remain significant and positive, supporting the notion that larger and more profitable firms invest more in CSR than others do [52,110,111].…”

“…Consistent with literature [98,[103][104][105][106][107][108][109][110], several firm-related characteristics (i.e., ownership structure, board structure, and economic characteristics) were used as control variables in this study. Board shareholding (B_Share) was calculated as the percentage of shares held by the board of directors.…”

Do CSR Ratings Converge in China? A Comparison Between RKS and Hexun Scores

“…However, research is lacking on the validity of measuring CSR performance and disclosure quality, as well as the convergent validity between these scores. In this paper, a comparative and quantitative analysis was performed for the period 2010-2017, and the following results were obtained: (1) Based on a comparison of the rating methods, information sources, and other factors, RKS is more suitable for measuring the CSR disclosure quality, while Hexun is more suitable for measuring the CSR performance; (2) based on a Spearman correlation analysis, the convergent validity between these two scores is very low, particularly after 2013; and (3) the sub-indicator weights of the RKS system always maintain a high stability, whereas those of the Hexun system suffer from severe fluctuations starting in 2013.Sustainability 2019, 11, 3921 2 of 20 mechanisms of economic consequences [20][21][22][23], the drivers of CSR performance [24][25][26][27][28][29], and economic consequences [30][31][32][33][34][35]; and (2) the HX score is used only as a proxy for the CSR performance level, such as in research on the drivers of CSR performance [36][37][38][39][40] and the economic consequences of CSR performance [19,33,[41][42][43]. Some studies even use the level-1 sub-indicator of the HX score, the environmental dimension HXE, to score a firm's environmental performance level [44,45].Sustainability 2019, 11, x FOR PEER REVIEW 2 of 21 also for CSR performance levels, such as in research on the drivers of CSR disclosure quality [16][17][18][19], the mechanisms of economic consequences [20][21]…”

“…Sustainability 2019, 11, x FOR PEER REVIEW 2 of 21 also for CSR performance levels, such as in research on the drivers of CSR disclosure quality [16][17][18][19], the mechanisms of economic consequences [20][21][22][23], the drivers of CSR performance [24][25][26][27][28][29], and economic consequences [30][31][32][33][34][35]; and (2) the HX score is used only as a proxy for the CSR performance level, such as in research on the drivers of CSR performance [36][37][38][39][40] and the economic consequences of CSR performance [19,33,[41][42][43]. Some studies even use the level-1 sub-indicator of the HX score, the environmental dimension HXE, to score a firm's environmental performance level [44,45].…”