Corporate Social Responsibility, firm performance, and firm characteristics: evidence from China

Abstract

There is a long-lasting debate upon the effect of Corporate Social responsibility (CSR) on firm performance. Most of the empirical studies are conducted under the mature markets, while China, an emerging market, the relationship between CSR and firm performance remains unclear. I use the aggregated CSR performance score from the Hexun rating system to empirically test whether there is a positive relationship between CSR and firm performance which is measured by both Tobin’ q and Return on Asset (ROA). Further, I test the relationship between CSR and firm performance for each industry to see whether manufacturing has a different relation pattern. The results may show a positive relationship between CSR and Tobin, but a negative between ROA and CSR. Also, some differences exist between the manufacturing industry and the overall Chinese market. Therefore, I recommend that, in the future, Chinese firms should not only exercise CSR for meeting the regulations but also take it as a competitive strategy to prompt their corporate performance.