CSR disclosure, financial performance, and ownership: evidence from China

Abstract

Purpose

This study investigates the relationship between corporate social responsibility (CSR) disclosure and financial performance (FP), and ascertains whether ownership structure (OS) moderates the CSR disclosure–FP nexus.

Design/methodology/approach

We distinctly employed the well-established approach of panel data analysis to examine the comprehensive dataset of Shanghai A-share listed firms from 2008 to 2017 with 20,236-full sample and 4,190-disclosed sample firm-year observations. To test the hypotheses, the study used panel regression analysis. The study used CSR disclosure as an explanatory variable and accounting-based performance measures: return on equity (ROE) and earning per share (EPS) as dependent variables. In addition, we used CSR score to determine the extent of disclosure by each firm and employed matched pair sample analysis to check for the robustness of the earlier obtained results.

Findings

The findings indicate significant positive association among CSR disclosure and CSR score with ROE and EPS. Further, the CSR disclosure–FP nexus is more pronounced when the OS moderates it.

Research limitations/implications

The results of this study lack generalizability due to its unique setting. A limitation of this paper is that our sample period only covers 2008–2017. Future studies can extend our research to a more recent period to test whether our findings remain valid in other periods.

Practical implications

Our findings suggest stronger CSR disclosure measures to enhance the image of businesses in the eyes of stakeholders. The study findings are consistent and confirm the theoretical basis (stakeholder theory) that Chinese listed firms can be more beneficial from disclosing CSR related information, and they should put more emphasis on the improvement of CSR disclosure.

Originality/value

This research offers empirical evidence that sheds light on the importance of OS as the moderating effect on the nexus of CSR disclosure–FP measures. In doing so, this study’s findings contribute to the literature significantly, along with the regulators and shareholders.

Citation

Ali, R., Liu, Y., Rehman, R.U. and Naseem, M.A. (2024), "CSR disclosure, financial performance, and ownership: evidence from China", Journal of Strategy and Management, Vol. 17 No. 4, pp. 688-706. https://doi.org/10.1108/JSMA-07-2023-0180