CORPORATE SOCIAL RESPONSIBILITY IN CHINA: AN EMPIRICAL STUDY ON THE FINANCIAL PERFORMANCE

Abstract

According to meta-analyses, there is a positive association between "Corporate Financial Performance" (CFP) and "Corporate Social Responsibility" (CSR). However, numerous researchers have concluded that there is either no correlation between them or a negative one. The current study aims to investigate the "CSR-CFP" relationship in China, where prior research was methodologically limited and produced contradictory results. Within the purview of this study, the "Centre for Research on the Social Responsibility of Corporations" evaluated four aspects of CSR based on ratings provided by the "Chinese Academy of Social Sciences" (CASS). The ratios "Tobin's Q," "Return on Assets" (ROA), and "Return on Equity" (ROE) were utilized to evaluate the financial success of

a corporation. The study centered on three hundred companies that submitted CASS-CSR reports in 2013 and publicized their financial recital information. We used sequential regression analysis to investigate the relationship between corporate social responsibility (CSR) and financial success, accounting for the influence of company size and industry. According to the findings of this study, there is no link between economic success and corporate social responsibility (CSR). In addition, an ANCOVA was used to assess the difference in financial disclosure between corporations that disclosed their CSR activities and those that did not.

Regarding ROA, ROE, and Tobin's Q, companies that filed CASS-CSR reports had significantly superior financial performance than those that did not. The issue is why this investigation into Chinese corporations uncovered no connections between the companies. There is a possibility that China's CSR studies are symbolic gestures designed to obtain favor with the government. Even though these businesses participated in CSR reporting, our data's relatively low mean CSR scores indicate that their CSR systems are not particularly advanced. The second reason is that the relationship between CSR and CFP is more readily apparent in industrialized nations with their well-established institutional institutions and efficient market mechanisms. Suppose additional research is conducted utilizing information collected after 2013. In this case, it may be possible to determine if CSR actions are cultivating and if a positive association between CSR and CFP emerges when market conditions alter. It has been discovered that there is a significant link between the CSR components enumerated in ROA and CASS that regulate trade and organizational size. Moreover, a significant relationship exists between CSR components outlined in CASS and ROE regulations for firm size and trade. In addition, a substantial relationship exists between the CSR fundamentals mentioned in Tobin's Q and CASS for trade and organization regulations. On the CASS, there is a disparity in monetary output between CSR and non-CSR organizations.

There are several recommendations for this study, including developing a CSR strategy compatible with the beliefs and expectations of China. This may involve engaging stakeholders to identify their problems and priorities and implementing CSR initiatives to resolve them. Partnering with local organizations can assist businesses in understanding China's social and environmental challenges and establishing credibility with local stakeholders. Companies should be forthright about their actions, methods, and results. This demonstrates to stakeholders the company's dedication to ethical business practices. Companies should monitor and report on their CSR efforts' social, environmental, and financial impacts. This could help stakeholders comprehend the benefits of CSR and identify successful initiatives. Companies should be aware of the legislative, reputational, and unintended effects of corporate social responsibility in China. Effective risk management guarantees the success and longevity of CSR initiatives.