Do financial performance and firm's value affect the quality of corporate social responsibility disclosure: Moderating role of chief executive officer's power in China

Cao Na; Gaoliang Tian; Fawad Rauf; Khwaja Naveed

doi:10.3389/fpsyg.2022.925323

Do financial performance and firm's value affect the quality of corporate social responsibility disclosure: Moderating role of chief executive officer's power in China

Front Psychol. 2022 Aug 18:13:925323. doi: 10.3389/fpsyg.2022.925323. eCollection 2022.

Authors

Cao Na¹, Gaoliang Tian¹, Fawad Rauf², Khwaja Naveed³

Affiliations

¹ School of Management, Xi'an Jiaotong University, Xi'an, China.
² Centre for Management and Commerce, University of Swat, Swat, Pakistan.
³ Faculty of Management Sciences, Riphah International University, Islamabad, Pakistan.

Abstract

This paper investigates the correlation between the quality of corporate social responsibility disclosure (CSRD) and financial performance (FP). It also investigates the moderating role of chief executive officer power (CEOP) in the relationship between the quality of CSR disclosure and firm value (FV) in Chinese listed companies. The evidential research used the up-to-date sample (3, 248) of unbalanced findings for the period of 2014-2020, from the registered Chinese firms in the Shenzhen and Shanghai Stock Exchanges as samples for the study. As a starting point technique, the STATA 15 has been used to test pooled ordinary least squares (OLS) regression on a sample of Chinese listed companies. We use 1-year lagged regression and two SLS regressions to monitor the potential endogeneity problem. The imbalanced data set was received from the China Stock Market and Accounting Research (CSMAR) web page, which is the most significant source of information for Chinese publicly listed firms. Data on CSR information items and media reporting are compiled manually. The findings of the study revealed that there are positive FP consequences for the companies engaged in the quality of CSR disclosure. We also report that higher CEO power negatively enhances the quality of CSR disclosure effect on the FP of FV. The research investigates the impact of CSR disclosure and FP by presenting evidence of the moderating role of CEO power. Therefore, it is suggested that a higher law for CSR engagement and disclosure be implemented in China, and robust measures for the implementation of CEO power, although there are financial advantages to be gained. A key relevance to the empirical quality of CSR disclosure research can be recognized as the moderating role of CEO power in the quality of CSR disclosure, FP, and FV in the context of Chinese study. The findings are robust with the use of an instrumental variable method.

Keywords: CEO power; agency theory; corporate social responsibility disclosure; financial performance; firm value.