The social, environmental and ethical performance of Chinese companies: Evidence from the Shanghai Stock Exchange

Hisham Farag, Qingwei Meng, Chris Mallin

Research output: Contribution to journalArticlepeer-review

21 Citations (Scopus)

Abstract

We investigate the social performance of Chinese listed non-financial companies in the Shanghai Stock Exchange. We design a comprehensive social, environment and ethics disclosure index (CSPDI) and assess the bi-directional relationship between corporate social performance and financial performance using the three-stage least squares (3SLS). We find that the mean value of CSPDI is 53% and high social disclosure is associated more with environmentally sensitive industries. Moreover, the index results show that little attention has been paid to ethical issues. Interestingly, we find that the better the financial performance, the worse the corporate social performance disclosure. This result is consistent with the managerial opportunism hypothesis. Finally, the results of the 3SLS estimation show that the causality between the two endogenous variables runs from financial performance to the corporate social performance. This suggests that the corporate social performance is determined by financial performance.

Original languageEnglish
Pages (from-to)53-63
Number of pages11
JournalInternational Review of Financial Analysis
Volume42
Early online date20 Dec 2014
DOIs
Publication statusPublished - Dec 2015

Keywords

  • Chinese companies
  • Corporate social responsibility
  • Ethics
  • Social performance and financial performance

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