|Author:||Wong, Man Hin Raymond|
|Title:||Corporate social responsibility and firm performance : evidence from the Hong Kong stock exchange|
|Subject:||Hong Kong Polytechnic University -- Dissertations|
Investments -- Moral and ethical aspects
Stock exchanges -- China -- Hong Kong
Social responsibility of business
|Department:||Faculty of Business|
|Pages:||90 pages : color illustrations|
|Abstract:||In this research, I investigate the association between socially responsible investment and firm performance. I test this association in a sample of 229 Hong Kong (HK) listed companies by using hand-collected data on corporate social responsibility (CSR) investment and corporate donations in combination with financial data from the CSMAR database. Some of the firms in the sample had been early adopters of ESG reporting over the four-year period from 2013 to 2016. I find a strong negative relationship between CSR investment and firm profitability. I also find that corporate donations are negatively related to profitability, while a firm's slack resources are positively and strongly associated with profitability. Furthermore, I find that the more slack resources a firm has, the better its financial performance, provided that its management makes investments in both CSR and corporate donations. To show that the link is causal, I examine the differential effects of CSR and corporate donations on profitability that arise from the exogenous external finance dependence (RZ index) of different industries. I find that the effects of corporate donations on firm profitability do not vary significantly across industries. However, the effects of CSR on firm profitability differ significantly across industries with varying degrees of external finance dependence. This suggests that the effect of CSR occurs mainly through its role in constraining firm budgets and is influenced by the exogenous external finance dependence of different industries and firms. Finally, I perform a difference-in-differences analysis of the sample and find that the mandatory ESG reporting policy proposed by the HK Stock Exchange and implemented on January 1, 2016 had a positive impact on firm profitability in HK in the year immediately following its enactment.|
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