Does share pledging promote or impede corporate social responsibility? An examination of Chinese listed firms

Figures & data

Table 1. Variable definition.

Type	Variable	Definition
Dependent	CSR	Total corporate social responsibility score in year t + 1, which include the category of shareholder, supplier & customer, employees, society, and environment
	CSR2	The CSR score of society and environment
Independent	Pledge	The share pledging ratio of largest shareholders
	Pledge2	The total ratio of share pledging, freezing and equity custody of the largest shareholder
Control	Size	Firm size, measured as the natural logarithm of market value
	ROA	Return on assets, which is the net earnings to total assets
	Leverage	Financial leverage, proxied as the ratio of total liabilities to total assets
	Firm Age	The number of years that firms have been listed
	Growth	Sales growth rate calculated as the ratio of sales in the current year to sales in the last year minus one
	Cash	Cash and cash equivalents scaled by total assets
	Top1	The shareholding percentage of the largest shareholder
	State	A dummy variable and equals one if a firm is the state-owned enterprise
	Institutional	The ownership percentage of institutional shareholders
	Board Size	The natural logarithm of the number of board directors
	Board Meeting	The natural logarithm of the number of board meetings
	Independent	The ratio of independent directors in the director board
	Analysts	The natural logarithm of one plus the number of analysts
Other	Divergance	The divergence between cash flows rights and controlling rights, which is the ratio of controlling rights to cash flow rights of the actual controller. A larger Separation value denotes a higher agency cost
	ROAsd	ROA Volatility, which is utilized as a proxy for risk-taking, is the standard deviation of Firms’ ROA during year t to t-2.
	Tobin Q	The ratio of market value plus total debts to total assets

Source: The Authors.

Table 2. Summary statistics.

Panel A: Description statistics
variable		N	mean		sd	min	max
CSRt+1		11,249	28.06		17.53	−4.830	80.95
CSR2 t+1		11,249	7.460		7.411	−10	33.33
Pledge		11,249	0.00400		0.0380	0	1
Pledge2		11,249	0.246		0.346	0	1
Size		11,249	22.97		1.126	20.32	28.73
ROA		11,249	0.0510		0.0390	−0.0100	0.209
Lev		11,249	0.426		0.198	0.0460	0.850
Growth		11,249	0.213		0.386	−0.481	3.596
Cash		11,249	0.165		0.121	0.0120	0.649
Age		11,249	10.05		6.293	2	25
State		11,249	0.430		0.495	0	1
Institutional		11,249	7.760		7.658	0	40.40
Board size		11,249	2.158		0.199	1.099	2.890
Meeting		11,249	2.208		0.397	0	4.043
Independent		11,249	0.372		0.0550	0.125	0.800
Analysts		11,249	1.824		1.096	0	3.850
Top1		11,249	0.363		0.151	0.0360	0.894
Divergence		10,957	5.114		7.991	0	49.40
ROA sd		11,249	0.0160		0.0180	0	0.274
Panel B: Pearson correlation matrix (Part I)
	1	2	3	4	5	6	7
1. CSR	1
2. Pledge	−0.012	1
3. Size	0.285***	−0.025***	1
4. ROA	0.260***	−0.003	0.042***	1
5. Lev	0.103***	0.01	0.466***	−0.391***	1
6. Growth	0.025***	−0.015	0.055***	0.124***	0.064***	1
7. Cash	0.060***	−0.005	−0.188***	0.289***	−0.389***	−0.018*	1
8. Age	0.110***	0.018*	0.355***	−0.110***	0.341***	−0.081***	−0.144***
9. State	0.200***	0.002	0.318***	−0.115***	0.291***	−0.105***	−0.069***
10. Institutional	0.165***	−0.016*	0.225***	0.258***	0.045***	0.087***	0.096***
11. Board size	0.139***	0.015	0.213***	−0.011	0.154***	−0.042***	−0.070***
12. Meeting	0.002	−0.016*	0.213***	−0.112***	0.244***	0.144***	−0.100***
13. Independent	−0.001	−0.005	0.073***	−0.025***	0.017*	0.008	0.017*
14. Analysts	0.268***	−0.028***	0.411***	0.395***	0.029***	0.112***	0.063***
15. Top1	0.127***	−0.020**	0.228***	0.052***	0.114***	−0.023**	−0.005
Panel C: Pearson correlation matrix (Part II)
	8	9	10	11	12	13	14
8. Age	1
9. State	0.463***	1
10. Institutional	0.039***	−0.013	1
11. Board size	0.136***	0.278***	0.018*	1
12. Meeting	0.047***	−0.078***	0.092***	−0.040***	1
13. Independent	−0.043***	−0.033***	0.008	−0.485***	0.064***	1
14. Analysts	−0.117***	−0.027***	0.465***	0.110***	0.114***	0.013	1
15. Top1	0.002	0.243***	−0.144***	0.037***	−0.069***	0.059***	0.046***

Note *, **, *** represent that coefficient is significant at 10%, 5% and 1% level, respectively.

Source: The Authors.

Table 3. Main result.

	(1)	(2)
VARIABLES	CSR t+1	CSR t+1
Pledge	−14.299***	−9.163**
	(5.475)	(4.441)
Size		4.168***
		(0.308)
ROA		80.343***
		(6.454)
Leverage		−2.706*
		(1.478)
Growth		0.648*
		(0.372)
Cash		4.082**
		(1.757)
Age		0.078*
		(0.042)
State		2.220***
		(0.585)
Institutional		−0.010
		(0.029)
Board Size		1.862
		(1.306)
Board Meeting		−1.056**
		(0.483)
Independent		2.602
		(4.173)
Analysts		1.280***
		(0.223)
Top1		−0.093
		(1.559)
Constant	28.093***	−78.065***
	(0.256)	(7.173)
Observations	11,081	11,081
Adjusted R-squared	0.195	0.334
Year FE	Yes	Yes
Industry FE	Yes	Yes
Province FE	Yes	Yes
F	6.820	66.87

Note: Standard errors are adjusted by clustering at the firm level and reported in parentheses. *, **, *** represent that coefficient is significant at 10%, 5% and 1% level, respectively.

Source: The Authors.

Table 4. Mechanism analysis.

Panel A: Impact of risk-taking
		(1)		(2)
		Low Risk-taking		High Risk-taking
VARIABLES		CSR t + 1		CSR t + 1
Pledge		1.865		−18.635***
		(7.574)		(3.062)
Constant		−70.278***		−89.867***
		(8.713)		(8.871)
Observations		5,579		5,502
Adjusted R-squared		0.338		0.341
Control		Yes		Yes
Year FE		Yes		Yes
Industry FE		Yes		Yes
Province FE		Yes		Yes
F		39.26		54.26
Panel B: Impact of divergence between cash flow rights and controlling rights
		(1)		(2)
		Low Divergence		High Divergence
VARIABLES		CSR t+1		CSR t+1
Pledge		−4.902		−14.423***
		(7.425)		(4.532)
Constant		−75.469***		−104.865***
		(7.561)		(8.664)
Observations		6,121		4,960
Adjusted R-squared		0.343		0.333
Control		Yes		Yes
Year FE		Yes		Yes
Industry FE		Yes		Yes
Province FE		Yes		Yes
F		46.49		54.94

Note: Standard errors are adjusted by clustering at the firm level and reported in parentheses. *, **, *** represent that coefficient is significant at 10%, 5% and 1% level, respectively.

Source: The Authors.

Table 5. Impact of CSR change on firm performance.

Panel A: Impact of CSR change on firm performance
	(1)	(2)
VARIABLES	ROAt+1	ROA t+1
△CSR	0.007***	0.007***
	(0.003)	(0.003)
Constant	4.078***	−4.280**
	(0.081)	(2.055)
Observations	10,294	10,294
Adjusted R-squared	0.043	0.206
Control	No	Yes
Year FE	Yes	Yes
Industry FE	Yes	Yes
Province FE	Yes	Yes
F	7.054	85.35
Panel B: Impact of CSR change on firm value
	(1)	(2)
VARIABLES	Tobin Q t+1	Tobin Q t+1
△CSR	0.007***	0.004***
	(0.001)	(0.001)
Constant	1.894***	7.309***
	(0.026)	(0.596)
Observations	10,019	10,019
Adjusted R-squared	0.285	0.498
Control	No	Yes
Year FE	Yes	Yes
Industry FE	Yes	Yes
Province FE	Yes	Yes
F	98.57	124.6

Note: Standard errors are adjusted by clustering at the firm level and reported in parentheses. *, **, *** represent that coefficient is significant at 10%, 5% and 1% level, respectively.

Source: The Authors.

Table 6. Addressing the endogenous concern.

Panel A: Difference in difference analysis
	(1)	(2)
VARIABLES	CSR t+1	CSR t+1
Treat x Post	−1.997*	−1.717*
	(1.024)	(0.941)
Constant	29.064***	−77.286***
	(0.586)	(7.196)
Observations	11,081	11,081
Adjusted R-squared	0.194	0.334
Control	No	Yes
Year FE	Yes	Yes
Industry FE	Yes	Yes
Province FE	Yes	Yes
F	3.805	67.11
Panel B: Parallel trend assumption
	(1)	(2)
VARIABLES	CSR t+1	CSR t+1
−3	−0.026	0.281
	(1.518)	(1.433)
−2	−1.638	−1.137
	(1.637)	(1.499)
−1	−1.781	−1.594
	(1.931)	(1.807)
0	−1.585	−0.908
	(1.939)	(1.800)
+1	−1.829	−1.609
	(1.948)	(1.840)
+2	−4.153**	−3.649**
	(1.891)	(1.740)
+3	−4.266**	−3.542**
	(1.923)	(1.766)
Constant	29.979***	−76.573***
	(1.305)	(7.331)
Observations	11,081	11,081
Adjusted R-squared	0.194	0.334
Control	No	Yes
Year FE	Yes	Yes
Industry FE	Yes	Yes
Province FE	Yes	Yes
F	1.720	47.52
Panel C: Instrument variable regression
	(1)	(2)
	First stage	Second stage
VARIABLES	Pledge	CSR t+1
Pledge (Province)	0.972***
	(0.308)
Pledge (Industry)	0.956***
	(0.270)
Predicted pledge		−54.965**
		(27.198)
Observations	11,081	11,081
Adjusted R-squared	0.042	0.325
Control	Yes	Yes
Year FE	Yes	Yes
Industry FE	Yes	Yes
Province FE	Yes	Yes
Under identification test (P value)	.	0.001
Weak identification test (Cragg-Donald Wald F)	.	156.4
Stock-Yogo weak ID test critical values (10%)		19.93
Over identification test (Hansen J P value)	.	0.544

Note: Standard errors are adjusted by clustering at the firm level and reported in parentheses. *, **, *** represent that coefficient is significant at 10%, 5% and 1% level, respectively.

Source: The Authors.

Table 7. Robustness check.

Panel A: Alternative measure for CSR
	(1)	(2)
	model1	model2
VARIABLES	CSR2 t+1	CSR2 t+1
Pledge	−4.182**	−3.115*
	(2.050)	(1.802)
Constant	7.473***	−29.472***
	(0.100)	(2.934)
Observations	11,081	11,081
Adjusted R-squared	0.231	0.293
Control	No	Yes
Year FE	Yes	Yes
Industry FE	Yes	Yes
Province FE	Yes	Yes
F	4.164	30.32
Panel B: Alternative measure for share pledging
	(1)	(2)
	model1	model2
VARIABLES	CSR t+1	CSR t+1
Pledge2	−14.299***	−9.163**
	(5.475)	(4.441)
Constant	28.093***	−78.065***
	(0.256)	(7.173)
Observations	11,081	11,081
Adjusted R-squared	0.195	0.334
Control	No	Yes
Year FE	Yes	Yes
Industry FE	Yes	Yes
Province FE	Yes	Yes
F	6.820	66.87
Panel C: Fixed effect model
	(1)	(2)
VARIABLES	CSR t+1	CSR t+1
Pledge	−9.838***	−7.927**
	(3.137)	(3.288)
Constant	28.077***	−187.066
	(0.011)	(154.782)
Observations	11,081	11,081
Adjusted R-squared	0.491	0.508
Control	No	Yes
Year FE	Yes	Yes
Firm FE	Yes	Yes
F	9.837	17.55

Note: Standard errors are adjusted by clustering at the firm level and reported in parentheses. *, **, *** represent that coefficient is significant at 10%, 5% and 1% level, respectively.

Source: The Authors.