How does corporate social and environmental responsibility contribute to investment efficiency and performance? Evidence from the financial sector of China

Figures & data

Table 1. Descriptive statistics.

	N	Mean	Std. dev.	min	p50	Max
CSR	671	39.481	21.670	−11.060	33.210	86.700
CER	671	2.268	3.788	0.000	0.000	26.000
Inveff	612	0.00012	0.1579	−1.052	0.0004	3.0965
Growth	671	1.532	1.190	0.755	1.104	19.094
Size	671	25.409	2.886	19.189	25.311	31.036
Lev	671	0.710	0.228	0.020	0.760	0.966
Cash	671	0.462	5.411	0.000	0.149	138.831
Age	671	2.285	0.745	0.693	2.485	3.367
ROA	671	0.020	0.037	−0.245	0.014	0.346
BM	667	0.805	0.242	0.144	0.907	1.324

Note: CSR is corporate social responsibility, Inveff shows the investment efficiency calculated using Richardson (2006), CER shows the environmental responsibility of the firm, growth shows the growth of the firm calculated as the revenue/loans divided by the lag of revenue/loans, and size shows the firm’s size calculated as a log of total assets, cash indicates the cash and short-term investments by lagged total assets, Lev is the leverage ratio calculated using debt to equity ratio, age shows the firm’s age, ROA shows the return on assets whereas BM is the book to market value.

Source: Authors.

Table 2. Correlation analysis.

	CSR	Inveff	CER	Growth	Size	Lev	Cash	Age	ROA	BM
CSR	1.000
Inveff	0.096**	1.000
CER	0.772***	0.005	1.000
Growth	0.189***	0.227***	0.048	1.000
Size	0.370***	−0.206***	0.075*	−0.564***	1.000
Lev	−0.237***	−0.170***	0.016	−0.550***	0.832***	1.000
Cash	0.031	0.426***	0.029	−0.011	−0.023	−0.004	1.000
Age	−0.098**	0.060	−0.045	0.204***	−0.170***	−0.209***	0.025	1.000
ROA	0.205***	0.095**	0.079**	0.264***	−0.206***	−0.317***	0.031	0.118***	1.000
BM	0.200***	−0.203***	0.026	−0.883***	0.782***	0.708***	0.015	−0.203***	−0.257***	1.000

Note: Asterisks ^*** indicate a 1% significance level, ^** indicates a 5% significance level, and ^* indicate a 10% significance level.

Source: Authors.

Table 3. Univariant analysis.

	Corporate socially Irresponsible firms (1)			Corporate socially responsible firms (2)
	N	Mean	N	Mean	Difference Test (1) − (2)
CSR	338	25.757	333	53.412	−27.655***
Inveff	299	0.002	308	−0.001	0.003
CER	338	0.869	333	3.688	−2.819***
Growth	338	1.273	333	1.787	−0.515***
Size	338	24.135	333	26.702	−2.567***
Lev	338	0.640	333	0.782	−0.142***
Cash	338	0.306	333	0.620	−0.314
Age	338	2.303	333	2.266	0.037
ROA	338	0.018	333	0.022	−0.005
BM	335	0.739	332	0.872	−0.132***

Note: Asterisks ^*** indicate a 1% significance level.

Source: Authors.

Table 4. CSR, investment efficiency, and performance.

	(1)	(2)	(3)	(4)
	Inveff	Inveff	ROA	ROA
CSR	0.0014***	0.0015***	0.0003***	0.0006***
	(0.0003)	(0.0001)	(0.0001)	(0.0001)
Size		0.0863***		0.0235***
		(0.0103)		(0.0056)
Lev		−0.0320*		−0.0746***
		(0.0180)		(0.0100)
Cash		−0.0152***		−0.0070***
		(0.0046)		(0.0027)
Age		0.0023		0.0022
		(0.0040)		(0.0023)
BM		0.0825***		0.0436***
		(0.0200)		(0.0148)
Growth		0.0483***		0.0103***
		(0.0030)		(0.0034)
_cons	0.1176***	−0.1011***	0.0180***	−0.0014
	(0.0261)	(0.0190)	(0.0062)	(0.0168)
Industry & Year FE	Yes	Yes	Yes	Yes
N	612	550	671	550
adj. R2	0.067	0.594	0.061	0.222

Note: Asterisks ^*, and ^*** give the significance level at 10, and 1 percent, respectively.

Source: Authors.

Table 5. Environmental responsibility, investment efficiency, and performance.

	(1)	(2)	(3)	(4)
	Inveff	Inveff	ROA	ROA
CER	0.0031***	0.0011**	0.0018***	0.0037***
	(0.0006)	(0.0005)	(0.0004)	(0.0006)
Size		0.0011***		0.0277***
		(0.0102)		(0.0059)
Lev		−0.0459***		−0.0599***
		(0.0174)		(0.0103)
Cash		−0.0043*		−0.0087***
		(0.0024)		(0.0028)
Age		0.0028		0.0024
		(0.0034)		(0.0024)
BM		0.0420**		0.0477***
		(0.0179)		(0.0156)
Growth		0.0153***		0.0083**
		(0.0033)		(0.0035)
_cons	0.0654***	−0.0487***	0.0184***	0.0124
	(0.0230)	(0.0243)	(0.0017)	(0.0171)
Industry & Year FE	Yes	Yes	Yes	Yes
N	612	550	671	550
adj. R2	0.041	0.3214	0.005	0.142

Note: Asterisks ^***, ^**, and ^* give the significance level at 1, 5, and 10 percent, respectively.

Source: Authors.

Table 6. Regression analysis for state-owned and non-state-owned enterprises.

	State-owned firm’s		Non-state-owned firms
	(1)	(2)	(3)	(4)
	Inveff	ROA	Inveff	ROA
CSR	0.0011***	0.0003***	0.0017***	0.0009***
	(0.0002)	(0.0001)	(0.0003)	(0.0001)
Size	0.0587***	0.0111	0.0318**	0.0406***
	(0.0159)	(0.0082)	(0.0145)	(0.0087)
Lev	−0.0236	−0.0877***	0.0088	−0.0750***
	(0.0240)	(0.0112)	(0.0258)	(0.0164)
Cash	−0.0144***	−0.0031	0.0898***	−0.0315***
	(0.0049)	(0.0026)	(0.0137)	(0.0088)
Age	0.0089*	0.0067**	0.0015	−0.0047
	(0.0053)	(0.0028)	(0.0055)	(0.0036)
BM	−0.0264	0.0215	0.1269***	0.0318
	(0.0301)	(0.0288)	(0.0268)	(0.0219)
Growth	0.0040	−0.0094	0.0532***	0.0136***
	(0.0089)	(0.0112)	(0.0033)	(0.0043)
_cons	0.0525	0.0486	−0.1436***	−0.0085
	(0.0369)	(0.0376)	(0.0270)	(0.0234)
Industry & Year FE	Yes	Yes	Yes	Yes
N	233	233	317	317
adj. R^2	0.181	0.305	0.737	0.263

Note: Asterisks ^***, ^**, and ^* give the significance level at 1, 5, and 10 percent, respectively.

Source: Authors.

Table 7. Robustness check 2SLS results.

	(1)	(2)	(3)	(4)	(5)
	CSR	Inveff	ROA	Inveff	ROA
Province_CSR	0.1779***
	(0.0318)
CSR		−0.0014***	0.0006***
		(0.0005)	(0.0001)
CER	4.2175***			0.0010**	0.0004***
	(0.1428)			(0.0005)	(0.0002)
Size	3.3557***	0.1466***	0.0268***	0.1409***	0.0320***
	(0.3426)	(0.0107)	(0.0068)	(0.0108)	(0.0071)
Lev	−9.3026**	−0.0543***	−0.0817***	−0.0615***	−0.0712***
	(3.8546)	(0.0183)	(0.0116)	(0.0182)	(0.0120)
Cash	0.0614	−0.0249***	−0.0082***	−0.0228***	−0.0106***
	(0.0754)	(0.0047)	(0.0030)	(0.0047)	(0.0031)
Age	−0.8609	0.0030	0.0016	0.0024	0.0020
	(0.6198)	(0.0040)	(0.0026)	(0.0041)	(0.0027)
BM	1.0915	0.1375***	0.0637***	0.1257***	0.0787***
	(1.0840)	(0.0301)	(0.0191)	(0.0300)	(0.0197)
Growth	2.8866***	0.0610***	0.0174***	0.0612***	0.0175***
	(1.0840)	(0.0066)	(0.0042)	(0.0066)	(0.0043)
_cons	−1.1241***	−0.1406***	−0.0274	−0.1342***	−0.0332
	(0.2963)	(0.0312)	(0.0198)	(0.0314)	(0.0207)
Year & Industry FE	Yes	Yes		Yes	Yes

Note: Asterisks **, and *** give the significance level at 5 and 1 percent, respectively.

Source: Authors.

Richardson, S. (2006). Over-investment of free cash flow. Review of Accounting Studies, 11(2–3), 159–189. https://doi.org/10.1007/s11142-006-9012-1

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Data availability statement

The datasets used for this study’s analysis can be obtained from the Wind Financial database [https://www.wind.com.cn/en/wft.html], and China Stock Market Accounting Research (CSMAR) can be accessed at www.gtadata.com. The CSMAR and WIND data in this study are used under a licence and are subject to restrictions. The data are available from the authors with the permission of CSMAR and WIND.