Are Controlling Shareholders Influencing the Relationship Between CSR and Earnings Quality? Evidence from Chinese Listed Companies

ABSTRACT

This article examines how controlling shareholders may affect the relationship between the level of corporate social responsibility (CSR) and earnings quality. We find that controlling shareholders have a significant impact on the relationship between the level of CSR and earnings quality; the relationship between the level of CSR and earnings quality is significantly positive in privately owned enterprises but not state-owned enterprises; and, among state-owned enterprises, the relationship is weaker at enterprises controlled by the central government than at those controlled by local governments. Our article highlights the differential impacts of controlling shareholders on the relationship between CSR and earnings quality.

KEY WORDS:

• controlling shareholders
• corporate social responsibility
• earnings quality
• privately owned enterprises
• state-owned enterprises

JEL CLASSIFICATION:

• M14
• M41
• P26

Supplemental Material

Supplemental data for this article can be accessed on the publisher’s website.

Notes

1. The CSR index consists of the companies with best CSR performance in both Shanghai and Shenzhen Stock Exchange. Comprised of top 100 ranked by social contribution value per share stocks from the SSE Corporate Governance index, the Shanghai Stock Exchange Social Responsibility index is designated to reflect performance of stocks with good performance in Social Responsibility. The purpose of the SSE Social Responsibility index is to stimulate listed companies to carry out Social Responsibility and provide underlying for investors.

Additional information

Funding

Our research was supported by National Natural Science Foundation of China. (NSFC: 71502055; NSFC: 71702190)