Moderating Effect of Political Embeddedness on the Relationship between Resources Base and Quality of CSR Disclosure in China
Abstract
:1. Introduction
2. Literature Review and Hypotheses Development
2.1. Legitimacy Theory
2.2. The Relationship between Political Embeddedness and CSR Disclosure Quality
2.3. Resource Base and CSR Disclosure
2.4. Moderating Role of Political Embeddedness
3. Methodology
3.1. Data and Sample
3.2. Empirical Model and Measures
3.2.1. Dependent Variable
3.2.2. Control Variables
3.2.3. Independent Variables
4. Descriptive Statistics and Correlation Matrix
5. Analysis and Results
Endogeneity and Other Robustness Tests
6. Discussion and Conclusions
6.1. Policy Implications
6.2. Limitations and Future Research
Author Contributions
Funding
Conflicts of Interest
References
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Variables | Abbreviation | Measurement |
---|---|---|
(1) Corporate social responsibility disclosure quality | CSRDQ | The CSR report provides information conferring to ten substances regarding the listed company’s non-financial performance. CSR report is a dummy variable equal to 1 if the focal firm has issued a CSR report in a given year, and it is 0 otherwise. |
(2) Political Embeddedness | PE | Political Embeddedness: The firm assigns value 1 if it is politically embedded and 0 otherwise. A firm is politically embedded if one of its directors, senior officers, or supervisors (i.e., chairman, president, vice president, etc.) is or was a member of the National People’s Congress (NPC), a government official, or a member of the Chinese People’s Political Consultative Conference (CPPCC). |
(3) Resource Base | RB | Resource base as total cash flow from different activities of business-like operating, investing, and financing. |
(4) Firm Size | FS | Defined as the natural log of total assets. |
(5) Board Size | BS | The number of directors on the board. |
(6) Independent Director | ID | The firms will take at least 2 directors as independent directors. |
(7) Tobin’s Q | TQ | Tobin’s Q is the percentage among a physical asset’s market value and its additional value. |
(8) Book to Market Ratio | BTMA | Book to market ratio of shareholders equity. |
(9) Asset Growth | AG | Asset Growth of the company is measured as the change in total assets. |
(10) Return on Assists | ROA | Total profit is a percentage of total assets. |
(11) Return on Equity | ROE | The ratio of total profit and percentage of equity. |
(12) Board Meeting | BM | The number of meetings in one-year time. |
(13) Financial Leverage | LEV | The ratio of total debt to the total asset. |
Year and Industry | YI | To control the effect of year and industry, we included year and Industry dummies in all regressions |
Variables | Mean | S.D. | Min | Max | (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | (9) | (10) | (11) | (12) | (13) |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(1) CSRDQ | 5.406 | 2.505 | 1 | 8 | 1.000 | ||||||||||||
(2) PE | 0.105 | 0.306 | 0 | 1 | −1.105 | 1.000 | |||||||||||
(3) RB | 24.83 | 5.508 | 14.557 | 38.975 | −0.050 * | −0.015 * | 1.000 | ||||||||||
(4) Firm Size | 23.192 | 1.747 | 18.265 | 30.814 | 0.044 * | −0.073 * | −0.182 * | 1.000 | |||||||||
(5) Board Size | 9.483 | 2.282 | 4 | 22 | −0.003 * | −0.002 * | −0.100 * | 0.261 * | 1.000 | ||||||||
(6) Independ Direct | 3.493 | 0.839 | 1 | 8 | 0.023 * | 0.007 * | −0.092 * | 0.315 * | 0.593 * | 1.000 | |||||||
(7) Tobin’s Q | 1.752 | 1.813 | 0.096 | 33.270 | −0.081 * | 0.068 * | 0.119 * | −0.468 * | −0.169 * | −0.143 * | 1.000 | ||||||
(8) BTMA | 1.186 | 1.153 | 0.030 | 10.328 | 0.015 * | −0.078 * | −0.110 * | 0.580 * | 0.114 * | 0.137 * | −0.488 * | 1.000 | |||||
(9) Asset Growth | 0.166 | 0.343 | −0.828 | 10.888 | −0.035 * | 0.019 * | −0.001 | −0.023 * | −0.000 | -0.001 | 0.106 * | −0.073 * | 1.000 | ||||
(10) ROA | 0.042 | 0.574 | −0.690 | 0.481 | −0.088 * | 0.056 * | −0.058 * | −0.066 * | −0.404 * | 0.026 * | 0.366 * | 0.350 * | 0.164 * | 1.000 | |||
(11) ROE | 0.082 | 0.816 | −18.568 | 43.614 | −0.061 * | 0.054 * | −0.059 * | 0.084 * | 0.068 * | 0.054 * | 0.190 * | 0.180 * | 0.164 * | 0.547 * | 1.000 | ||
(12) Board Meeting | 10.215 | 4.790 | 1 | 57 | −0.012 | −0.020 * | −0.029 * | 0.188 * | 0.029 * | −0.076 * | −0.105 * | 0.205 * | −0.017 * | −0.127 * | −0.047 * | 1.000 | |
(13) Fin_ Leverage | 0.509 | 0.509 | 0.007 | 1.344 | 0.075 * | −0.056 * | −0.138 * | 0.458 * | 0.115 * | 0.132 * | −0.477 * | −0.607 * | −0.477 * | −0.085 * | −0.185 * | 0.241 * | 1.000 |
Variables | Model 1 | Model 2 | Model 3 |
---|---|---|---|
CSRDQ | OLS | OLS | OLS |
PE | −0.636 *** (−4.32) | −0.514 *** (−3.52) | −0.767 *** (−5.02) |
RB | -------------- | 0.033 *** (9.35) | 0.024 *** (6.07) |
Interaction | -------------- | -------------- | −0.025 *** (5.35) |
Firm Size | −0.009 (−0.21) | −0.016 (−0.37) | −0.019 (0.44) |
Board Size | −0.049 (−1.43) | −0.049 (−1.43) | −0.050 (−1.48) |
Independ Direct | 0.081 ** (1.93) | 0.188 ** (2.00) | 0.180 ** (1.93) |
Tobin’s Q | 0.056 * (−1.83) | −0.055 * (−1.82) | −0.054 * (−1.79) |
BTMA | −0.050 (−0.90) | −0.046 (−0.85) | −0.049 (−0.90) |
Asset Growth | −0.176 (−1.33) | −0.016 (−0.12) | −0.078 (−0.59) |
ROA | 0.440 (0.40) | −0.390 (−0.36) | 0.267 (0.24) |
ROE | −0.485 ** (−1.96) | −0.440 ** (−1.80) | −0.439 ** (−1.81) |
Board Meeting | −0.026 *** (−2.86) | −0.016 * (−1.76) | −0.016 ** (−1.82) |
Financial Leverage | 0.647 ** (2.04) | 0.632 ** (2.02) | 0.601 ** (1.93) |
Constant | 4.140 *** (4.23) | 3.620 *** (6.80) | 3.852 *** (3.99) |
R-squared | 0.0482 | 0.0732 | 0.0813 |
Variables | Model 1 | Model 2 | Model 3 |
---|---|---|---|
CSRDQ | OLS | OLS | OLS |
PE | −0.636 *** (−4.33) | −0.514 *** (−3.52) | −0.767 *** (−5.03) |
RB | -------------- | 0.033 *** (9.38) | 0.024 *** (6.09) |
Interaction | -------------- | -------------- | 0.025 *** (5.37) |
Firm Size | −0.009 (−0.21) | −0.016 (−0.37) | −0.019 (−0.44) |
Board Size | −0.049 (−1.44) | −0.049 (−1.44) | −0.050 (−1.48) |
Independ Direct | 0.184 ** (1.94) | 0.188 ** (2.01) | 0.180 ** (1.94) |
Tobin’s Q | 0.056 * (−1.84) | −0.055 * (−1.82) | −0.054 ** (−1.80) |
BTMA | −0.050 (−0.90) | −0.046 (−0.85) | −0.049 (−0.90) |
Asset Growth | −0.176 (−1.32) | −0.016 (−0.12) | −0.078 (−0.59) |
ROA | 0.440 (0.40) | −0.390 (−0.36) | 0.267 (0.25) |
ROE | −0.485 ** (−1.97) | −0.440 ** (−1.81) | −0.439 ** (−1.81) |
Board Meeting | −0.026 *** (−2.87) | −0.016 * (−1.76) | −0.016 ** (−1.82) |
Financial Leverage | 0.647 ** (2.04) | 0.632 ** (2.02) | 0.601 ** (1.93) |
Constant | 4.144 *** (4.24) | 3.620 *** (3.75) | 3.852 *** (4.01) |
Lambda | 0.1235623 | 0.0275016 | 2.42827 |
R-squared | 0.0482 | 0.0732 | 0.0813 |
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Rauf, F.; Voinea, C.L.; Bin Azam Hashmi, H.; Fratostiteanu, C. Moderating Effect of Political Embeddedness on the Relationship between Resources Base and Quality of CSR Disclosure in China. Sustainability 2020, 12, 3323. https://doi.org/10.3390/su12083323
Rauf F, Voinea CL, Bin Azam Hashmi H, Fratostiteanu C. Moderating Effect of Political Embeddedness on the Relationship between Resources Base and Quality of CSR Disclosure in China. Sustainability. 2020; 12(8):3323. https://doi.org/10.3390/su12083323
Chicago/Turabian StyleRauf, Fawad, Cosmina Lelia Voinea, Hammad Bin Azam Hashmi, and Cosmin Fratostiteanu. 2020. "Moderating Effect of Political Embeddedness on the Relationship between Resources Base and Quality of CSR Disclosure in China" Sustainability 12, no. 8: 3323. https://doi.org/10.3390/su12083323