Kindness or Hypocrisy: Political Mindset and Corporate Social Responsibility Decoupling in Chinese firms

Zhi Wang, Gerhard Kling* (Corresponding Author), Peter Rejchrt

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

This study examines the effects of executives' political mindsets on their Corporate Social Responsibility (CSR), which has corporate and societal implications. We focus on the Chinese market, where political connections shape business activities. We find that executives with a promotion or ideology-oriented mindset issue more substantive CSR reports than their peers.
However, only executives with ideology-oriented mindsets contribute to society, whereas promotion-oriented executives are associated with lower societal impact. This "CSR decoupling" also manifests itself in firms' CSR activities. Chairpersons with political connections are more likely to pursue financial performance at the expense of societal contributions than their unconnected peers. In contrast, chairpersons with party membership are less likely to do so than their unaffiliated peers. Lastly, this paper shows that executives' political perception affects the relationship between political mindset and CSR.
Original languageEnglish
Pages (from-to)524-548
Number of pages25
JournalEuropean Journal of Finance
Volume30
Issue number5
Early online date11 May 2023
DOIs
Publication statusPublished - 2024

Bibliographical note

This work was supported by National Natural Science Foundation of China: [Grant Number grant number 72202184]; Guanghua Talent Project of Southwestern University of Finance and Economics: [Grant Number NA].

Keywords

  • Corporate governance
  • Political mindset
  • Corporate social responsibility
  • Decoupling

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