Journal
JOURNAL OF CORPORATE FINANCE
Volume 42, Issue -, Pages 75-99Publisher
ELSEVIER
DOI: 10.1016/j.jcorpfin.2016.11.001
Keywords
Gender; CSR ratings; Social performance; QFII; Governance; China
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China's recent promotion of Corporate Social Responsibility (CSR) has coincided with a marked increase in the number of Chinese listed firms attracting female board members and foreign equity investors. Using Rankins' (RKS) ratings over the 2009 to 2013 period, we show that greater gender balance in top-management supports stronger CSR performance. This finding broadens gender-based accounts emphasizing social networks (Westphal and Milton, 2000), Critical Mass Theory (Kramer et al., 2006; Bear et al., 2010; and Soares et al., 2011) and team dynamics (Woolley et al., 2010; and Hoogendoorn et al., 2013). Findings also reveal stronger CSR performance in firms where a female officer is present at the CEO and/or vice CEO level. Female leadership thus appears to be just as important as gender mix in driving CSR change. Our findings shed new light and add further dimension to the nascent literature on gender and CSR-engagement in China (Lau et al., 2016; and Liao et al., 2016). We examine whether a political-networking motivation underlies foreign investment (Du and Girma, 2010; Liu et al., 2014a; Lin et al., 2015; and Jiang and Kim, 2015). We argue that qualified foreign institutional investors (QFIIs) deploy social-engagement in non-SOEs to build competitive advantage. But in SOEs, where strong political networks already exist, QFIls have less incentive to boost CSR ratings. Results indicate little difference in the social ratings of QFII-invested SOEs and non-SOEs. However, CSR scores are increasing in foreign ownership levels in SOEs. By considering offshore ownership, we broaden understanding of how foreign channels influence CSR in China (Tsoi, 2010; Cheung et al., 2014a; and Lau et al., 2016). Additionally, we confirm the Barnea and Rubin (2010) contention of an inversion in social ratings at entrenched managerial ownership levels. Non-linear rating effects also emerge in relation to state ownership (Li et al., 2013). Finally, CSR performance exhibits positive (negative) relation with a listed entity's size and age (leverage and lagged return-on-equity) but virtually no connection with independent board representation. (C) 2016 Elsevier B.V. All rights reserved.
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