Firms’ Innovation Strategy Under the Shadow of Corporate Social Responsibility Disclosure: Evidence from China.

44 Pages Posted: 12 Jul 2021 Last revised: 27 Dec 2021

See all articles by William Mbanyele

William Mbanyele

Center for Economic Research, Shandong University

Date Written: December 9, 2020

Abstract

This paper examines how CSR disclosure impacts innovation using a sample of Chinese firms. We find that an increase in CSR disclosure leads firms to invest more in R&D investments and generate more patents. Additionally, our findings reveal that firms with high CSR disclosure nurture innovation by engaging less in short-termism activities that crowd resources for innovation. Furthermore, we uncover that CSR disclosure promotes the optimum allocation of R&D expenditure by allocating risky capital toward good investment opportunities and away from poor investment opportunity sets. In addition, we show that CSR disclosure promotes innovation through information and human capital channels.

Keywords: CSR disclosure, Corporate Social Responsibility, Corporate Innovation, China, Earnings management, R&D

JEL Classification: O3, G1, G3, D8

Suggested Citation

Mbanyele, William, Firms’ Innovation Strategy Under the Shadow of Corporate Social Responsibility Disclosure: Evidence from China. (December 9, 2020). Available at SSRN: https://ssrn.com/abstract=3883184 or http://dx.doi.org/10.2139/ssrn.3883184

William Mbanyele (Contact Author)

Center for Economic Research, Shandong University ( email )

Jinan, SD Shandong 250100
China

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