Corruption and CSR: New Evidence from China’s Anti-Corruption Campaign

52 Pages Posted: 14 Sep 2021 Last revised: 15 Sep 2023

See all articles by Juncheng Hu

Juncheng Hu

Bond University

Janice Hollindale

Bond University - Bond Business School

Lijuan Zhang

Australian National University

Date Written: August 23, 2021

Abstract

The general intuition is that corporate corruption, as a violation of legal and ethical principles, is contrary to corporate social responsibility (CSR), which signifies firms’ willingness to do the right things. However, we find evidence of the opposite in China—corruption positively influences CSR performance. Using a difference-in-differences model that exploits China’s 2012 anti-corruption campaign as a shock, we find that an exogenous decrease in corruption leads to a reduction in CSR performance. Further triple difference estimations suggest that the reduction in CSR performance is more pronounced when firms have high-political-ranking and high-compensated managers. We offer novel evidence that CSR in China is a window-dressing tool to mask corruption.

Keywords: corruption, CSR, anti-corruption campaign

Suggested Citation

Hu, Juncheng and Hollindale, Janice and Zhang, Lijuan, Corruption and CSR: New Evidence from China’s Anti-Corruption Campaign (August 23, 2021). Available at SSRN: https://ssrn.com/abstract=3909482 or http://dx.doi.org/10.2139/ssrn.3909482

Juncheng Hu (Contact Author)

Bond University ( email )

98 University Drive
Robina, QLD 4226
Australia

HOME PAGE: http://research.bond.edu.au/en/persons/juncheng-hu

Janice Hollindale

Bond University - Bond Business School ( email )

Gold Coast
Australia

Lijuan Zhang

Australian National University ( email )

Canberra, Australian Capital Territory 2601
Australia

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