Summary:
Targeted poverty alleviation(hereafter: TPA) was proposed by Chinese central government in 2013. TPA requires firms to provide specific and effective assistance to poverty-stricken people throughout China. This assistance should seek to solve the problems that cause people to be trapped in poverty. Accordingly, a number of socially responsible firms have initiated TPA programs. We summarize that there are three motivations for firms to perform corporate social responsibility (CSR) such as TPA. The first is altruistic motivation, which involves firms giving assistance to others in society without receiving a return. The second is managerial agency motivation, which involves managers using firms' resources to enhance their own social image. The third is strategic motivation, which involves firms performing CSR activities to acquire strategic resources, such as social reputation and political connections. Although there are many studies on CSR,most studies only consider philanthropic donations and do not consider non-cash assistance (e.g., technical and educational assistance). Moreover, previous studies focus on whether and how much firms donate but do not examine whether donations achieve their desired effects. These studies conclude that the motivation of CSR is not altruistic and may be another form of managerial agency cost. We believe that this conclusion may misinterpret firms' motivation to perform CSR. Thus, we explore firms' motivation to perform CSR by examining whether their motivations to engage in TPA and the effects of their doing so are different from those related to philanthropic donations. Our sample includes all of the non-financial A-share firms listed on the Shanghai Stock Exchange and Shenzhen Stock Exchange. We manually collect firms' implementations of TPA from annual reports and CSR reports. We find that engaging in TPA reduces firms' financial constraints and thus increases firms' performance and shareholder wealth. Furthermore, we find that TPA spurs local economic growth and enhances residents' income within targeted regions. Furthermore, TPA does not cause significant damage to the regional environment. We also find that firms do not participate in TPA to conceal misconduct or to divert investors' attention from stagnant stock prices, which allows us to exclude managerial agency as a motivation. Overall, our findings suggest that firms' participation in TPA is driven by altruistic and strategic motivations and ultimately creates a win-win situation for firms, society, and the environment. Our findings provide important information for policymakers who devise methods to reduce poverty. Specifically, our findings suggest that the governments should encourage firms to deeply embed themselves in poor regions of the world, as by doing so, firms can use technology and talent to increase the efficiency of poverty alleviation. In addition, subsequent to the implementation of rural revitalization strategies in China, firms should establish long-term mechanisms to systematically achieve rural revitalization. For example, by allocating more advanced technology and talent to rural areas, firms could integrate themselves with local economies and thus obtain returns from resource complementarity. Our study makes several contributions to the literature. First, we clarify what motivates firms to perform CSR in terms of why they engage in TPA. Studies conclude that firms' motivations to perform CSR are not altruistic and may be used as a tool to achieve managerial goals. However, we evaluate the effects of CSR and find that firms' engagement in TPA is motivated by altruism, suggesting that firms genuinely wish to improve social welfare, rather than to simply pursue managerial self-interest. Our study thus provides a new theoretical perspective that gives a better understanding of what motivates firms to engage in CSR. Second, our study clarifies whether engaging in CSR produces unilateral benefits or creates a win-win situation. Many papers find that CSR produces benefits for only one party. For example, Chen et al. (2018) find that engaging in CSR reduces a firm's profitability and shareholder wealth. Lu et al. (2020) find that these reductions in profitability and shareholder wealth occur in state-owned enterprises (SOEs) and in non-SOEs; thus, CSR improves social welfare at the expense of shareholder wealth. In contrast, we find that engaging in TPA increases shareholder wealth and promotes local economic growth without damaging the local environment; thus, engaging in TPA can create a win-win situation. This is a new perspective that broadens understanding of the effect of CSR on firms' profitabilities and social welfare.
潘健平, 翁若宇, 潘越. 企业履行社会责任的共赢效应——基于精准扶贫的视角[J]. 金融研究, 2021, 493(7): 134-153.
PAN Jianping, WENG Ruoyu, PAN Yue. The Win-Win Effect of Corporate Social Responsibility:Evidence from Targeted Poverty Alleviation Programs. Journal of Financial Research, 2021, 493(7): 134-153.
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