Does CEP Influence Corporate Value? Evidence from Chinese Manufacturing Enterprise
Wentao Gu, Shumin Zhou, and Zhe Dong
Research Institute of Econometrics and Statistics, Zhejiang Gongshang University
18 Xuezheng Street, Xiasha Education Park, Hangzhou, Zhejiang 310018, China
This study explores the relationship between the performance of corporate environmental protection responsibility (CEP) and corporate value. Because CEP is part of corporate social responsibility (CSR), we also investigated the impacts of other parts of CSR on corporate value. From a stakeholder perspective and with considering the unique aspects of Chinese corporations, we establish a CSR index evaluation system based on the framework of ISO26000. We subdivided the CSR index into four types: NCEPX (qualitative indices of non-CEP performance), NCEPL (quantitative indices of non-CEP performance), CEPX (qualitative indices of CEP performance), and CEPL (quantitative indices of CEP performance). We selected 122 listed manufacturing companies in mainland China to conduct CSR performance evaluations and run multiple linear fixed effect panel models. The results show that enterprises can increase corporate value by fulfilling the non-CEP, and NCEPL is more significant than NCEPX; Conversely, fulfilling CEP decreases corporate value. We also find that the coefficient of integrated CSR index is not significant.
-  A. Belkaoui, “The impact of the disclosure of the environmental effects of organizational behavior on the market,” Financial Management, Vol.5, No.4, pp. 26-31, 1976.
-  P. B. Shane and B. H. Spicer, “Market response to environmental information produced outside the firm,” The Accounting Review, Vol.58, No.3, pp. 521-538, 1983.
-  R. D. Klassen and C. P. McLaughlin, “The impact of environmental management on firm performance,” Management Science, Vol.42, Issue 8, pp. 1199-1214, 1996.
-  O. Hassan and D. M. Power, “The usefulness of accounting information; evidence from the Egyptian market,” Qualitative Research in Financial Markets, Vol.1, Issue 3, pp. 125-141, 2009.
-  S. A. Waddock and S. B. Graves, “The corporate social performance-financial performance link,” Strategic Management J., Vol.18, Issue 4, pp. 303-319, 1997.
-  R. W. Ingram and K. B. Frazier, “Environmental performance and corporate disclosure,” J. of Accounting Research, Vol.18, No.2, pp. 614-622, 1980.
-  K. E. Aupperle, “An empirical examination of the relationship between corporate social responsibility and profitability,” The Academy of Management J., Vol.28, No.2, pp. 446-463, 1985.
-  A. Murray, D. Sinclair, D. Power, and R. Gray, “Do financial markets care about social and environmental disclosure? Further evidence and exploration from the UK,” Accounting, Auditing & Accountability J., Vol.19, Issue 2, pp. 228-255, 2006.
-  S. M. Rao and J. B. Hamilton III, “The effect of published reports of unethical conduct on stock prices,” J. of Business Ethics, Vol.15, Issue 12, pp. 1321-1330, 1996.
-  D. Cormier, I. M. Gordon, and M. Magnan, “Corporate environmental disclosure: contrasting management’s perceptions with reality,” J. of Business Ethics, Vol.49, No.2, pp. 143-165, 2004.
-  D. C. Hambrik and P. A. Mason, “Upper echelons: the organization as a reflection of its top managers,” Academy of Management Review, Vol.9, No.2, pp. 193-206, 1984.
-  W. H. Greene, “Econometric Analysis,” 5th Ed., Prentice-Hall, Upper Saddle River, 1993.
-  C. Gainet, “Exploring the impact of legal systems and financial structure on corporate responsibility,” J. of Business Ethics, Vol.95, No.2, pp. 195-222, 2012.
-  S. S. Cowen, L. B. Ferreri, and L. D. Parker, “The impact of corporate characteristics on social responsibility disclosure: A Typology and Frequency-based Analysis,” Accounting, Organizations and Society, Vol.12, No.2, pp. 111-122, 1987.
-  R. W. Roberts, “Determinants of corporate social responsibility disclosure: An application of stakeholder theory,” Accounting, Organizations and Society, Vol.17, No.6, pp. 595-612, 1992.
-  C. Costanza, N. Paola, and A. Jaiswal-Dale, “Ownership concentration and corporate social performance: an empirical evidence for european firms,” CRRC, Vol.9, 2008.
-  F. J. López-Iturriaga and Ó. López-De-Foronda, “Corporate social responsibility and large shareholders: An analysis of european firms,” Social Science Electronic Publishing, 2009.
-  A. Burak and L. S. Morante, “Corporate social responsibility and firm characteristics in Sweden: Who and what makes a firm a better corporate citizen?,” Master’s Thesis in Finance Stockholm School of Economics, p. 35, 2007.
-  A. S. Thomas and R. L. Simerly, “The chief executive officer and corporate social performance: An interdisciplinary examination,” J. of Business Ethics, Vol.13, No.12, pp. 959-968, 1994.
-  J. R. Deckop, K. K. Merriman, and S. Gupta, “The effects of CEO pay structure on corporatesocial performance,” J. of Management, Vol.32, No.3, pp. 329-342, 2006.
-  L. S. Mahoney and L. Thorne, “Corporate social responsibility and long-term compensation: Evidence from Canada,” J. of Business Ethics, Vol.57, No.3, pp. 241-253, 2005.
This article is published under a Creative Commons Attribution-NoDerivatives 4.0 Internationa License.