Corporate social responsibility investment and social objectives: An examination on social welfare investment of chinese state owned enterprises

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Abstract

We apply the theory of corporate social responsibility to analyse social welfare investment undertaken by Chinese State Owned Enterprises (SOEs). We present a simple theoretical model to illustrate how the presence of social objectives in the firm's objective function changes its investment behaviour. Our theoretical model accommodates special features of Chinese SOEs, whose social welfare investment is driven by both social objectives and profit concerns. The model is then tested using a panel of Chinese enterprises during the period 1995-1999. The empirical analysis indicates that despite of the corporatization reform social welfare investment undertaken by Chinese SOEs is still inefficient due to the lack of profit concerns, suggesting that social objectives still dominate profit concerns in motivating the SOEs' social welfare investment. However, we do obtain clear-cut evidence showing that social objectives become less important as time progresses.

Original languageEnglish
Pages (from-to)267-295
Number of pages29
JournalScottish Journal of Political Economy
Volume56
Issue number3
DOIs
Publication statusPublished - Jul-2009

Keywords

  • PANEL-DATA

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