Is obedience rewarding? State investment in response to CSR reporting in China

Scholars have recognized governmental and political influences on corporate social responsibility (CSR) reporting activities. However, whether such activities subsequently result in governmental support to firms remains unchecked. We theorize that due to governments’ multiple demands and developmental agenda, state investments with divergent underlying incentives respond differently to firms’ CSR reporting. Using a panel data analysis on 1462 Chinese private firms from 2014–2018, we find that CSR report quality is positively associated with further state investment with a socially-beneficial incentive, and negatively associated with further state investment with a profit-seeking incentive. We further reveal that the relationship between the quality of CSR report and two types of state investments are weakened by chief executive officer (CEO) succession and strengthened by a local CEO. Our study contributes to research on CSR and stakeholder theory.