The Response of CSR to Economic Policy Uncertainty: Evidence from China

Abstract

The dynamics and instability of economic policies exercise considerable influence on firm behaviors. This study aims to explore the impact of economic policy uncertainty on the level of CSR that firms are engaged in and the heterogeneity of this impact across firms. Using a dataset of Chinese-listed companies from 2011 to 2019, which consists of 837 different firms and 4551 firm-year observations, the results show a negative response of CSR to economic policy uncertainty in China, which is mitigated by the political connections and resource slack that firms possess. These findings underscore the importance of a predictable business environment for CSR behaviors and the capability of firms to cope with uncertainty.