Can Fulfillment of Social Responsibility Enable Enterprises to Innovate? The Role of Corporate Financialization and Agency Costs

Abstract

This study constructs a panel model to conduct an empirical analysis on the influence of fulfillment of social responsibility on corporate innovation and its mechanism based on the annual data of A-share listed companies in China from 2010 to 2020. Research results show that (1) fulfillment of social responsibility has a positive effect on corporate innovation. Compared with enterprises with high economic policy uncertainty and low equity balance and non-state-owned enterprises, the implementation of social responsibility has a larger impact on the innovation of enterprises with low economic policy uncertainty and high equity balance and state-owned enterprises. (2) Corporate financialization and agency costs play a mediating role in the relationship between fulfillment of social responsibility and corporate innovation. Fulfillment of social responsibility can promote enterprise innovation by alleviating the capital-crowding effect caused by enterprise financialization and reducing agency costs. (3) Commercial credit has a positive moderating effect on the relationship between fulfillment of social responsibility and enterprise innovation. (4) Institutional investors have a negative moderating effect on the relationship between the fulfillment of social responsibility and enterprise innovation. The results can provide important theoretical guidance and serve as a decision-making reference for standardizing corporate social responsibility behavior and realizing the high-quality development of the Chinese economy.