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Executive compensation, internal control quality, and corporate social responsibility in China

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  • Junnan Hu
  • Xuan Lin
  • Feixue Xie

Abstract

We explore the relations among executive compensation, internal control quality (ICQ), and corporate social responsibility (CSR), focusing on improving the CSR outcomes of listed firms in China. Our findings are fourfold. First, we document that executive compensation and ICQ have a significant positive impact on CSR. Second, we find that executive compensation positively affects ICQ; hence, we identify ICQ as a channel that can further improve the impact of executive compensation on CSR. Third, we discover that the documented effects are stronger in state‐owned firms than in non‐state‐owned firms. Fourth, we observe that regulatory changes have both positive and negative impacts on CSR. Our findings are less vulnerable to endogeneity and have key implications for policy makers.

Suggested Citation

  • Junnan Hu & Xuan Lin & Feixue Xie, 2024. "Executive compensation, internal control quality, and corporate social responsibility in China," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 47(1), pages 147-177, March.
    • Handle: RePEc:bla:jfnres:v:47:y:2024:i:1:p:147-177
    DOI: 10.1111/jfir.12365
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