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The Nonlinear Effect of Economic Policy Uncertainty on Corporate Social Responsibility

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  • Cuiling Ou

    (School of Public Administration, Hunan University, Changsha 410082, China)

  • Kegao Yan

    (School of Public Administration, Hunan University, Changsha 410082, China)

Abstract

The debate on how corporate social responsibility (CSR) responds to and reacts to the increasing economic policy uncertainty (EPU) is still unsettled. The present study sheds light on the curvilinear relationship between EPU and CSR, employing the provincial EPU index in China for the period of 2010–2016. More precisely, when EPU is in an appropriate range, as EPU grows, its CSR engagement experiences an initial increase; however, once the threshold value is reached, the additional increments in EPU result in a reduction in CSR engagement. Additionally, the inflection point of the state-owned firms, large-sized firms, and firms in their mature stage are large, indicating that economic policy uncertainty influences corporate social responsibility positively in a rather wider range. We also show that the inverted U-shaped effect is negatively moderated by financial constraints and government interventions. The findings of this study hold significance for policy-makers, offering valuable insights related to the structuring of efficient policies.

Suggested Citation

  • Cuiling Ou & Kegao Yan, 2024. "The Nonlinear Effect of Economic Policy Uncertainty on Corporate Social Responsibility," Sustainability, MDPI, vol. 16(12), pages 1-19, June.
  • Handle: RePEc:gam:jsusta:v:16:y:2024:i:12:p:5062-:d:1414733
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    References listed on IDEAS

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