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Corporate Board and Corporate Social Responsibility Assurance: Evidence from China

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Abstract

This paper investigates the association between board characteristics and the company’s corporate social responsibility (CSR) assurance decision in China. By examining 2054 firm-years of Chinese listed companies with CSR reports from 2008 to 2012, we find that firms with a large board size, more female directors, and separation of CEO and chairman positions are more likely to engage in CSR assurance. Gender diversity also influences the CSR assurance provider choice. However, board independence and overseas background of the CEO do not affect the CSR assurance decision. Inconsistent with our prediction, firms with foreign directors are less likely to engage in voluntary CSR assurance. In summary, this research provides in-depth insights into the determinants of Chinese firms’ voluntary CSR assurance.

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Notes

  1. See Cohen and Simnett (2015) for the detailed review.

  2. In September 2008, after months of intentionally hiding information from the public, the infant formula from Sanlu Group, one of China’s leading infant formula producers, was reported to contain an industrial chemical ingredient melamine. This caused numerous infant kidney stones and/or kidney failure in China. The melamine incident not only led to the bankruptcy of Sanlu Group, it swept 22 dairy enterprises (including well-known brands) and destroyed consumer confidence in the entire dairy and food industry. An estimated 300,000 victims caused considerable pressure on the public medical system. Laid-off workers from the dairy industry required government intervention. The incident reshaped the national regulation system, with the suspension of inspection-free systems and the implementation of the ‘Regulation on the Supervision and Management of the Quality and Safety of Dairy,’ triggering intensive debates on CSR in China.

  3. Yang et al. (2008) show that more than 80 % of listed firms in China have boards of nine or eleven members.

  4. www.rksratings.com.

  5. As CSMAR covers CSR information from 2008 for all the listed companies, we are unable to include prior year CSR reports and assurance data in this analysis, even though we note that the earliest CSR reports and the first CSR assurance in China was made in 2006 for China Ocean Shipping Corporation (COSCO).

  6. The International Auditing and Assurance Standard Board (IAASB) has made an effort to establish an Integrated Reporting Working Group in 2014 and a discussion draft, entitled “Assurance on Integrated Reporting” has been circulated for comment in April 2015. Website: http://auasb.cmail1.com/t/ViewEmail/r/478F94AB1E82E8632540EF23F30FEDED#toc_item_3.

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Authors and Affiliations

  1. Southwestern University of Finance and Economics, Chengdu, China

    Lin Liao

  2. Shantou University, Shantou, China

    Teng (Philip) Lin

  3. Queensland University of Technology, Brisbane, Australia

    Yuyu Zhang

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  1. Lin Liao
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  2. Teng (Philip) Lin
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  3. Yuyu Zhang
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Correspondence to Yuyu Zhang.

Appendix

Appendix

See Table 7.

Table 7 Definitions to the variables
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Liao, L., Lin, T.(. & Zhang, Y. Corporate Board and Corporate Social Responsibility Assurance: Evidence from China. J Bus Ethics 150, 211–225 (2018). https://doi.org/10.1007/s10551-016-3176-9

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