THE DYNAMIC IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON FINANCIAL PERFORMANCE: THE MODERATING EFFECT OF POLITICAL CONNECTIONS
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Abstract
Based on stakeholder theory and institutional theory, this article constructs a theoretical model to explore the dynamic relationship between Corporate Social Responsibility (CSR) and financial performance. Using publicly available data from listed companies on China’s Shanghai and Shenzhen stock markets from 2010 to 2019, the study employs empirical methods from a dynamic analysis perspective to examine the evolving impact of CSR on financial performance. It also investigates the moderating role of political connections in this relationship. The empirical results indicate that a higher level of CSR fulfillment significantly enhances financial performance. The dynamic analysis further reveals that this positive effect is most pronounced within two years, with impact coefficients of 0.0009 and 0.0006, respectively. Political connections exhibit a significant negative moderating effect in this process, as reflected in the cross-term coefficient of -0.0004. This study contributes to the literature by expanding the understanding of the dynamic economic effects of CSR and providing new empirical evidence on the “double-edged sword” role of political connections. Future research may further explore organizational boundaries to more comprehensively reveal the dynamic economic impacts of CSR.
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