The spillover effect of investment incentives on corporate social responsibility: Firm responses to accelerated depreciation. (20th January 2023)

• Record Type: Journal Article
• Authors: Zhao, Lexin; Peng, Gang
• Is Part Of: Journal of cleaner production. Volume 385(2023)
• Publication Date: 2023-01-20
• Subjects: Sustainable development -- Tax incentives -- Financial constraints -- Firm performance; D22 -- G38 -- H25 -- M14; Factory and trade waste -- Management -- Periodicals; Manufactures -- Environmental aspects -- Periodicals; Déchets industriels -- Gestion -- Périodiques; Usines -- Aspect de l'environnement -- Périodiques; 628.5
• DOI: 10.1016/j.jclepro.2022.135647
• Languages: English
• ISSNs: 0959-6526

Abstract

Abstract: This paper aims to explain the causal relationship between accelerated depreciation policy (ADP), a worldwide used tax incentive, and corporate social responsibility (CSR) performance. We employ China's ADP as a quasi-natural experiment and use a difference-in-differences (DID) specification to explore the policy effects on CSR performance. Based on the data of China's A-share listed companies from 2010 to 2019, we find that ADP would increase CSR performance by easing corporate financing constraints and improving firm performance. Besides, the policy effects are more pronounced on firms facing stronger market competition and firms with better corporate governance. These results suggest that ADP can be an incentive for CSR engagement and highlight the significance of improving marketization to make tax policies effective.