The spillover effect of investment incentives on corporate social responsibility: Firm responses to accelerated depreciation

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...

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Bibliographic Details
Published in:Journal of cleaner production 2023-01, Vol.385, p.135647, Article 135647
Main Authors: Zhao, Lexin, Peng, Gang
Format: Article
Language:English
Subjects:
China
corporate social responsibility
Financial constraints
Firm performance
governance
issues and policy
market competition
Sustainable development
Tax incentives
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Summary: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.
ISSN:0959-6526
1879-1786
DOI:10.1016/j.jclepro.2022.135647