Targeted Poverty Alleviation And Regional Resource Allocation For Listed Companies In China

Along with the introduction and implementation of the targeted poverty alleviation(Then referred to as TPA),firms have increasingly become the main force in the undertaking of poverty alleviation in China,and TPA has become an important new form of corporate philanthropic behavior.As an important part of economic and social development,firms that participate in TPA can ease resource constraints and improve resources efficiency,which is an indispensable force in China’s poverty alleviation work.To encourage firms to participate in TPA,the government has implemented a series of policies.From the perspective of corporate practice,more and more firms have been engaged in TPA since its implementation in 2013.The number of A-share listed firms involved in TPA increased from 668 in 2016 to 1,545 in 2020,representing about 36% of the total number of A-share listed firms,and the investment increased from 5.25 billion yuan in 2016 to 22.52 billion yuan.TPA directed to poor areas can be considered as a Place Based Policy that affects the regional allocation of business resources.China’s poor area and poor population have obvious spatial clustering characteristics,mainly concentrated in the central and western regions of China.Therefore,TPA directed to poor areas is similar to Place Based Policy.The participation of firms in TPA is inevitably reflected in the spatial adjustment of their economic activities.However little research has focused on this issue.In response to this reality,this paper takes the perspective of regional resource allocation of listed firms based on manually collected data on the geographical distribution of firms’ TPA,charitable resources,subsidiary investment,and bank credit and explores the impact of participation in TPA on firm investment and financing and their economic consequences from the perspective of regional resource allocation of listed companies.Specifically,the research in this paper focuses on answering the following three questions.First of all,what is the impact of TPA on the regional allocation of firm donation resources? Before the TPA,firms mostly participated in poverty alleviation through donating,in view of the "obvious" and "habitual" characteristics of donating,donating is still one of the ways for firms to participate in TPA.But due to the obvious geographical orientation of TPA.After TPA,firms’ participation in poverty alleviation through donation will inevitably cause firms to invest more charitable resources in poor regions,thus causing spatial adjustment of charitable resources.Based on this,this paper considers the impact of TPA on corporate donations from the perspective of geographical distribution.The empirical results reveal that(1)before TPA,we provide robust evidence of firms’ revenue-driven regional favoritism.Specifically,firms donate more to regions where they obtain revenue than to poorer regions in greater need,and the spontaneous poverty alleviation effect of corporate donations was weaker.(2)TPA has compromised firms’ revenue-driven regional favoritism while increasing the amount of money donated to poor regions,indicating that TPA causes an adjustment in the spatial distribution of corporate donation resources,which leads firms to allocate charitable resources to poor regions and enhances the poverty alleviation effect of corporate donations.(3)The closer the distance between products and consumers and the greater the pressure of poverty alleviation faced by firms in their locations,the more likely they are to donate to poor regions.(4)After TPA was proposed in 2013,corporate donations to poor areas can enhance firms’ reputations and help them obtain government subsidies.These findings suggest that in the context of TPA,frim adjustment of the geographical distribution of donations and increasing donations to poor areas can gain social and governmental recognition and guide the allocation of social and economic resources to achieve consistency between social and corporate benefits.Secondly,what is the impact of TPA on the regional allocation of firm subsidiaries’ investment? After the implementation of TPA,the form of firm participation in poverty alleviation not only includes the traditional "blood transfusion type of poverty alleviation" based on corporate donations,but also the "blood creation type of poverty alleviation" based on industrial investment.To obtain the policy bonus brought by TPA and make full use of the regional resource advantages,firms take the form of investing and establishing subsidiaries in poor regions to participate in poverty alleviation,thus causing changes in the geographic distribution of their subsidiaries.Based on this,this study explores the impact of TPA on the spatial allocation of corporate investment from the perspective of the geographic distribution of corporate subsidiaries.The study finds that(1)after the introduction of TPA,firms will set up more subsidiaries in poor counties,and the firms that set up subsidiaries in poor counties are mainly labor-intensive and resource-dependent firms.This indicates that TPA is compatible with industrial transfer in China,and the two together can guide industries that have lost their comparative advantages in non-poor regions to transfer to the poor,optimize the spatial adjustment of China’s industrial structure,and achieve a "win-win" situation of economic development in poor regions and firm performance growth.(2)The mechanism test shows that the more obvious the comparative advantages of land and labor factors in poor counties,the more investments in corporate subsidiaries are attracted.(3)Further study finds that setting up subsidiaries in poor counties can reduce the operating costs and promote the performance of firms,and at the same time,subsidiaries in poor counties can promote the economic development of poor regions.Together,the above empirical evidence shows that TPA does not necessarily distort the allocation of market resources while directing resources to poor regions.The internal logic of listed firms to follow the government’s macro policy to invest in conjunction with their own development needs is still in line with the market rules.Thirdly,what is the impact of TPA on the regional allocation of corporate credit.Credit support is an important measure to encourage firms to participate in precise poverty alleviation.TPA will have an impact on firms’ donation decisions and subsidiary investment decisions in addition to their financing behavior.Based on the reason above,this paper switches the study perspective to corporate credit resources and investigates the impact of corporate participation in TPA and different types of TPA on the regional allocation of corporate bank credit resources,and explores its mechanism of effect on this basis.The empirical study shows that(1)firms’ participation in TPA affects their ability to obtain credit in different regions,and the more the firms invest in TPA in a region,the more credit they obtain from banks in that region.(2)Compared with other types of poverty alleviation,the above effect is more significant in firms that invest more in industrial TPA.(3)The mechanism test shows that information effect and government-firm interaction effect are the main channels through which TPA affects the ability of firms to obtain bank credit in that regions.(4)The analysis of the characteristics of bank credit reveals that the more firms invest in TPA in a region,the lower the interest rate and the longer the credit period they can obtain from banks in that region.These results together indicate that firms’ participation in TPA can be recognized by the market,guide the allocation of firms’ credit resources,and achieve consistency between social and corporate benefits in carrying out TPA.This paper takes the geographical directionality of TPA as the entry point and explores the impact of corporate participation in TPA on the regional allocation of corporate resources and its inner mechanism.The research innovations of this paper are as follows.First,the research in this paper expands the cognition of new corporate social responsibility behavior in the context of China.TPA has become an important new type of corporate philanthropy after donation,while most existing studies have focused only on corporate donation or precision poverty alleviation itself ignoring the association between the two and failing to reflect the Chinese corporate the full picture of philanthropic forms,and it is difficult to examine the inner logic of corporate philanthropic resource allocation and adjustment.Therefore,the difference of the trade-off departure between precise poverty alleviation and corporate giving starts to explore the inner mechanism of corporate philanthropic resource allocation decisions,which is a supplement and deepening of the previous research on corporate philanthropic forms under a single perspective and reflects a stronger Chinese characteristic and contemporary background.The research in this paper emphasizes the geographical heterogeneity in the study of firm PTA,which to some extent breaks through the assumption of geographical homogeneity in previous studies,provides a new research perspective for the study of enterprise precision poverty alleviation,and expands the research literature on firm PTA and economic geography.Existing literature mainly explores firm PTA in terms of both influencing factors and firm value,but the focus on geographic factors is significantly insufficient,which leads to most existing studies assume that firms and poor regions are geographically homogeneous or that the geographical distance between them is negligible.The assumption of homogeneity is not in line with the reality,and it is difficult to observe the spatial flow of resources caused by enterprises’ participation in precise poverty alleviation.Distinct from the previous literature,this paper explores the impact of PTA on corporate investment and financing from the perspective of regional resource allocation of listed companies,which enriches the research literature on corporate PTA.Third,the research in this paper provides new empirical evidence for strategic CSR theory.CSR and corporate performance are the focus of strategic CSR theories.This paper takes the new type of CSR,TPA,as the background,and again tests the classic proposition of CSR and corporate performance,providing new empirical evidence for strategic CSR theories.This paper finds that the investment property of TPA makes it not only a kind of CSR,but also an industrial investment made by enterprises according to their own development needs,and the strategic participation of enterprises in TPA can realize the unification of social and corporate benefits.