The Expenditures On And Efficiency Of Corporate Social Responsibility Activities

Chinese firms are required to disclose their expenditures on targeted poverty alleviation(TPA)projects and the number of people being lifted out of poverty consequently.This unique setting provides both actual expenditures on,and the outcomes of a specific corporate social responsibility(CSR)activity,allowing to examine the determinants of firms’ CSR spending and its efficiency.We find that political pressure from the government is the main driver behind Chinese firms’ TPA spending.Some of the political pressure measures weaken the relation between TPA expenditures and the number of people alleviated out of poverty,indicating a waste of resources when firms are pushed to CSR activities by the government.Firms that are more competent in their own business tend to be more efficient in the TPA projects too,suggesting that the government and interest groups should encourage these firms to actively manage their CSR activities.The additional analysis indicates that political pressure is the key determinant for firms to choose TPA projects,firms are more likely to choose industrial-development type of TPA projects over other TPA projects when they face greater political pressure.The complexity of TPA projects can significantly affect the efficiency of TPA projects.The complexity strengthens the association between the input and output of TPA projects.After controlling the complexity of TPA projects,political pressure still weakens the association between the input and output of TPA projects.