Preprint Article Version 1 Preserved in Portico This version is not peer-reviewed

Corporate Social Responsibility and Firm Life Cycle: Empirical Evidence from the Pharmaceutical Industry in China

Version 1 : Received: 7 November 2021 / Approved: 9 November 2021 / Online: 9 November 2021 (14:40:54 CET)

How to cite: LI, J.C.; Benamraoui, A.; Mathew, S.; Shah, N. Corporate Social Responsibility and Firm Life Cycle: Empirical Evidence from the Pharmaceutical Industry in China. Preprints 2021, 2021110183 (doi: 10.20944/preprints202111.0183.v1). LI, J.C.; Benamraoui, A.; Mathew, S.; Shah, N. Corporate Social Responsibility and Firm Life Cycle: Empirical Evidence from the Pharmaceutical Industry in China. Preprints 2021, 2021110183 (doi: 10.20944/preprints202111.0183.v1).

Abstract

The study examines the relationship between corporate social responsibility (CSR) and the corporate life cycle (CLC) of the Chinese pharmaceutical listed companies for the duration of 2010 to 2018. The firm cash flow pattern is used as a proxy for the CLC. The study results indicate that the relationship between CSR and CLC is positive and linear in all the phases of the CLC including, the introduction, growth and maturity stage. Although the relationship is smaller and more significant at the maturity phase. The research further shows that investors incorporating social responsibilities values play a key role in the firm cash flow performance (CFP) across all the firm stages. Whilst, employees espousing social responsibility tenets can only improve CFP in the decline or shakeout stages. Likewise, embedding CSR into the customers group only improves CFP at the maturity stage. Applying the lag effects lead to the same study results. The finding for the bi-directional causality indicates that although CSR can positively influence CFP, CFP is ultimately more associated with the firm unobservable characteristics rather than performance attributed to CSR. On the whole, our study results point to positive causality between CSR and CFP across all the firm life stages and the CSR has a mediating effect on each life cycle.

Keywords

China; Corporate Life Cycle; Corporate Performance; Corporate Social Responsibility; Pharmaceutical Industry

Subject

SOCIAL SCIENCES, Accounting

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