Journal of Business Ethics

https://doi.org/10.1007/s10551-020-04538-w

ORIGINAL PAPER

Government Initiated Corporate Social Responsibility Activities:

Evidence from a Poverty Alleviation Campaign in China
Yuyuan Chang1 · Wen He2 · Jianling Wang1 

Received: 27 April 2019 / Accepted: 13 May 2020

© Springer Nature B.V. 2020

Abstract
In 2016 the Chinese government initiated a nationwide campaign aiming to eliminate poverty in China by 2020. Over 20% of
listed firms in China have made significant contributions to the campaign. Using hand-collected data on listed firms’ contri-
butions to the campaign and multivariate analyses, we examine whether managers’ and politicians’ personal incentives play
an important role in firms’ contributions to the campaign. The results show that firms are more likely to contribute if they
are state-owned and managers are appointed by governments, if managers have a higher risk of being targeted in a concur-
rent anti-corruption campaign, if the political leaders in their province are new or intend to seek promotion, and if managers
or directors have experienced poverty in their early life. The results suggest that it is important to consider managers’ and
politicians’ personal incentives in CSR activities that could have a grand social impact.

Keywords  Corporate social responsibility · Incentives · Government · Poverty alleviation · China

JEL Classifications G41

Introduction eliminate poverty and recognize that it is critically important

Corporate social responsibility (CSR) has attracted increasing
attention from both academia and the business world.1 A large
number of corporations have set up dedicated internal units
to manage their social engagement, and over 8000 corpora-
tions around the world have signed the United Nations’ Global
Compact to address important societal challenges (Wang et al.
2016). In many countries, a key challenge is poverty: accord-
ing to the World Bank, in 2013, 10.7% of the world’s popula-
tion, or 767 million people, lived on less than US$1.90 a day.
While some governments and international organizations such
as the United Nations and the World Bank have vowed to
* Jianling Wang
wangjl@xjtu.edu.cn
Yuyuan Chang
changyuyuan1994@stu.xjtu.edu.cn
Wen He
wen.he1@monash.edu
1
Department of Accounting and Finance, School
of Management, Xi’an Jiaotong University, Xi’an, China
2
Department of Accounting, Monash Business School,
Monash University, Melbourne, Australia
to involve businesses in addressing global challenges, there
is little evidence on firms’ incentives and actions to address
poverty and contribute to social equity. This study aims to pro-
vide such evidence by investigating listed firms’ engagement
in a poverty alleviation campaign in China,2 a country which
has achieved a rapid reduction in poverty in recent decades.
When the People’s Republic of China was founded in
1949, the majority of the Chinese population lived in pov-
erty. Since then, governments at all levels have taken numer-
ous measures to alleviate poverty. According to the World
Bank, the number of Chinese people living in poverty has
dramatically decreased from 730.4 million in 1981 to 18.5
million in 2014.3 In 2016, the Chinese government and the
1
 Although there is no consensus definition of CSR, recent studies
usually follow the ESG framework that focuses on environmental (E),
social (S) and governance (G) issues. See Garriga and Melé (2004)
for a discussion of various concepts and theories of CSR. For a recent
review of the CSR literature, please see Kitzmueller and Shimshack
(2012) and Wang et al. (2016).
2
 By examining the poverty alleviation, our study focuses on the
social element in the ESG framework of CSR.
3
  A 2012 report by the World Bank shows that the number of Chi-
nese people living on less than US$1 a day decreased from 730.4 mil-
lion in 1981 to 97.4 million in 2008, and the percentage of the Chi-
nese population living on less than US$1 a day decreased from 73.5%

13
Vol.:(0123456789)

ruling party launched a nationwide campaign of targeted
poverty alleviation and pledged to eliminate poverty by
2020.4 One feature of the campaign is that it has mobilized
organizations and people from all parts of society, including
listed firms, to participate in and contribute to the campaign.
This offers a unique setting to investigate public firms’ par-
ticipation in government initiated CSR activities, while the
prior studies focus on CSR activities initiated by firms.
Poverty eradication is related to social justice and fair-
ness. Walzer (1983) observes that insufficient income
excludes a citizen from full membership in a society. Rawls
(1999) proposes that social justice requires a set of institu-
tions that make the worst-off members of society as well off
as possible. Arneson (2002, p. 184) states that “the sufficien-
tarian principle of justice says that institutions and practices
should be arranged and actions chosen so that of those peo-
ple who will ever live, as many as possible reach the suffi-
cient level.” Furthermore, egalitarians generally believe that
it is unfair if one person is worse off than another through no
fault or choice of their own (Temkin 2003). Because poverty
is often caused by conflicts and a lack of job opportunities
and infrastructure,5 which are not the fault or choice of the
poor, it is only fair that the poor get help to have sufficient
resources to live. Therefore, the government initiated pov-
erty alleviation campaign has important ethical implications
for social justice and fairness.
Footnote 3 (continued)
in 1981 to 7.4% in 2008. The report is available at: https​://siter​esour​
ces.world​bank.org/INTPO​VCALN​ET/Resou​rces/Globa​l_Pover ​ty_
Updat​e_2012_02-29-12.pdf. The World Bank estimates that in 2014,
18.5 million Chinese people living on less than US$1.90 a day (the
new standard to define poverty).
4
 The idea of targeted poverty alleviation was first raised in 2013
by President Xi Jinping. The goal of “eliminating poverty by 2020”
was first set in the decision made by the Central Committee of China
Communist Party and the Central Government of China on Novem-
ber 29, 2015 (see the official news report at https​://www.gov.cn/
xinwe​n/2015-12/07/conte​nt_50209​63.htm.). The goal was also subse-
quently set in the 13th Five-Year Plan, approved by the People’s Con-
gress of China on March 16, 2016. After this approval, the nation-
wide campaign started.
5
 See, for example, https​://www.conce​rnusa​.org/story​/top-9-cause​
s-globa​l-pover​ty/.
13
Y. Chang et al.
Using manually collected data from annual reports from
2016 to 2018, we first describe listed Chinese firms’ par-
ticipation in and contributions to the poverty alleviation
campaign. In 2016, 18.2% of listed firms participated in the
campaign, and this percentage increased to 23.0% in 2017
and 24.9% in 2018. The main forms of contributions include
donations of money, donations of non-pecuniary resources
such as goods and services, setting up business projects such
as factories and sales platforms, and providing training and
education programs. For participating firms, the average
value of monetary and non-pecuniary donations was 4.448
million yuan in 2016, 5.859 million yuan in 2017 and 6.752
million yuan in 2018,6 equivalent to 1.2%, 2.9% and 3.3%
of net income in those three years. On average, a participat-
ing firm helped 291 people out of poverty in 2016, and the
number increased to 385 in 2018. Collectively, listed firms
contributed 9.1 billion yuan to the campaign and helped over
200,000 people out of poverty in 3 years. The evidence sug-
gests that some listed firms have actively participated in the
campaign and made significant contributions.
Despite the moral and ethical importance of helping the
poor, about three quarters of listed firms have not made any
contribution to the poverty alleviation campaign. We explore
the motivations for listed firms to participate in the cam-
paign. Following recent studies that suggest that managers’
personal incentives play an important role in firms’ CSR
activities (e.g., Masulis and Reza 2015; Petrenko et al. 2016),
we focus on managers’ and politicians’ personal incentives
in explaining firms’ participation in the poverty alleviation
campaign. Because the campaign was initiated by the central
government and the ruling party, we expect that managers
and politicians who have stronger incentives to follow the
request from the government are more likely to participate in
the campaign. To test the expectation, we begin with a com-
parison of state-owned enterprises (SOEs) and firms in the
private sector. Managers of SOEs are appointed by govern-
ments, and thus are more likely to support the government
initiated campaign by making significant contributions. In
contrast, private sector firms are owned by individuals or
families, who likely care more about profitability. We thus
predict that SOEs are more likely to contribute to the poverty
alleviation campaign. Consistent with this prediction, we
find that 37.8% of SOEs contribute to the campaign, com-
pared to 13.2% of non-SOEs contributing to the campaign.7
Multivariate analysis confirms that SOEs are more likely
6
 The average exchange rate was about 6.5 yuan per US dollar in
2016 2017 and 2018. The statistics reported here are based on the
sample with continuous variables winsorized at the top 1% level.
7
  Only about one third of SOEs participated in the campaign, sug-
gesting that participation is not compulsory, which allows us to exam-
ine variations in firms’ incentives to participate.
Government Initiated Corporate Social Responsibility Activities: Evidence from a Poverty…
to participate in the campaign and donate more money and
resources than non-SOEs, after controlling for other firm
characteristics such as profitability and cash holdings.
The poverty alleviation campaign is concurrent with an
unprecedented anti-corruption campaign that has ousted
over 1.3 million officials in China and put hundreds of
managers of businesses in jail (Griffin et al. 2018; Liu et al.
2017). Contributions to the poverty alleviation campaign
may help managers to manage political risk and avoid being
targeted in the anti-corruption campaign. Consistent with
this view, we find that firms are more likely to participate in
and donate more to the poverty alleviation campaign if they
have a higher risk of being targeted in the anti-corruption
campaign.
We then examine the incentives of local political lead-
ers, as political leadership may drive social change (Blondel
1987; George 1968), and conjecture that some local political
leaders have stronger incentives to mobilize local firms to
participate in the campaign. Focusing on the top leaders in
the province (the governor and the provincial party leader),8
we expect that new leaders who have just taken up their
position and leaders who intend to advance their political
careers further are likely to have stronger incentives to pub-
licly demonstrate their loyalty to the central government and
the central committee of the ruling party, and to show their
effectiveness and success in completing the political task of
alleviating poverty by mobilizing more local firms to par-
ticipate in the campaign. The empirical results are consistent
with our expectations.
Xu and Li (2016) show that CEOs who experienced the
“Great Chinese Famine” between the years 1959 and 1961
are more likely to make philanthropic donations while enjoy-
ing less “perks”. The evidence suggests that managers with
poverty experience are likely to have more ethical behavior
and more sympathy for the poor. Consistently, we find that
firms are more likely to contribute to the poverty allevia-
tion campaign when their managers or directors have expe-
rienced poverty in their early life, suggesting that empathy
and ethical considerations could be a reason for firms to
participate in the campaign.
We then examine whether there are economic rewards for
public firms to participate in the poverty alleviation cam-
paign. Consistent with prior findings that CSR is related
to government benefits and positive market outcomes,9 we
8
  Mainland China has 22 provinces, 5 autonomous areas, and 4 cities
under direct administration of the central government. They are at the
same level in China’s administration system. For brevity, we refer to
all of them as provinces.
9
  Prior studies have shown that CSR is positively related to govern-
ment subsidies (Lin et  al. 2015), government procurement contracts
(Flammer 2018), firm value (Zolotoy et al. 2019), and positive media
coverage (Cahan et al. 2015).
find that firms participating in the campaign receive more
government subsidies, a higher firm valuation measured by
Tobin’s Q, and a better reputation for CSR in public media.
The evidence suggests that participating firms are rewarded
for their contributions to the poverty alleviation campaign.
Finally, we explore whether government initiated CSR
activities “crowd out” firms’ other CSR activities by exam-
ining changes in philanthropic donations after firms partici-
pate in the poverty alleviation campaign. Using a difference-
in-differences approach, we find that, relative to firms not
participating in the campaign, firms that contribute to the
campaign have a decrease in their philanthropic donations
(net of their campaign contributions) after 2016. However,
participating firms’ total CSR investments, measured by
the sum of their campaign contributions and philanthropic
donations, increase. The evidence suggests that government
initiated CSR activities may “crowd out” firms’ other CSR
activities, but overall have a positive effect on firms’ total
CSR investments.
Our study contributes to the literature in four ways. First,
to our best knowledge, we are the first to use archival data to
investigate firms’ participation in government initiated CSR
activities, while the vast CSR literature focuses on CSR initi-
ated by firms. Furthermore, while prior CSR studies exam-
ine issues such as environment protection and the special
needs of subsets of people, they provide little evidence on
the impact of individual firms’ CSR activities on general
society. By examining poverty alleviation, we can provide
evidence on the impact of CSR on society. Our evidence
shows that an average participating firm in the campaign can
help over 300 people out of poverty and, collectively, par-
ticipating firms helped over 200,000 people out of poverty
in the 3-year period in our sample. The experience of China
suggests that it is feasible and fruitful to mobilize public
firms to join forces to achieve a grand social objective that
is difficult to achieve by any individual firm.
Second, our results add to the growing studies that link
managers’ personal incentives to CSR activities (e.g., Masu-
lis and Reza 2015; Petrenko et al. 2016). Our results indicate
that managers’ and government officials’ incentives matter in
deciding firms’ contributions to the poverty alleviation cam-
paign. The results have implications for international efforts
to address grand challenges around the world, such as pov-
erty alleviation and global warming. It has been recognized
that these global issues are better addressed through the joint
efforts of governments and businesses.10 One implication
10
 For example, Lise Kingo, the CEO and Executive Director of
United Nations Global Compact, stated that “For governments and
business, working together to build a prosperous, net zero carbon
economy by 2050 is critical.” Available at https​://www.unglo​balco​
mpact​.org/news/4466-08-21-2019.
13

of our results is that it might be more effective to motivate
managers and politicians to participate in addressing global
challenges if their contributions can be rewarded with posi-
tive publicity, reputation and career advancement.
Third, our study also links to the literature on political
leadership and social change. Prior studies have documented
that politicians and governments have a significant impact on
social issues (e.g., Dietz 2015; Naguib and Smucker 2009;
Vallentin 2015). In a qualitative analysis, Griesse (2007)
finds that the Brazilian government’s effort to alleviate pov-
erty has been undermined by poor articulation, bribery and
corruption. In our setting, the strong leadership of the central
government of China played an important role in launching
the poverty alleviation campaign, mobilizing government
and non-government organizations to contribute to the cam-
paign, implementing strategies to reduce poverty, disciplin-
ing misbehavior in the campaign and evaluating the outcome
of the poverty alleviation initiatives. The interesting contrast
suggests that strong leadership is critical in driving social
change and achieving social equity.
Fourth, our study also adds to the growing literature on
CSR in China and other developing markets (e.g., Chen et al.
2018a; Lin et al. 2015; Manchiraju and Rajgopal 2017). 11
Unlike developed economies, in developing markets gov-
ernments often play a critical role in the economy by set-
ting regulations, giving government subsidies, and granting
access to bank loans and equity markets (Lin et al. 2015;
Wong 2016). Given the power of governments, it is thus
important for firms to manage their relationship with the
government in developing markets. Our evidence suggests
that firms may actively manage their political risk by par-
ticipating in government initiated social projects. In return,
participating firms receive rewards from the government,
which help improve firm value.
The remainder of the paper proceeds as follows. “Insti-
tutional Background and Hypothesis Development” section
describes the institutional background and develops hypoth-
eses. We discuss the research design in “Research Design,
Data and Sample” section and report empirical results in
“Empirical Results” section. “Conclusion and Discussion”
section concludes.
11
  Visser (2008) and Jamali and Karam (2016) survey academic stud-
ies on CSR in developing countries.
13
Y. Chang et al.
Institutional Background and Hypothesis
Development
Institutional Background
Poverty has long been a global challenge. According to
the World Bank Annual Report in 2017,12 the percentage
of the world’s population living in poverty has decreased
from 37.1% in 1990 to 9.6% in 2015, and nearly 1.1 bil-
lion people have escaped poverty since 1990. But over 700
million people still struggle to survive under the scarcity
of essential resources such as food, clothing and shelter.
Academic researchers have widely documented the adverse
consequences of poverty for social development. For exam-
ple, prior studies show that poverty damages children’s and
young adolescents’ mental, emotional and behavioral devel-
opment (Brooks-Gunn and Duncan 1997; Montgomery et al.
1996; Yoshikawa et al. 2012), intensifies the mortality rate
from diseases (Dorling et al. 2000), and is closely related
to homicide, assault and other violent crimes which greatly
threaten social stability (Guo and Harris 2000; Hsieh and
Pugh 1993). Reducing poverty has been a major target for
many countries and international organizations. For exam-
ple, the World Bank has its mission carved in stone at its
Washington headquarters: “Our Dream is a World Free of
Poverty”. The United Nations has “No Poverty” as the num-
ber one goal of the Sustainable Development Goals to be
achieved by 2030.13
China has made significant progress in reducing poverty.
The World Bank estimates that China has lifted over 800
million people out of poverty in the past four decades, sig-
nificantly contributing to the goal of eliminating poverty in
the world. China’s achievement was supported by successful
economic reforms and fast economic growth. For decades
the Chinese government has been committed to eliminating
poverty and has invested many resources to help people out
of poverty. As summarized by Qu (2017), the government
has developed a set of effective methods to reduce poverty
including (1) concentrating resources and eliminating pov-
erty village by village; (2) developing local economies and
creating job opportunities to employ the poor; (3) moving
the poor from villages with few resources to areas with a
more developed economy; (4) setting up training and educa-
tional programs to increase the employability of the poor; (5)
providing social welfare to help the ill, the disabled and the
disadvantaged; (6) investing in healthcare to prevent people
12
 World Bank Annual Report 2017, available at https​://pubdo​
cs.world​bank.org/en/90848​15074​03754​670/Annua​l-Repor​t-2017-
WBG.pdf.
13
  There are 17 goals, listed on the website: https​://www.un.org/susta​
inabl​edeve​lopme​nt/susta​inabl​e-devel​opmen​t-goals​/.
Government Initiated Corporate Social Responsibility Activities: Evidence from a Poverty…
from falling into poverty because of illness; and (7) protect-
ing the natural environment and subsidising the local poor.
In its thirteenth Five-Year Plan covering 2016 to 2020,
the central government of China committed 250 billion yuan
to poverty relief with the objective of eradicating poverty
in China by 2020.14 To achieve the objective, the Chinese
government launched a nationwide campaign to alleviate
poverty. The campaign emphasizes the importance of a
“targeted method” to ensure that assistance reaches poverty
stricken villages and households (Li et al. 2016). Specifi-
cally, it requires accurate identification of the poor, appro-
priate and specific projects for the poor, and precise meas-
urement of the effect. A key feature of the campaign is that
it has mobilized people and organizations from all walks
of life to participate (Qu 2017). For example, government
officials, university staff and firms have all been actively par-
ticipating in and contributing to the campaign. In September
2016, China Securities Regulatory Commission (CSRC), the
regulator of China’s capital market, announced that it had set
up a poverty alleviation working group led by the chair of
the commission.15 CSRC “supports and encourages” listed
firms to fulfil the social responsibility of reducing poverty,
and gives favorable consideration to equity and debt financ-
ing applications for firms located in poverty stricken areas.
A number of listed firms have contributed to the campaign
by donating money and resources, setting up cooperative
projects with local people in poverty stricken areas, and
employing the poor.16 For example, China Minsheng Bank
provided 31.5 million yuan to support 28,500 school stu-
dents in poverty, build and renovate 151 schools, and finance
63 projects on community development and environment
protection. Jinzhengda Group, a major fertilizer producer,
focused on improving agricultural productivity in rural areas
through training and financial support, and helped over 1
million farmers to increase their income. Hengda Group,
the largest real estate company in China, invested 5.7 billion
yuan in Bijie, a poverty stricken county in Guizhou prov-
ince, to establish agriculture businesses that helped 700,000
farmers to gain a sustainable income. It also provided skill
training to 80,000 people to help them become employed.17
14
  Following the World Bank, China uses income to define poverty
and the threshold has increased over time. Since 2011, people earning
less than 2300 yuan per year were classified as living in poverty.
15
  The announcement (in Chinese) is available at the CSRC website:
https​://www.csrc.gov.cn/pub/newsi​te/zjhxw​fb/xwdd/20160​9/t2016​
0909_30322​0.html.
16
 For example, hundreds of SOEs and over 35,000 private firms
have participated in the campaign and have specific tasks to do
to help the poor. See https​://www.xinhu​anet.com/fortu​ne/2017-
2/09/c_11220​85482​.htm.
17
 For more examples and details, please see https​://rmfp.peopl​
e.com.cn/n1/2018/0920/c4067​25-30304​314.html.
In December 2016, the two stock exchanges in Shanghai
and Shenzhen issued a Notice on Disclosing Firms’ Poverty
Alleviation Information18 to encourage listed firms to par-
ticipate in poverty alleviation activities. The notice requires
firms to follow a set of guidelines to disclose information
about their poverty alleviation efforts in their annual reports
or standalone CSR reports. Specifically, firms are encour-
aged to provide quantitative information about their con-
tributions to the campaign and the achievements they have
made in lifting people out of poverty.
Following the requirement of the stock exchanges, listed
firms in China systematically disclose information about
their participation in and contributions to the poverty alle-
viation campaign starting from fiscal year 2016. In particu-
lar, firms disclose the amount of money or resources they
contribute to the campaign, the number of people they help
out of poverty, and the number of educational or other pro-
jects they help set up. Firms that do not contribute to the
campaign also have to disclose that they have not made any
contributions yet. The disclosure allows us to manually col-
lect the information and examine public firms’ participation
in the poverty alleviation campaign.
Prior Studies on CSR
The literature and practice of CSR have broadly defined
CSR as covering environmental, social and governance
(ESG) issues. For example, the United Nations Industrial
Development Organization defines CSR as “a management
concept whereby companies integrate social and environ-
mental concerns in their business operations and interactions
with their stakeholders.”19 McWilliams and Siegel (2001,
p. 117) define CSR as “actions that appear to further some
social good, beyond the interests of the firm and that which
is required by law.” Researchers have used data measuring
firms’ ESG performance to examine the determinants and
consequences of corporate CSR activities (e.g., Kim et al.
2017; Liang and Renneboog 2017). Using US data, prior
studies have documented that the determinants of CSR
include a number of firm characteristics, such as owner-
ship structure (El Ghoul et al. 2016; Kim et al. 2019), local
religiosity (Zolotoy et al. 2019) and social capital (Jha and
Cox 2015). CSR activities are also found to be related to a
18
 The notice is at: https​://www.szse.cn/main/about​us/bsyw/39763​
006.shtml​ and https​://www.sse.com.cn/about​us/media​cente​r/confe​
rence​/c/c_20161​230_42232​94.shtml​. The notice also reported the
contributions to the poverty alleviation campaign made by the two
stock exchanges themselves.
19
 Available at https​://www.unido​.org/our-focus​/advan​cing-econo​
mic-compe​titiv​eness​/compe​titiv​e-trade​-capac​ities​-and-corpo​rate-
respo​nsibi​lity/corpo​rate-socia​l-respo​nsibi​lity-marke​t-integ​ratio​n/
what-csr.
13

few benefits such as lower cost of capital (e.g., Bae et al.
2019; El Ghoul et al. 2011; Goss and Roberts 2011), a low
stock price crash risk (Kim et al. 2014), more positive media
coverage (Cahan et al. 2015), and higher shareholder value
(Byun and Oh 2018; Ferrell et al. 2016; Nguyen et al. 2020).
While early CSR studies focused on developed markets
such as the US, recent studies show that CSR practice differs
substantially across countries. Consistent with institutional
theory, firms’ CSR varies systematically with a country’s
institutional factors such as legal origin (Kim et al. 2017;
Liang and Renneboog 2017), political system (Zhao 2012),
and culture (Mitra 2012). In developing markets, due to the
lack of regulation and enforcement or a focus on profits,
firms may lack incentives to improve CSR performance
(Azmat and Samaratunge 2009; Marquis and Qian 2014).
Consequently, governments in developing countries tend to
take actions to ask for or mandatorily require firms’ engage-
ments in CSR activities (Chen et al. 2018a; Manchiraju and
Rajgopal 2017; Marquis and Qian 2014). However, the real
effect of these government initiatives may differ because of
the political system, regulatory enforcement, local bureau-
cratic embeddedness and firms’ incentives. For example,
Naguib and Smucker (2009) show that the Malaysian
government has been successful in pursuing social equity
together with economic development. In contrast, Griesse
(2007) finds that the Brazilian government’s effort to allevi-
ate poverty has been undermined by poor articulation, brib-
ery and corruption. Manchiraju and Rajgopal (2017) find
that mandatorily requiring firms in India to spend on CSR
leads to a decline in firm value.
Some recent studies have started to examine the effect of
managers’ personal incentives and traits on firms’ CSR deci-
sions. For instances, Petrenko et al. (2016) argue that lead-
ers’ personal needs for attention can lead to CSR, and find
that CEO narcissism has positive effects on levels and profile
of organizational CSR. Similarly, McCarthy et al. (2017)
examine the role of CEO confidence, and find that firms with
a more confident CEO are likely to take more CSR activities
to hedge risk. Masulis and Reza (2015) find that the pre-
ferred charities of a firm’s CEO receive more philanthropic
donations from the firm, suggesting an agency problem asso-
ciated with CSR spending. However, these studies all adopt
a US setting. Due to the institutional differences between the
US and developing countries, it is unclear whether and how
managers’ personal incentives and traits affect firms’ CSR
in developing markets.
In this study, we aim to examine the effect of managers’
and politicians’ personal incentives on firms’ participation
in the Chinese poverty alleviation campaign. This study thus
provides insight on two topics in the existing CSR research.
First, we provide evidence to understand whether and how
managers’ personal incentives influence firms’ CSR deci-
sions in developing markets. Second, we shed light on the
13
Y. Chang et al.
effect of government initiated CSR activities and in particu-
lar how governments can motivate businesses to participate
in CSR activities that have profound social impact such as
poverty alleviation.
Hypothesis Development
One key feature of the poverty alleviation campaign is that
it was initiated by the state government and the ruling party
of China. In developing markets such as China, govern-
ments have a significant influence in the economy by setting
regulations, providing subsidies and tax incentives, issuing
licences, and granting access to equity and debt financing
(Allen et al. 2005; Wong 2016). Firms are under pressure to
be compliant and cooperative with the government in order
to survive and thrive in a “command and control” economy.
Prior studies have suggested that Chinese firms could use
CSR as an effective way to establish social-political legiti-
macy in the community and build up political connections
with politicians (e.g., Chang et al. 2018; Lin et al. 2015;
Wang and Qian 2011).20 Therefore, firms whose managers
have a stronger incentive to follow the orders of the govern-
ment are more likely to contribute to the poverty alleviation
campaign.
Our first hypothesis involves a comparison between SOEs
and non-SOEs. Because the managers of SOEs are appointed
by governments, SOEs are more likely to support govern-
ment projects. Prior studies have shown that SOEs often
have to help governments to achieve social welfare objec-
tives such as increasing employment and reducing pollu-
tion (Chen et al. 2017, 2018b; Lin et al. 1998; Wang et al.
2015). Since poverty alleviation has become a priority of the
government and the ruling party has promised to eliminate
poverty by 2020, the government has required all govern-
ment related entities to engage in the campaign. The State-
owned Assets Supervision and Administration Commission,
which oversees and controls hundreds of SOEs in China,
issued a report in 2017 stipulating that SOEs should follow
the requirement by the party and State Council to actively
fulfil political and social responsibilities, and engage in
poverty alleviation efforts.21 As a result, poverty alleviation
has become a political task for the managers of SOEs to
complete, if they have the ability or resources to contribute.
In contrast, although non-SOEs are also encouraged to con-
tribute to the campaign by the stock exchanges, managers
of non-SOEs are not appointed by government and thus do
not have an obligation to participate in the campaign. We
20
  Moon and Shen (2010) provide an excellent survey of CSR studies
in China.
21
 The report (in Chinese) is available at https​://www.sasac​.gov.cn/
n2588​025/n2588​119/c8013​520/conte​nt.html.
Government Initiated Corporate Social Responsibility Activities: Evidence from a Poverty…
thus expect that SOEs are more likely to participate in and
contribute more to the poverty alleviation campaign than
non-SOEs. This leads to our first hypothesis stated below
in alternative form:
H1  SOEs are more likely to participate in and contribute
more to the poverty alleviation campaign than non-SOEs.
In 2012 China launched a large scale anti-corruption
campaign that has resulted in over 1.3 million corrupt gov-
ernment officials being ousted and punished, including
many high level officials in the central government (Griffin
et al. 2018). The anti-corruption campaign has significantly
increased political risk for both officials and firms (Chow
2017; Liu et al. 2017). Godfrey (2005) proposes that CSR
could be used by firms as a risk management tool because
the reputation associated with CSR activities can provide
an insurance-like protection to firms in the case of negative
events. In our setting, the heightened political risk could
motivate managers to participate in the poverty alleviation
campaign to reduce the risk of being targeted in the anti-
corruption campaign. The rationale is that participation in
the poverty campaign could signal that managers are loyal
to the current leaders of the ruling party and fully support
the central government. Anecdotal evidence suggests that
firms that actively participate in the poverty alleviation cam-
paign could get favorable treatment from the central govern-
ment.22 We therefore expect that managers with a higher risk
of being targeted in the anti-corruption campaign are more
likely to participate in the poverty alleviation campaign. We
state our second hypothesis in alternative form as below:
H2  Firms are more likely to participate in and contrib-
ute more to the poverty alleviation campaign if managers
have a higher risk of being targeted in the anti-corruption
campaign.
Given the strong influence of governments in the econ-
omy, local political leaders can have significant impact
on firms’ behavior in China (Chen et al. 2018b; Lin et al.
2015; Xu et al. 2016). Local political leaders, however,
have diverse incentives. One incentive is to win promotions
and advance their political careers, which motivates local
political leaders to publicly demonstrate their strong abil-
ity to manage the local economy and their loyalty to the
ruling party (Cao et al. 2016; Li and Zhou 2005; Piotroski
22
  For example, an article in Financial Times on August 3, 2018 says
that “Analysts say the companies are investing heavily in the (anti-
poverty) scheme in an attempt to curry favour with Beijing, which
has pledged to crack down on debt and retains control of most of the
country’s financial system” (available at https​://www.ft.com/conte​
nt/09386​0ce-80c5-11e8-bc55-50daf​11b72​0d).
et al. 2015). For example, Cao et al. (2016) find that Chi-
nese provincial officials who aim for political promotions
work harder to comply with the central government’s policy
agenda to promote renewable energy. The poverty allevia-
tion campaign provides local political leaders another good
opportunity to demonstrate to the current top leaders of the
ruling party and central government that they can follow
orders from the top and effectively complete tasks to help
the central government to fulfil the political commitment
to eliminate poverty by 2020. This incentive is likely to be
stronger for new local political leaders and for those seeking
political promotions. New leaders who have just taken up
positions could have a stronger incentive to prove themselves
to the top leaders and the public (Wallace 2016). Since the
poverty alleviation campaign is a priority and attracts exten-
sive media coverage, new leaders are likely to work harder
on the campaign and push more local firms to contribute to
the campaign. Similarly, officials who have incentives to be
promoted could exert more effort on the campaign and push
more firms to participate. In contrast, provincial leaders who
are close to the compulsory retirement age of 65 years prob-
ably lack strong incentives to work hard on the tasks while
waiting for their retirement. This discussion leads to our
third hypothesis, stated in alternative form below:
H3a  Firms are more likely to participate in and contribute
more to the poverty alleviation campaign if the political
leaders in the province are new or have promotion incentives.
H3b  Firms are less likely to participate in and contribute
less to the poverty alleviation campaign if the political lead-
ers in the province are close to retirement age.
Finally, we examine if there is an ethical driver in Chi-
nese firms’ engagement in the poverty alleviation campaign.
Hemingway and Maclagan (2004) argue that firms’ CSR
behaviors could be related to the personal initiatives of ethi-
cal managers. The rationale is that ethical managers reflect
high levels of moral development, develop ethical stand-
ards to restrain employees, and promote responsible poli-
cies and programs, which tend to enhance CSR activities in
the organization (Valentine and Fleischman 2008). Besides,
Duarte (2010) proposes that the ethical beliefs of an indi-
vidual manager may nurture the ‘CSR cultures’ aiming at
ensuring social sustainability, which in turn influence the
organizational CSR activities. More recent studies, such as
Pasricha et al. (2018) and Tourigny et al. (2019), provide
further evidence on the link between the ethical considera-
tions of managers and firms’ CSR engagements. To cap-
ture Chinese managers’ ethical considerations, we rely on
prior studies (e.g., Bernile et al. 2017; Law and Mills 2017)
that show that early-life experience greatly affects an indi-
vidual’s values and beliefs, and will influence their future
13

behaviors. Xu and Li (2016) show that Chinese CEOs who
have experience of the “Great Famine” in the years between
1959 and 1961 make more philanthropic donations and have
less “perks”, suggesting these managers have more ethical
behavior and more sympathy for the disadvantaged. Fol-
lowing their study, we expect managers and directors with
poverty experience in their early life to be more ethical and
more likely to feel the pain and difficulty of people living
in poverty. Therefore, the campaign is more likely to trigger
the sympathy of this group of managers and directors, who
will contribute to the poverty alleviation campaign. This dis-
cussion leads to our fourth hypothesis, stated in alternative
form below:
H4  Firms with managers and directors who have experi-
enced poverty in their early life are more likely to participate
in and contribute more to the poverty alleviation campaign.
Research Design, Data and Sample
Research Design
To test our hypotheses, we estimate the following cross-
sectional regression model using observations for firm i in
year t:
DEPi,t = 𝛽0 + 𝛽1 FIRMi,t−1 + ControlVariablesi,t−1 + 𝜀i,t−1
(1)
where the dependent variable DEP captures a firm’s partici-
pation in and contributions to the poverty alleviation cam-
paign. Because the main form of contributing to the cam-
paign is donations of money and resources, we construct
three continuous variables to measure the amount of dona-
tions: (1) MONEY (the natural log of a firm’s monetary con-
tributions to the campaign); (2) RESOURCE (the natural log
of a firm’s resource contributions to the campaign); and (3)
DONATE (the natural log of the sum of a firm’s monetary
and resource contributions). Firms also report the number
of people they help lift out of poverty, which captures the
effectiveness of their contributions to the campaign. We thus
construct the fourth measure of firm contributions: (4) PEO-
PLE (the natural log of the number of people helped out of
poverty by the firm’s poverty-alleviating contributions). In
addition, we use four indicator variables to capture whether
a firm participates in the campaign and makes contributions.
Specifically, we define DON1, DON2 and DON as binary
variables equal to 1 if a firm makes monetary, resource, or
either monetary or resource donations for poverty allevia-
tions, respectively. We also define PEO as an indicator vari-
able equal to 1 if a firm helps people out of poverty, and 0
otherwise.
13
Y. Chang et al.
The variable of interest is FIRM, which refers to vari-
ous firm characteristics that are related to our hypotheses.
H1 predicts that SOEs are more likely to participate in the
campaign. We thus construct SOE, an indicator variable
that equals 1 if a firm is ultimately controlled by govern-
ment and 0 otherwise. We expect SOE has a positive coef-
ficient in Eq. (1), to support H1. H2 examines managers’
risk of being targeted in the anti-corruption campaign, and
we construct three measures of this risk. The first measure
is entertainment and travel expenses as Cai et al. (2011)
show that these expenses are often related to firms’ corrup-
tion and Griffin et al. (2018) show that the anti-corruption
campaign leads to a dramatic decrease in these expenses.
The evidence suggests that firms with high entertainment
and travel expenses are more likely to have corruption and
be targeted in the anti-corruption campaign. We thus manu-
ally collect data from firms’ annual reports and construct
ENTERTAIN, which is the natural log of the entertainment
and travel expenses of the firm. The anti-corruption cam-
paign has resulted in a large number of government officials
being ousted and punished, but the number varies across
provinces, suggesting that the risk of being targeted is higher
in some provinces than others. Accordingly, we manually
collect data from the websites of provincial procuratorates
and use the number of officials ousted in each province as
an alternative measure of the risk. We define OUSTING1 as
the natural log of the number of high level officials (at a level
higher than the prefecture level23) ousted in the province in
the year. To capture the risk at the firm level, we also define
OUSTING2 as an indicator variable equal to 1 if any of the
firm’s executives have been investigated since the start of
the anti-corruption campaign in late 2012, and 0 otherwise.
Griffin et al. (2018) find 150 firms whose CEOs or other
top executives were investigated during the anti-corruption
campaign from 2012 to 2015, and the investigation usually
leads to a turnover of top executives and signals heightened
political risk. H2 predicts a positive coefficient for ENTER-
TAIN, OUSTING1 and OUSTING2 when these variables are
put in Eq. (1).
H3a predicts that new political leaders and leaders with
promotion ambition in the local province are more likely
to mobilize firms to participate in the campaign. We focus
on the top provincial leaders including the governors and
the party leaders, and identify the years in which a new
leader takes the position in a province. Following Lin et al.
(2015), we define a dummy variable LEADER_NEW to indi-
cate firm-year observations that are from firms located in
a province where a new top provincial leader (governor or
23
  In mainland China’s bureaucratic system, government officials are
ranked at five levels (from top to bottom): state, province, prefecture,
county, and township.
Government Initiated Corporate Social Responsibility Activities: Evidence from a Poverty…
provincial party secretary) takes office in the year. Wang
et  al. (2019) argue that Chinese provincial government
officials’ promotion heavily depends on the economic per-
formance of the province under their administration, and
outstanding economic performance significantly increases
the chance of an official being promoted to a higher level in
the hierarchy. Following Wang et al. (2019), we construct
an index based on three economic indicators in a province
in a year: GDP growth rate, fiscal surplus and employment
rate, and define LEADER_UP equal to the index value for
all the firms in the province in the year. A higher value indi-
cates better economic performance and a higher chance of
the provincial leaders being promoted. We expect a positive
coefficient for LEADER_NEW and LEADER_UP when these
two variables replace FIRM in Eq. (1).
H3b expects that political leaders who are close to their
retirement are less likely to push hard on firms to partici-
pate in the campaign. The stated retirement age for political
leaders at the provincial level is 65 years, and the major-
ity of provincial leaders retire at this age unless they get
promoted to be a country-level political leader or moved
to a more important position. Li and Zhou (2005) docu-
ment that the majority of provincial leaders get promoted at
between 50 and 64 years. We define an indicator variable,
LEADER_RETIRE, for firms located in provinces where the
provincial leader is older than 64 years and unlikely to be
promoted in their career path. We expect that LEADER_
RETIRE has a negative coefficient in Eq. (1) if it replaces
FIRM in regressions.
H4 predicts that firms are more likely to contribute to the
poverty alleviation campaign if their managers or directors
have experienced poverty in their early life. Following Xu
and Li (2016), we define a manager or a director as having
poverty experience if their early-life period (i.e., the ages of
0–18) includes the “Great Chinese Famine” (i.e., the years
between 1959 and 1961). In other words, managers or direc-
tors born in the period from the year 1941 to 1961 are con-
sidered as having poverty experience in their early life.24
We then construct two variables: CEO_POVERTY_EXPE-
RIENCE (an indicator variable equal to 1 if a firm’s CEO
has poverty experience) and BOARD_POVERTY_EXPERI-
ENCE (the percentage of board members who have poverty
experience). We expect to find that both variables have posi-
tive coefficients in Eq. (1) when these two variables replace
FIRM.
24
  The definition of poverty experience implies that managers with
poverty experience are likely from the same age cohort. While it is
plausible that the experience of the great famine has the most signifi-
cant impact on their life, there may be other (uncontrolled) confound-
ing effects related to this particular age cohort.
We include a number of control variables that are poten-
tially related to firms’ poverty alleviation donations. Firstly,
we control for some firm characteristics that have been docu-
mented to affect firms’ philanthropic donations. Following
Lin et al. (2015), we control for firm size (SIZE, the natural
log of total assets), cash holdings (CASH, the natural log of
cash and cash equivalents.), profitability (ROA, net income
scaled by total assets), leverage (LEV, total liabilities scaled
by total assets), book-to-market ratio (BM, book value of
equity scaled by market value of equity), firm age (AGE,
the number of years since the firm’s IPO) and controlling
shareholder’s power (TOP, the percentage of shares owned
by the firm’s largest shareholder). In addition, we control
for other firm characteristics including growth opportunity
(GROWTH, the annual sales growth rate), CEO duality
(DUAL, a dummy variable that equals 1 when one person
occupies both board chair and CEO positions, and 0 other-
wise), institutional ownership (IO, the percentage of shares
owned by the institutional shareholder) and ownership
concentration (TOP10, the percentage of shares owned by
the firm’s top 10 shareholders). Secondly, because contri-
butions to the poverty alleviation campaign could be per-
ceived as a form of corporate philanthropy and potentially
replace other philanthropic donations, we explicitly control
for firms’ charitable donations.25 Specifically, we adopt two
proxies, CHARITY (the natural log of a firm’s charitable
contributions) and CHARITY_DUMMY (a dummy variable
that equals 1 if a firm makes charitable contributions and
0 otherwise), to measure corporate non-poverty-alleviat-
ing donations. We add CHARITY or CHARITY_DUMMY
to Eq. (1), depending on whether dependent variables are
continuous or indicator variables. Thirdly, the poverty alle-
viation campaign is likely to have a larger impact on firms
located in poverty stricken areas as local governments face
more pressure to reduce poverty and likely ask local firms to
contribute more to the campaign. We therefore use one prov-
ince-level variable to control for the regional poverty level:
POVERTY​(the number of people living in poverty scaled by
the population of the province). Finally, we include industry-
fixed effects and year-fixed effects in all regressions.
We use OLS regression to estimate Eq. (1) when depend-
ent variables are continuous variables, and use logistic
regressions when dependent variables are indicator vari-
ables. To eliminate the influence of extreme values, we
winsorize each continuous variable at the 1st and 99th
percentiles.
25
 Section  "Campaign contributions and philanthropic donations"
provides more analysis on whether participating firms replace philan-
thropic donations with contributions to the poverty alleviation cam-
paign. In calculating charitable donations, we explicitly remove cam-
paign contributions in 2016 2017 and 2018 for firms that participate
in the poverty alleviation campaign.
13

Data and Sample
Our sample selection starts with all listed firms in China’s
A-share markets in 2016 2017 and 2018. The sampling
period starts in 2016, the first year in which listed firms
were required by the stock exchanges to disclose informa-
tion about their contributions to the poverty alleviation
campaign. We start with 9729 firm-year observations from
3602 firms. We then manually collect data on firms’ poverty
alleviation contributions from their annual reports or CSR
reports.26 We focus on quantitative information, including
the amount of monetary donations, the amount of donated
resources, and the number of people helped out of poverty
with the firm’s assistance. We exclude financial firms (with
CSRC industry code J) from our sample, reducing our sam-
ple size to 9532 observations. From the CSMAR database,
we obtain data on firms’ accounting numbers and other rele-
vant information to construct variables used in the multivari-
ate analyses. After excluding observations with missing data
for the variables, we have a final sample with 8216 firm-year
observations representing 3035 unique firms.
Table 1 reports the sample distribution and some descrip-
tive statistics on firms’ contributions to the poverty allevia-
tion campaign. Panel A shows that, in 2016, 17.5% of listed
firms donated money and 8.5% of firms donated resources to
the campaign. The average monetary donation is 3.852 mil-
lion yuan, and the average resource donation is 0.404 million
yuan. The medians of the monetary and resource donations
are much lower, being 0.600 million yuan and 0.052 mil-
lion yuan, implying that a few firms donate a significantly
larger amount than other firms. Combining both money and
resource donations, 18.2% of listed firms contributed to the
campaign, with a mean contribution of 4.448 million yuan
(median = 0.671 million yuan). An average participating
firm helped 291 people out of poverty in 2016, suggesting
that the contributions from listed firms have a real effect
in reducing poverty. In 2017 and 2018, more firms partici-
pated in the campaign and they contributed more to the cam-
paign. The percentage of firms contributing to the campaign
26
  The data on firms’ poverty alleviation contributions are reliable for
two reasons. First, the National Audit Office of China regularly audits
the source and use of funds contributed to the campaign. Media
reports show that misuse of funds can lead to penalties. Second,
the auditing standards in China (Standard 1521) require auditors to
read “other information” contained in annual reports and ensure that
there is no significant inconsistency between “other information” and
reported financial statements. Information about campaign contribu-
tions is thus part of “other information” in annual reports. Because
the contributions to the poverty alleviation campaign represent out-
flow of cash or other assets, auditors have to ensure the information
about campaign contributions is consistent with that in the cash flow
statement and the balance sheet, suggesting the same level of assur-
ance for the information in financial statements and in the disclosure
of campaign contributions.
13
Y. Chang et al.
increased to 23.0% in 2017 and 24.9% in 2018. The average
amount of monetary and resource contributions increased to
5.859 million yuan (median = 0.916 million yuan) in 2017
and 6.752 million yuan (median = 1.075 million yuan) in
2018. The average number of people a firm assisted out of
poverty also increased to 356 (median = 134) in 2017 and
385 (median = 136) in 2018. The evidence suggests that the
campaign has gained popularity and strength.
Panel B of Table 1 reports the sample distribution and sta-
tistics of poverty alleviation contributions by province, with
provinces sorted by the percentage of firms contributing to
the campaign. At the top of the table are the provinces where
firms are more likely to participate in the campaign. The top
four provinces, Tibet, Guizhou, Yunnan and Guangxi, are
all located in the west of China and have an underdeveloped
economy and a larger population living in poverty. Provinces
at the bottom of the table are in the east of China and have a
more developed economy. The evidence suggests that firms
located in poverty stricken provinces are more likely to par-
ticipate in the campaign than firms in economically devel-
oped areas. The reason could be that firms in poorer areas
face stronger pressure from local governments to contribute
to reduce poverty in local communities. However, it is worth
noting that every province has some firms contributing to the
campaign, consistent with the campaign mobilizing firms
across the country to participate.
Table 2 reports the descriptive statistics for the variables
used in the multivariate regressions. On average, 21.5%
of firms donate money to the campaign, 10.6% donate
resources, and 22.2% donate either money or resources.
Since our sample covers almost all firms in the market, the
firm characteristics are comparable to those reported in other
studies on China. For example, on average, sample firms
have a ROA of 5.1%, an annual sales growth rate of 26.4%
and an institutional ownership of 4.5%, 75.5% of firms make
charitable donations and 37.0% of firms are SOEs.
Empirical Results
Main Regression Results
To test H1, we replace FIRM with SOE in Eq. (1) and esti-
mate the cross-sectional regressions with results reported in
Table 3. Columns (1) to (6) show that SOE has a positive and
statistically significant coefficient in all regressions, suggest-
ing the SOEs are more likely to participate in the poverty
alleviation campaign and contribute more to the campaign.
In Columns (1), (3) and (5) where dependent variables are
the natural logarithm of money, resource and total dona-
tions, respectively, the estimated coefficients suggest that
SOEs donate 144.7% more money, 85.2% more resources,
 Table 1  Distribution of the donation sample
Year Number of % of firms % of firms % of firms Mean of Median of Mean of Median of Mean of Median of Mean of Median of the
firms donating donating donating monetary monetary resource resource monetary monetary the number number of
money resources either money donations donations donations donations and resource and resource of people people helped
or resources (million (million (million (million donations donations helped out out of poverty
yuan) yuan) yuan) yuan) (million (million of poverty (hundred)
yuan) yuan) (hundred)

Panel A: Distribution of donation sample by year

 2016 2570 17.5 8.5 18.2 3.852 0.600 0.404 0.052 4.448 0.671 291.5 109.0
 2017 2738 22.5 10.7 23.0 4.898 0.832 0.422 0.090 5.859 0.916 356.1 134.0
 2018 2908 24.1 12.5 24.9 5.564 0.939 0.503 0.120 6.752 1.075 385.4 136.0
Province Number of % of firms % of firms % of firms Mean of Median of Mean of Median of Mean of Median of Mean of Median of
firms donating donating donating monetary monetary resource resource monetary monetary number number of
money resources either money donations donations donations donations and resource and resource of people people helped
or resources (million (million (million (million donations donations helped out of out of poverty
yuan) yuan) yuan) yuan) (million (million poverty
yuan) yuan)

Panel B: Distribution of donation sample by province

 Tibet 35 68.6 42.9 82.9 3.672 0.823 0.630 0.250 3.789 0.800 80.5 43.0
 Guihzou 65 61.5 24.6 61.5 11.520 1.853 0.459 0.029 13.337 2.099 295.5 128.0
 Yunnan 89 41.6 33.7 42.7 6.697 0.889 0.574 0.053 7.998 1.250 439.5 155.0
 Guangxi 97 40.2 32.0 44.3 2.963 0.489 0.319 0.074 4.173 0.630 298.6 141.0
 Shanxi 93 39.8 23.7 40.9 3.636 0.720 0.358 0.157 3.906 0.988 535.3 150.0
 Gansu 81 39.5 24.7 43.2 4.319 0.348 0.408 0.052 4.984 0.478 290.7 117.0
Government Initiated Corporate Social Responsibility Activities: Evidence from a Poverty…

 Hainan 87 39.1 19.5 39.1 3.298 0.429 0.262 0.020 4.191 0.457 175.2 141.0
 Jiangxi 100 38.0 21.0 38.0 4.516 0.896 0.272 0.039 5.200 0.920 331.0 93.0
 Henan 209 36.8 22.0 36.8 5.536 0.940 0.365 0.070 6.309 1.000 384.8 76.0
 Xinjiang 128 36.7 16.4 38.3 3.644 1.220 0.796 0.260 5.987 1.330 518.4 182.0
 Qinghai 31 35.5 19.4 38.7 10.765 1.517 0.106 0.083 9.921 1.056 414.5 460.0
 Ningxia 35 34.3 2.9 34.3 2.327 0.687 0.010 0.010 2.328 0.687 178.0 178.0
 Hubei 255 32.9 18.8 33.7 3.703 1.022 0.509 0.055 4.624 1.041 381.0 83.0
 Sichuan 315 32.4 20.3 33.0 5.180 0.730 0.396 0.074 6.864 0.775 335.9 158.0
 Hunan 238 32.4 17.6 33.2 4.108 0.870 0.356 0.066 5.556 0.986 232.3 110.0
 Shaanxi 118 28.8 14.4 29.7 3.162 0.123 0.098 0.037 3.454 0.160 211.2 52.0
 Anhui 253 28.1 19.0 28.9 1.422 0.382 0.198 0.058 1.529 0.408 136.0 68.0
 Fujian 314 27.4 7.6 28.0 6.178 0.777 0.491 0.133 7.381 0.777 327.9 90.0
 Neimenggu 70 24.3 17.1 25.7 4.397 3.001 0.988 0.691 7.074 3.388 524.3 269.0
 Chongqing 128 24.2 7.8 24.2 4.406 0.729 1.159 1.137 5.012 0.929 323.3 32.0
 Tianjin 123 19.5 9.8 21.1 5.766 0.467 0.592 0.224 6.669 0.741 416.9 121.0

13
 Y. Chang et al.

and 151.1% more total donations to the campaign than non-

out of poverty
people helped
Median of SOEs. Column (7) uses the natural log of the number of
number of
people helped out of poverty as the dependent variable. The

33.5
98.0
46.5
242.0
173.0
38.5
243.0
111.0
129.5
566.0
result shows that SOEs help 43.2% more people out of pov-
erty than non-SOEs. Column (8) shows that SOEs are more
helped out of

likely to lift people out of poverty. Overall, the evidence

of people

suggests that SOEs make large contributions to reducing

Mean of
number

poverty

244.0
216.8

357.7
244.0
376.0
438.5
276.2
402.9
752.7
445.9
poverty in China.
We further differentiate SOEs controlled by the central
and resource

government and SOEs controlled by local governments.

Median of

donations
monetary

Because the campaign is initiated by the central government,

(million
yuan)

1.258
0.510
0.778

0.914
0.805
0.600
1.500
0.282
2.100
1.407

we expect that SOEs controlled by the central government

have more pressure to participate in the campaign than local
SOEs. Columns (9) and (10) test this expectation by replac-
and resource
donations
monetary

ing SOE with two indicator variables for central government

Mean of

(million

2.881
4.898
3.210
5.725
4.323
6.060
5.566
6.858
10.623
3.672
yuan)

owned SOEs (CENTRAL_SOE) and local SOEs (LOCAL_

Table reports the distribution of firms making donations to the poverty alleviation campaign, by year (Panel A) and by province (Panel B)
SOE). The results show that while both indicator variables
have positive coefficients, the coefficient of CENTRAL_SOE
Median of

donations

is larger than that of LOCAL_SOE in both columns. The

resource

(million
yuan)

0.040
0.122
0.097
0.170
0.056
0.015
0.106
0.280
0.023
0.448

differences in the coefficients between CENTRAL_SOE and

LOCAL_SOE are statistically significant (p-value = 0.041 in
Column (9) and 0.036 in Column (10)) and economically
donations

significant. It suggests that, compared with SOEs controlled

resource
Mean of

(million
yuan)

0.093
0.617
0.535
0.428
0.336
0.027
0.459
0.626
0.263
0.824

by local governments, SOEs controlled by the central gov-

ernment make 45.2% more total donations to the campaign.
The evidence is consistent with the expectation that SOEs
Median of

donations
monetary

controlled by the central government face stronger political

(million
yuan)

0.508
0.703

0.900
0.715
0.907
0.500
1.240
0.300
2.225
0.786

pressure to contribute to the campaign.

In general, the control variables have predicted signs.
Firms with a larger size, an older age, making charitable
donations
monetary

donations, and located in provinces with a larger population

Mean of

(million

4.807

3.056
4.823
2.667
4.273
3.656
5.170
5.948
9.124
3.056

living in poverty are more likely to contribute to the poverty

yuan)

alleviation campaign.
H2 predicts that managers with a higher risk of being
either money
or resources
% of firms

targeted in the anti-corruption campaign have a higher like-

donating

lihood of contributing to the poverty alleviation campaign.

11.2
9.4
15.9
13.6
17.6
17.2
15.4
20.1
19.9
18.3

To test H2, we replace FIRM in Eq. (1) with three measures

of the risk of being targeted. Table 4 reports the results from
% of firms

regressions. Columns (1) and (2) show that ENTERTAIN has

resources
donating

a positive association with DON and DONATE, suggesting

5.6
3.2
6.2
5.2
6.9
9.6
11.2
7.2
9.4
9.0

that firms with larger entertainment expenses (a sign of cor-

ruption) are more likely to contribute to the poverty allevia-
% of firms

tion campaign. Similarly, Columns (3) and (4) report that

donating
money

OUSTING1 has a positive coefficient, implying that firms are

11.2
9.4
15.2
13.4
17.1
15.4
17.9
17.1
19.5
18.3

more likely to contribute to the poverty alleviation campaign

if there are more officials in their local province being ousted
Number of

and punished in the anti-corruption campaign. Finally, Col-

umns (5) and (6) show that if a firm has been investigated in
Table 1  (continued)

firms

125
855
466
841
 Guangdong 1255
104
224
624
149
709

the anti-corruption campaign, it is more likely to contribute

to the poverty alleviation campaign. In particular, the esti-
 Heilongji-

 Shandong
 Shanghai

mated coefficient of OUSTING2 suggests that investigated

 Liaoning

 Zhejiang
 Jiangsu
Province

 Beijing
 Hebei

firms make about 76.4% more donations to the poverty alle-

ang

 Jilin

viation campaign than firms that have not been investigated.

13
Government Initiated Corporate Social Responsibility Activities: Evidence from a Poverty…

Table 2  Descriptive statistics Variables N Mean SD Min Q1 Median Q3 Max

MONEY 8216 2.956 5.737 0.000 0.000 0.000 0.000 24.237

DON1 8216 0.215 0.411 0.000 0.000 0.000 0.000 1.000
RESOURCE 8216 1.239 3.669 0.000 0.000 0.000 0.000 21.672
DON2 8216 0.106 0.308 0.000 0.000 0.000 0.000 1.000
DONATE 8216 3.073 5.852 0.000 0.000 0.000 0.000 24.237
DON 8216 0.222 0.415 0.000 0.000 0.000 0.000 1.000
PEOPLE 8216 0.459 1.551 0.000 0.000 0.000 0.000 12.059
PEO 8216 0.094 0.292 0.000 0.000 0.000 0.000 1.000
SOE 8216 0.370 0.483 0.000 0.000 0.000 1.000 1.000
CENTRAL_SOE 8216 0.095 0.294 0.000 0.000 0.000 0.000 1.000
LOCAL_SOE 8216 0.275 0.446 0.000 0.000 0.000 1.000 1.000
ENTERTAIN 5938 15.516 1.154 12.367 14.776 15.517 16.256 18.446
OUSTING1 8216 1.775 1.510 0.000 0.000 2.079 3.178 4.220
OUSTING2 8216 0.039 0.193 0.000 0.000 0.000 0.000 1.000
LEADER_NEW 8216 0.301 0.459 0.000 0.000 0.000 1.000 1.000
LEADER_RETIRE 8073 0.449 0.497 0.000 0.000 0.000 1.000 1.000
LEADER_UP 8216 1.917 0.546 0.333 1.667 2.000 2.333 3.000
CEO_POVERTY_EXPERIENCE 8216 0.115 0.318 0.000 0.000 0.000 0.000 1.000
BOARD_POVERTY_EXPERIENCE 8216 0.150 0.165 0.000 0.000 0.111 0.267 0.857
CASH 8216 20.275 1.431 11.248 19.353 20.199 21.083 26.494
SIZE 8216 22.281 1.312 17.388 21.404 22.137 22.996 28.509
ROA 8216 0.051 0.057 − 0.165 0.026 0.048 0.078 0.223
LEV 8216 0.429 0.208 0.059 0.262 0.416 0.582 0.923
GROWTH 8216 0.264 0.762 − 0.615 − 0.026 0.116 0.315 5.985
DUAL 8216 0.071 0.257 0.000 0.000 0.000 0.000 1.000
BM 8216 0.396 0.228 0.016 0.228 0.358 0.520 1.139
AGE 8216 11.899 7.171 1.000 6.000 10.000 19.000 25.000
IO 8216 0.045 0.044 0.000 0.011 0.033 0.066 0.211
TOP10 8216 0.578 0.149 0.232 0.470 0.585 0.689 0.947
TOP 8216 0.337 0.146 0.084 0.221 0.316 0.432 0.748
CHARITY 8216 9.484 6.075 0.000 0.000 12.206 13.939 17.454
CHARITY_DUMMY 8216 0.755 0.430 0.000 1.000 1.000 1.000 1.000
POVERTY​ 8216 2.979 3.994 0.000 0.000 0.700 5.300 18.600

Table reports the summary statistics of the variables. The sample includes firm-year observations of listed
Chinese firms in 2016 2017 and 2018

In Table 5 we test H3a that new political leaders and lead-
ers aiming for promotion are more likely to mobilize firms to
participate in the poverty alleviation campaign, and H3b that
political leaders who are close to their retirement are less
likely to push firms to participate in the campaign. Columns
(1) and (2) show that LEADER_NEW is positively related
to both DONATE and DON, suggesting the new political
leaders are associated with more active participation of
firms in the poverty alleviation campaign. The estimated
coefficients suggest that having a new provincial leader is
associated with 24.9% more contributions to the campaign.
Results from Columns (3) to (6) show that firms participate
more in the campaign if local political leaders have a good
chance of being promoted, but firms participate less if local
political leaders are close to their retirement age. Overall,
the results in Table 5 are consistent with the predictions of
H3a and H3b.
In Table 6, we report results from multivariate analy-
ses testing H4 that managers and directors with poverty
experience in their early life are more likely to make
contributions to the poverty alleviation campaign. The
results show that both CEO_POVERTY_EXPERIENCE

13


Table 3  Are SOEs more active in participating in the poverty alleviation campaign?

Variables (1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
MONEY DON1 RESOURCE DON2 DONATE DON PEOPLE PEO DONATE DON

13
SOE 1.447*** 0.807*** 0.852*** 0.937*** 1.511*** 0.817*** 0.432*** 1.285***
(5.91) (6.98) (5.76) (6.45) (6.08) (7.09) (6.35) (7.44)
CENTRAL_SOE 1.855*** 0.977***
(8.18) (9.10)
LOCAL_SOE 1.403*** 0.766***
(8.73) (9.59)
CASH 0.049 − 0.005 0.087 0.061 0.065 0.001 0.027 0.048 0.064 0.001
(0.46) (− 0.09) (1.28) (0.81) (0.60) (0.01) (0.88) (0.58) (0.80) (0.03)
SIZE 1.318*** 0.593*** 0.587*** 0.478*** 1.354*** 0.590*** 0.259*** 0.464*** 1.341*** 0.583***
(9.27) (7.54) (6.55) (4.87) (9.40) (7.47) (5.83) (4.31) (12.74) (10.13)
ROA 4.219*** 2.509*** 0.724 1.323 4.231*** 2.362*** − 0.080 0.331 4.311*** 2.419***
(3.26) (3.05) (0.91) (1.26) (3.21) (2.87) (− 0.23) (0.28) (3.79) (3.67)
LEV − 0.722 − 0.506* − 0.234 − 0.244 − 0.678 − 0.475* − 0.023 0.013 − 0.671* − 0.469**
(− 1.64) (− 1.79) (− 0.93) (− 0.71) (− 1.51) (− 1.68) (− 0.20) (0.03) (− 1.92) (− 2.32)
GROWTH − 0.115 − 0.023 − 0.119** − 0.099 − 0.132 − 0.030 − 0.044** − 0.040 − 0.132* − 0.031
(− 1.42) (− 0.56) (− 2.44) (− 1.55) (− 1.62) (− 0.72) (− 2.14) (− 0.59) (− 1.70) (− 0.75)
DUAL − 0.111 − 0.073 − 0.077 − 0.095 − 0.075 − 0.060 − 0.066 − 0.197 − 0.094 − 0.071
(− 0.48) (− 0.63) (− 0.47) (− 0.65) (− 0.32) (− 0.53) (− 0.92) (− 1.26) (− 0.41) (− 0.61)
BM 0.023 − 0.069 − 0.067 − 0.179 − 0.005 − 0.083 − 0.001 − 0.160 0.004 − 0.078
(0.08) (− 0.57) (− 0.48) (− 0.82) (− 0.02) (− 0.62) (− 0.01) (− 0.71) (0.02) (− 0.91)
AGE 0.035** 0.025*** 0.005 0.013 0.035** 0.025*** − 0.002 0.012 0.035*** 0.026***
(2.16) (3.17) (0.55) (1.44) (2.13) (3.23) (− 0.53) (1.08) (3.21) (4.55)
IO 1.482 0.629 0.098 0.147 1.355 0.549 0.070 0.552 1.362 0.553
(0.94) (0.78) (0.10) (0.13) (0.85) (0.68) (0.17) (0.53) (1.16) (0.89)
TOP10 0.516 − 0.197 0.448 0.112 0.362 − 0.260 0.426* 0.472 0.355 − 0.262
(0.66) (− 0.48) (0.92) (0.23) (0.46) (− 0.64) (1.90) (0.85) (0.65) (− 0.90)
TOP 0.255 0.300 0.718 0.799 0.510 0.409 0.090 0.432 0.483 0.396
(0.32) (0.75) (1.46) (1.64) (0.64) (1.03) (0.41) (0.84) (0.91) (1.41)
CHARITY 0.023* − 0.006 0.017 − 0.000 0.019*
(1.77) (− 0.64) (1.33) (− 0.06) (1.87)
CHARITY_DUMMY 0.712*** 0.504*** 0.694*** 0.487*** 0.710***
(6.91) (4.06) (6.86) (3.52) (8.59)
POVERTY​ 0.503*** 0.172*** 0.284** 0.278*** 0.647*** 0.179*** 0.054 0.244*** 0.644*** 0.180***
(3.62) (3.55) (2.51) (4.53) (5.39) (3.73) (1.63) (3.29) (8.80) (5.29)
Y. Chang et al.
 Government Initiated Corporate Social Responsibility Activities: Evidence from a Poverty…

and BOARD_POVERTY_EXPERIENCE have positive and

This table reports the results from regressions estimating Eq. (1) with FIRM replaced by SOE, CENTRAL_SOE and LOCAL_SOE. The sample includes firm-year observations for Chinese listed
− 16.195***
statistically significant coefficients, suggesting that firms

(− 21.32)
with CEOs and directors who have experienced poverty

0.814
DON

8216
(10)

Yes
Yes
Yes
in their early life are more likely to participate in the
campaign and donate more to the campaign. The results
support H4.
− 32.687***
DONATE

(− 21.27)

Consequences of Contributing to the Campaign

0.227
8216
Yes
Yes
Yes
(9)

In this sub-section, we investigate the possible consequences

− 15.995***

of firms’ participation in the poverty alleviation campaign.

(− 10.65)

Prior studies suggest that CSR activities can help firms

0.849
8216
PEO

establish political connections and thus obtain benefits from

Yes
Yes
Yes
(8)

governments (Flammer 2018; Wang and Qian 2011). For

example, Lin et al. (2015) find that corporate philanthropy
− 6.245***

can help firms obtain government subsidies in China. Wang

PEOPLE

(− 7.97)

and Qian (2011) show that corporate donations are posi-

0.154
8216

firms in 2016 2017 and 2018. Variables are defined in Appendix. Standard errors are adjusted for the clustering effect at the firm level
Yes
Yes
Yes
(7)

tively related to firm valuation in China, suggesting that CSR

can contribute to firm value. Following these studies, we
− 16.350***

examine whether firms’ participation in the poverty allevia-

(− 14.16)

tion campaign can help firms obtain government subsidies or

0.814
DON

improve firm value. We also examine whether participating

8216
Yes
Yes
Yes
(6)

in the campaign helps improve firms’ reputation in society

and among stakeholders, an intangible asset that should be
− 33.016***

valuable to firms. If firms’ participation is positively related

DONATE

***, ** and * indicate the coefficient is statistically significant at the 1%, 5% and 10% level, respectively
(− 13.40)

to these benefits, this provides an economic reason for firms’

0.226
8216

participation as their contributions to the poverty alleviation

Yes
Yes
Yes
(5)

campaign can be perceived as an ‘investment’ in a project

with positive net present value.
− 16.865***

We collect data on government subsidies and define SUB-

(− 11.56)

SIDY as the natural logarithm of subsidy granted by govern-

DON2

0.828
8216
Yes
Yes
Yes

ment. We measure firm value by TOBIN’S Q, or the ratio of

(4)

market value of equity to book value of equity. To measure

firms’ reputation, we follow Lu et al. (2015) and use the
− 15.675***
RESOURCE

annual corporate social responsibility ranking compiled by

(− 9.35)

China CSR Research Center, which is affiliated with South

0.144
8216
Yes
Yes
Yes
(3)

Weekend, one of the most influential newspapers in China.

The center assesses Chinese firms’ CSR performance and
− 16.257***

issues a list of the top performing 100 SOEs and 100 non-
(− 14.17)

SOEs every year.27 We construct REPUTATION, which

DON1

0.813
8216

equals 1 for firms on the list and 0 otherwise. To address

Yes
Yes
Yes
(2)

endogeneity concerns, we use a difference-in-differences

design to focus on the changes in SUBSIDY, REPUTATION
− 31.144***

and TOBIN’S Q after firms participate in the poverty alle-

(− 12.61)
MONEY

viation campaign. Specifically, we first construct a matched

0.218
8216

sample by matching each firm participating in the campaign

Yes
Yes
Yes
(1)

both in 2016 and 2017 with a non-participating firm based

on industry and firm size. We then examine whether par-
Province fixed effect
Table 3  (continued)

Industry fixed effect

ticipating firms have more government subsidies and higher

Year fixed effect

Observations
Adjusted R 2
Variables

Constant

27
  The lists (in Chinese) are available at the center’s website: https​://
ROC

www.nfzmb​rand.com/Respo​nse/chann​els/202.html.

13
 Y. Chang et al.

Table 4  Are corrupt firms more active in participating in the poverty alleviation campaign?
Variables (1) (2) (3) (4) (5) (6)
DONATE DON DONATE DON DONATE DON

ENTERTAIN 0.251** 0.096**

(2.36) (2.27)
OUSTING1 0.265*** 0.157***
(3.01) (3.23)
OUSTING2 0.764** 0.283**
(2.45) (2.03)
CASH 0.093 0.019 0.177 0.057 0.344*** 0.121***
(0.78) (0.36) (1.63) (0.97) (4.07) (2.72)
SIZE 1.195*** 0.577*** 1.294*** 0.538*** 1.127*** 0.508***
(5.87) (7.13) (9.06) (7.28) (9.82) (8.40)
ROA − 0.014 1.820** 3.567*** 1.557** 3.624*** 1.689***
(− 0.03) (2.30) (2.65) (1.98) (3.16) (2.62)
LEV − 1.078** − 0.578** − 0.484 − 0.338 − 0.106 − 0.183
(− 2.08) (− 2.41) (− 1.07) (− 1.26) (− 0.30) (− 0.93)
GROWTH − 0.062 − 0.024 − 0.220*** − 0.073* − 0.212*** − 0.076*
(− 0.68) (− 0.50) (− 2.64) (− 1.72) (− 2.71) (− 1.84)
DUAL 0.231 0.129 0.015 − 0.004 0.068 0.020
(0.87) (0.96) (0.06) (− 0.04) (0.29) (0.17)
BM − 0.141 − 0.206 0.016 − 0.059 0.342* 0.032
(− 0.22) (− 0.98) (0.06) (− 0.60) (1.73) (0.37)
AGE 0.075*** 0.048*** 0.074*** 0.046*** 0.072*** 0.045***
(4.20) (7.56) (4.93) (6.69) (6.95) (8.59)
IO − 0.754 − 0.645 0.793 0.213 1.069 0.295
(− 0.37) (− 0.76) (0.49) (0.27) (0.90) (0.48)
TOP10 0.174 − 0.540 0.630 − 0.171 0.617 − 0.125
(0.19) (− 1.47) (0.79) (− 0.44) (1.12) (− 0.44)
TOP 1.127 0.752** 1.101 0.812** 1.247** 0.810***
(1.24) (2.17) (1.37) (2.10) (2.34) (2.95)
CHARITY 0.000 0.014 0.011
(0.03) (1.09) (1.08)
CHARITY_DUMMY 0.661*** 0.652*** 0.605***
(6.27) (6.63) (7.47)
POVERTY​ 0.585*** 0.245*** 0.276*** 0.122*** 0.796*** 0.205***
(4.70) (6.56) (10.99) (11.90) (8.40) (6.09)
Constant − 32.880*** − 17.868*** − 32.474*** − 16.520*** − 34.849*** − 17.145***
(− 10.24) (− 15.02) (− 14.44) (− 15.68) (− 20.23) (− 20.80)
Year fixed effect Yes Yes Yes Yes Yes Yes
Industry fixed effect Yes Yes Yes Yes Yes Yes
Province fixed effect Yes Yes Yes Yes
Observations 5938 5938 8216 8216 8216 8216
Adjusted R2 0.191 0.200 0.210
ROC 0.800 0.793 0.802

This table reports the results from regressions estimating Eq. (1) with FIRM replaced by ENTERTAIN, OUSTING1 and OUSTING2. The sample
includes firm-year observations for Chinese listed firms in 2016 2017 and 2018. Variables are defined in Appendix. Standard errors are adjusted
for the clustering effect at the firm level
***, ** and * indicate the coefficient is statistically significant at the 1%, 5% and 10% level, respectively

13
Government Initiated Corporate Social Responsibility Activities: Evidence from a Poverty…

Table 5  Do local province leaders affect firms’ participation in the poverty alleviation campaign?
Variables (1) (2) (3) (4) (5) (6)
DONATE DON DONATE DON DONATE DON

LEADER_NEW 0.249* 0.153**

(1.81) (1.96)
LEADER_RETIRE − 0.476*** − 0.241***
(− 3.27) (− 3.12)
LEADER_UP 0.703*** 0.276***
(3.86) (3.02)
CASH 0.176** 0.052 0.158 0.047 0.157 0.046
(2.16) (0.89) (1.45) (0.80) (1.44) (0.78)
SIZE 1.396*** 0.594*** 1.306*** 0.551*** 1.301*** 0.543***
(12.19) (7.38) (9.07) (7.35) (9.12) (7.33)
ROA 3.211*** 1.318* 3.440** 1.576** 3.591*** 1.596**
(2.78) (1.65) (2.56) (1.98) (2.68) (2.04)
LEV − 0.688* − 0.448 − 0.609 − 0.399 − 0.426 − 0.287
(− 1.89) (− 1.59) (− 1.34) (− 1.45) (− 0.94) (− 1.07)
GROWTH − 0.214*** − 0.070* − 0.227*** − 0.077* − 0.209** − 0.066
(− 2.74) (− 1.69) (− 2.69) (− 1.81) (− 2.51) (− 1.57)
DUAL 0.013 − 0.001 0.043 0.010 0.030  − 0.002
(0.05) (− 0.01) (0.18) (0.08) (0.13) (− 0.02)
BM − 0.725** − 0.434* 0.020 − 0.050 0.044 − 0.048
(− 1.96) (− 1.89) (0.07) (− 0.50) (0.17) (− 0.51)
AGE 0.071*** 0.045*** 0.077*** 0.048*** 0.079*** 0.048***
(7.07) (6.57) (5.16) (6.86) (5.28) (6.91)
IO 0.717 0.211 0.874 0.275 0.699 0.184
(0.61) (0.26) (0.55) (0.34) (0.44) (0.23)
TOP10 0.716 − 0.136 0.830 − 0.070 0.696 − 0.134
(1.29) (− 0.35) (1.04) (− 0.18) (0.87) (− 0.34)
TOP 1.006* 0.765** 0.983 0.741* 1.025 0.757**
(1.89) (1.99) (1.22) (1.90) (1.28) (1.96)
CHARITY 0.012 0.016 0.010
(1.16) (1.22) (0.79)
CHARITY_DUMMY 0.637*** 0.654*** 0.626***
(6.50) (6.60) (6.40)
POVERTY​ 0.269*** 0.117*** 0.267*** 0.116*** 0.316*** 0.133***
(17.45) (11.52) (10.59) (11.67) (11.01) (11.62)
Constant − 33.620*** − 17.043*** − 31.479*** − 16.037*** − 32.890*** − 16.495***
(− 21.46) (− 14.60) (− 14.07) (− 15.21) (− 14.77) (− 15.77)
Year fixed effect Yes Yes Yes Yes Yes Yes
Industry fixed effect Yes Yes Yes Yes Yes Yes
Observations 8216 8216 8073 8073 8216 8216
Adjusted R2 0.199 0.201 0.202
ROC 0.791 0.793 0.792

This table reports the results from regressions estimating Eq. (1) with FIRM replaced by LEADER_NEW, LEADER_RETIRE and LEADER_UP.
The sample includes firm-year observations for Chinese listed firms in 2016 2017 and 2018. Variables are defined in Appendix. Standard errors
are adjusted for the clustering effect at the firm level
***, ** and * indicate the coefficient is statistically significant at the 1%, 5% and 10% level, respectively

13
 Y. Chang et al.

Table 6  Managers and Variables (1) (2) (3) (4)

directors’ poverty experience
and firms’ participation in the DONATE DON DONATE DON
poverty alleviation campaign
CEO_POVERTY_EXPERIENCE 0.254** 0.122*
(2.38) (1.89)
BOARD_POVERTY_EXPERIENCE 1.408*** 0.685***
(2.90) (2.91)
CASH 0.114 0.032 0.110 0.029
(0.95) (0.52) (1.02) (0.47)
SIZE 1.389*** 0.587*** 1.364*** 0.576***
(10.69) (12.60) (9.50) (7.55)
ROA 3.653* 1.757* 3.754*** 1.826**
(1.79) (1.87) (2.81) (2.26)
LEV − 0.506 − 0.341** − 0.486 − 0.319
(− 1.64) (− 2.01) (− 1.09) (− 1.17)
GROWTH − 0.204** − 0.069* − 0.198** − 0.068
(− 2.16) (− 1.68) (− 2.39) (− 1.59)
DUAL 0.091 0.026 0.084 0.021
(0.57) (0.34) (0.36) (0.18)
BM 0.071 − 0.047 0.076 − 0.046
(0.54) (− 0.87) (0.31) (− 0.47)
AGE 0.073*** 0.046*** 0.076*** 0.048***
(5.13) (6.80) (4.99) (6.69)
IO 0.828 0.194 0.813 0.197
(0.59) (0.25) (0.51) (0.24)
TOP10 0.332 − 0.310 0.349 − 0.307
(0.41) (− 0.68) (0.44) (− 0.76)
TOP 1.333 0.911* 1.244 0.876**
(1.40) (1.87) (1.57) (2.24)
CHARITY 0.006 0.006
(0.73) (0.44)
CHARITY_DUMMY 0.621*** 0.621***
(9.44) (6.24)
POVERTY​ 0.633*** 0.210*** 0.633*** 0.213***
(5.19) (5.39) (5.61) (4.46)
Constant − 34.581*** − 16.998*** − 34.157*** − 16.796***
(− 17.34) (− 15.99) (− 14.19) (− 15.28)
Year fixed effect YES YES YES YES
Industry fixed effect YES YES YES YES
Province fixed effect YES YES YES YES
Observations 8,216 8,216 8,216 8,216
Adjusted R2 0.217 0.218
ROC 0.805 0.806

This table reports the results from regressions estimating Eq. (1) with FIRM replaced by CEO_POVERTY_
EXPERIENCE and BOARD_POVERTY_EXPERIENCE. The sample includes firm-year observations
for Chinese listed firms in 2016 2017 and 2018. Variables are defined in Appendix. Standard errors are
adjusted for the clustering effect at the firm level
***, ** and * indicate the coefficient is statistically significant at the 1%, 5% and 10% level, respectively

13
Government Initiated Corporate Social Responsibility Activities: Evidence from a Poverty…

Table 7  Does firm participation in the poverty alleviation campaign firm valuation and reputation in 2017 and 2018, relative to
pay off? non-participating firms. Specifically, we estimate the follow-
Variables (1) (2) (3) ing regression model using observations for firm i in year t:
SUBSIDY REPUTATION TOBIN’S Q DEPi.t+1 = 𝛼0 + 𝛼1 PARTICIPATEi.t + 𝛼2 PARTICIPATEi.t
PARTICIPATE 0.015 0.131 0.270
(2)
× POSTi.t + 𝛼3 POSTi.t + controls + 𝜀i.t
(0.05) (0.69) (0.72)
PARTICIPATE × POST 0.480** 0.291** 0.548* where DEP stands for SUBSIDY, TOBIN’S Q and REPUTA-
(2.00) (1.98) (1.81) TION. PARTICIPATE is an indicator variable equal to 1 for
POST 0.155 − 0.434*** − 0.206 firms that contributed to the poverty alleviation campaign
(0.86) (− 3.83) (− 1.13) both in 2016 and 2017, and 0 otherwise. POST is an indi-
SOE 0.615** − 0.163 − 0.723 cator variable equal to 1 for observations in year 2017 and
(2.09) (− 0.80) (− 1.12) 2018, and 0 otherwise. The interaction term between PAR-
SIZE 0.897*** 1.270*** − 1.241** TICIPATE and POST captures the incremental change in
(6.48) (11.76) (− 2.09) dependent variables for participating firms, relative to non-
ROA − 0.749 − 0.366 8.670** participating firms. A positive coefficient for the interac-
(− 1.16) (− 0.67) (2.27) tion term, or α2 > 0, suggests that participating firms obtain
LEV 0.159 − 0.062 7.825** some benefits from participating in the campaign. Control
(0.22) (− 0.12) (2.15) variables are selected from prior studies (e.g., Chang et al.
GROWTH − 0.117*** − 0.015 0.058 2018; Lin et al. 2015).
(− 2.68) (− 0.89) (0.69) Table 7 reports the results from regressions estimating
DUAL − 0.047 − 0.258* 0.368 Eq. (2) using the matched sample. Column (1) shows that
(− 0.19) (− 1.65) (1.63) the interaction term has a positive and statistically significant
BM 0.190 − 0.380 − 5.600*** coefficient, implying that participating firms obtain 48.0%
(0.46) (− 1.17) (− 8.95) higher government subsidy after contributing to the poverty
AGE − 0.041* 0.007 0.103* alleviation campaign. Column (2) shows that participating
(− 1.71) (0.45) (1.69) firms have an improved reputation for social responsibility,
IO 1.756 − 2.767** − 2.095 as suggested by the positive coefficient of the interaction
(0.99) (− 2.02) (− 1.12) term. In Column (3), the positive coefficient of the inter-
TOP10 − 0.786 0.752 4.392 action term suggests that participating firms have a higher
(− 0.78) (1.02) (1.54) valuation in the equity market, relative to non-participating
TOP 0.471 0.129 − 2.005 firms. Overall, the evidence in Table 7 shows that firms par-
(0.49) (0.18) (− 1.28) ticipating in the poverty alleviation campaign are rewarded
CHARITY_DUMMY 0.845*** − 0.583*** − 0.325 with more government subsidies, better reputation and
(3.10) (− 3.26) (− 1.24) higher firm valuation. Consistent with prior findings, the
Constant − 2.464 − 31.140*** 36.875** evidence suggests that CSR activities can help improve firm
(− 0.91) (− 13.46) (2.08) value.
Industry fixed effect YES YES YES
Province fixed effect YES YES YES Campaign Contributions and Philanthropic
Observations 2,538 2,538 2,538 Donations
Adjusted R2 0.207 0.192
ROC 0.933 In this sub-section, we investigate whether government
initiated CSR activities “crowd out” other CSR activities
This table reports the results from regressions estimating Eq.  (2).
that firms voluntarily engaged in. If participation in the
The sample includes Chinese listed firms that participated in the pov-
erty alleviation campaign in 2016 and 2017 and industry- and size- poverty alleviation campaign can help firms achieve objec-
matched non-participating firms. The sample period covers 2015 to tives that are usually achieved through other CSR activi-
2018. Variables are defined in Appendix. Standard errors are adjusted ties such as managing firms’ reputation, risk and relation-
for the clustering effect at the firm level
ship with stakeholders, it is possible that participating
***, ** and * indicate the coefficient is statistically significant at the firms could reduce their other CSR activities such as phil-
1%, 5% and 10% level, respectively
anthropic donations after contributing to the campaign.

13
 Y. Chang et al.

Table 8  Do participating firms reduce their philanthropic donations? non-participating firms in the periods before and after
Variables (1) (2)
2016. Specifically, we estimate Eq. (2) with a new set of
CHARITY TOTAL
dependent variables and control variables. We use two
dependent variables to capture firms’ philanthropic dona-
PARTICIPATE 1.483*** 1.450*** tions. The first variable is CHARITY, the natural log of the
(7.11) (6.98) amount of philanthropic donations (net of campaign con-
POST − 0.739*** − 0.747*** tributions). The second variable is TOTAL, the natural log
(− 6.45) (− 6.53) of the sum of philanthropic donations and contributions
PARTICIPATE × POST − 2.077*** 0.525*** to the poverty alleviation campaign. The control variables
(− 9.94) (3.03) are taken from prior studies on corporate philanthropy in
SOE − 1.836*** − 1.801*** China (e.g., Lin et al. 2015).
(− 8.40) (− 8.35) Table  8 reports the results from the regressions. In
CASH 0.171 0.199* Column (1) where the dependent variable is CHARITY,
(1.52) (1.80) the result shows that PARTICIPATE has a positive and
SIZE 1.237*** 1.216*** statistically significant coefficient, suggesting that par-
(9.07) (9.01) ticipating firms made more philanthropic donations than
ROA − 0.020 − 0.017 non-participating firms before 2016. POST has a negative
(− 1.07) (− 0.90) coefficient, suggesting that there is a decrease in non-par-
LEV − 0.210* − 0.175* ticipating firms’ philanthropic donations after 2016, con-
(− 1.65) (− 1.73) sistent with findings in Chang et al. (2018) that Chinese
GROWTH − 0.193** − 0.183** firms have reduced their charitable donations in recent
(− 2.03) (− 1.96) years because the anti-corruption campaign cuts off firms’
DUAL − 0.762*** − 0.737*** incentives to use donations to establish political connec-
(− 3.80) (− 3.78) tions. More importantly, we find the interaction term
BM 0.551 0.673* between PARTICIPATE and POST has a negative and sta-
(1.50) (1.86) tistically significant coefficient, implying that, relative to
AGE − 0.093*** − 0.092*** non-participating firms, firms contributing to the poverty
(− 5.83) (− 5.81) alleviation campaign decrease their philanthropic dona-
IO 2.108* 1.989 tions after 2016. The evidence is consistent with the view
(1.70) (1.63) that after engaging in government initiated CSR activi-
TOP10 − 0.534 − 0.479 ties, firms decrease their investment in other CSR activi-
(− 0.73) (− 0.67) ties such as corporate philanthropy. However, in Column
TOP − 1.593** − 1.763** (2) where the dependent variable is TOTAL, we find the
(− 2.15) (− 2.39) interaction term has a positive and statistically significant
Constant − 16.749*** − 16.812*** coefficient, suggesting that after 2016 participating firms
(− 8.87) (− 8.94) increase their total amount of donations, including both
Industry fixed effect YES YES campaign contributions and philanthropic donations. The
Observations 13,087 13,087 evidence shows that, although government initiated CSR
Adjusted R2 0.125 0.140 activities could “crowd out” other types of CSR activities,
This table reports the results from regressions estimating Eq. (2) with overall they have a positive impact on firms’ total invest-
CHARITY and TOTAL as dependent variables. The sample includes ment in CSR activities.
Chinese listed firms from 2013 to 2018. Variables are defined in
Appendix. Standard errors are adjusted for the clustering effect at the
firm level
Conclusion and Discussion
***, ** and * indicate the coefficient is statistically significant at the
1%, 5% and 10% level, respectively
Reducing poverty is a longstanding global challenge.
Many governments and international organizations, such
To test this possibility, we focus on philanthropic dona- as the United Nations and the World Bank, have made pov-
tions to capture firms’ investment in other CSR activities, erty reduction a priority in their agendas. The literature,
and use a difference-in-differences approach to compare
the philanthropic donations between participating and

13
Government Initiated Corporate Social Responsibility Activities: Evidence from a Poverty…
however, provides little evidence on firms’ efforts in and
contributions to poverty reduction around the world,
despite a large volume of research on CSR. In this study,
we use a unique setting in China to document how and
why listed firms contribute to poverty alleviation. In 2016,
the Chinese government launched a nationwide poverty
alleviation campaign aiming to eliminate poverty in 2020.
The campaign has mobilized organizations and entities
from all parts of society to participate, including many
listed firms in China’s stock markets. Starting from 2016,
listed firms are required to disclose quantitative informa-
tion about their poverty alleviation efforts in their annual
reports or CSR reports. We manually collect this informa-
tion and conduct our analyses.
The results reveal that over 20% of listed firms actively
participate in the poverty alleviation campaign, and par-
ticipating firms make significant contributions. On aver-
age, a participating firm donates over 3 million yuan and
helps hundreds of people out of poverty each year. To
explore firms’ motivations to participate in the campaign,
we examine managers’ and local political leaders’ incen-
tives. We find the following types of firms are more likely
to participate and make larger contributions: (1) SOEs;
(2) firms with a high risk of being targeted in an anti-
corruption campaign; (3) firms located in provinces whose
top political leaders have a stronger incentive to push the
campaign; and (4) firms with CEOs or directors who have
experienced poverty in their early life. The evidence sug-
gests that managers’ and politicians’ incentives are impor-
tant factors driving firms’ decision to participate in the
poverty alleviation campaign. Furthermore, we show that
participating firms are rewarded with more government
subsidies, better reputation and higher equity valuation.
Finally, we find that government initiated CSR activities
may “crowd out” firms’ other CSR activities, but overall
government initiated activities have a positive effect on
firms’ total investment in CSR activities.
Our study contributes to the CSR literature by providing
novel evidence on firms’ contributions to a government
initiated CSR activity. Our evidence also has important
implications for governments and organizations that aim
to reduce poverty around the world. Our results suggest
that it is important to consider managers’ and politi-
cians’ personal incentives when mobilizing governments
and businesses to work together to address critical social
issues such as poverty, inequality and global warming. In
practice, it might be more effective to motivate managers
and politicians to participate in addressing global chal-
lenges if their contributions can be rewarded with positive
publicity, global reputation and career advancement.
Although this study provides important insights, we
acknowledge that the success of the poverty alleviation
campaign and firms’ incentives to participate in the cam-
paign may be partly driven by the political structure of
China and the dominant role of government in the econ-
omy. It is a question whether governments in other coun-
tries can implement government initiated CSR activities
with such success and mobilize so many listed firms to
participate. We thus caution readers when generalizing our
results to other countries with different political structures.
We leave it to future research to explore the issue.
Our study also opens several avenues for future
research. For example, the success of China’s poverty
alleviation campaign contrasts with the ill-fated poverty
alleviation policies in Brazil. It is important for research-
ers to understand the reasons for success and best practice
in combatting poverty as such understanding has important
implications for global efforts to address poverty around
the world. Furthermore, our study suggests that manag-
ers’ and politicians’ incentives play an important role in
firms’ contributions to the campaign and CSR activities to
address a grand social issue. It is interesting to examine
whether such incentives vary with country-level institu-
tions such as government quality, legal system or national
culture. Finally, future research can explore managers’ and
politicians’ incentives in addressing other CSR challenges
such as global warming. Firms and countries vary in their
efforts and policies on global warming, and it is likely that
managers’ and politicians’ personal incentives play a role
in determining these efforts and policies.
Acknowledgements  We thank two anonymous reviewers, Peter Clark-
son, Simon Fung, Xiaolu Hu (discussant), John Roberts, Greg Shailer
(editor), Joyce Yu and participants in 2019 Financial Markets and Cor-
porate Governance conference for helpful comments
Appendix
See Table 9.
13
 Y. Chang et al.

Table 9  Variable definitions
Variables Definitions

Dependent variables
 MONEY The natural logarithm of the amount of a firm’s monetary poverty-alleviating contributions in the year
 DON1 A dummy variable that equals 1 if a firm makes a monetary poverty-alleviating contribution in the year,
and 0 otherwise
 RESOURCE The natural logarithm of the amount of a firm’s resource poverty-alleviating contributions in the year
 DON2 A dummy variable that equals 1 if a firm makes a resource poverty-alleviating contribution in the year,
and 0 otherwise
 DONATE The natural logarithm of the amount of a firm’s monetary or resource poverty-alleviating contributions in
the year
 DON A dummy variable that equals 1 if a firm makes a monetary or resource poverty-alleviating contribution
in the year, and 0 otherwise
 PEOPLE The natural logarithm of the number of people helped out of poverty by the firm’s poverty-alleviating
contributions in the year
 PEO A dummy variable that equals 1 if a firm helps people out of poverty using poverty-alleviating contribu-
tions in the year, and 0 otherwise
 REPUTATION A dummy variable that equals 1 if a firm is listed on an annual enterprise responsibility list published in
South Weekend in the year, the most influential Chinese newspaper hosted by an independent organiza-
tion, and 0 otherwise
 SUBSIDY The natural logarithm of subsidy granted by government to the firm in the year. The amount of subsidy is
manually collected from the footnotes of firms’ annual reports
 TOBIN’S Q The ratio of market value of equity to book value of equity
 TOTAL The natural log of the sum of a firm’s charitable donation and its monetary and resource contributions to
the poverty alleviation campaign in the year
Variables of interest
 SOE A dummy variable that equals 1 if a firm is ultimately controlled by government and 0 otherwise
 CENTRAL_SOE A dummy variable that equals 1 if a firm is ultimately controlled by central government and 0 otherwise
 LOCAL_SOE A dummy variable that equals 1 if a firm is ultimately controlled by local government and 0 otherwise
 ENTERTAIN The natural logarithm of entertainment expenses that firms spend to entertain directors or government
officials, manually collected from the detailed items of management expenses in the footnotes of firms’
annual reports
 OUSTING1 The natural logarithm of the number of officials at the prefecture level or above punished in the anti-
corruption campaign in the province where the firm is located, manually collected from the annual
report of the provincial procuratorate
 OUSTING2 A dummy variable that equals 1 when one of a firm’s executives has been investigated in the anti-corrup-
tion campaign since 2012 by the Commission for Discipline Inspection of the Central Committee of the
China Communist Party, and 0 otherwise. This data is manually collected from three sources: enter-
prise announcements, the official website of the Commission for Discipline Inspection of the Central
Committee of the CPC and the release of business media
 LEADER_NEW A dummy variable that equals 1 when the secretary of the party committee or the governor of the prov-
ince where the firm is located is replaced in the year, and 0 otherwise
 LEADER_RETIRE A dummy variable that equals 1 if the party leader in the province where the firm is located is aged above
64, and 0 otherwise
 LEADER_UP An index value constructed as the weighted average level of the regional promotion pressure indices of
GDP growth rate, fiscal surplus and employment rate in a province in the year, following the method in
Wang et al. (2019). The greater the index value, the higher the chance of promotion
 CEO_POVERTY_EXPERIENCE A dummy variable that equals 1 if a firm’s CEO has poverty experience (born in the period from the year
1941 to 1961), and 0 otherwise
 BOARD_POVERTY_EXPERIENCE The ratio of board members who have poverty experience (born in the period from the year 1941 to
1961)
 PARTICIPATE A dummy variable equal to 1 for firms that participated in the poverty alleviation campaign both in 2016
and 2017 (in Table 6), or after 2015 (in Table 7), and 0 otherwise
 POST A dummy variable that equals 1 for observations in 2017 and 2018 (in Table 7), or after 2015 (in
Table 8), and 0 otherwise
Control variables
 AGE The number of years since a firm’s initial public offering (IPO)

13
Government Initiated Corporate Social Responsibility Activities: Evidence from a Poverty…

Table 9  (continued)
Variables Definitions

 BM The ratio of book value of equity to market value of equity

 CASH The natural logarithm of cash and cash equivalents
 CHARITY The natural logarithm of the amount of charitable donations in a year. If a firm makes a monetary or
resource contribution to the poverty alleviation campaign in the year, the campaign contribution is
subtracted from the charitable donations
 CHARITY_DUMMY A dummy variable that equals 1 if a firm makes charitable contributions and 0 otherwise
 DUAL A dummy variable that equals 1 when one person occupies both board chair and CEO positions, and 0
otherwise
 GROWTH The annual sales growth rate
 IO The percentage of shares owned by the institutional shareholder
 LEV The ratio of total liabilities to total assets
 POVERTY​ The ratio of poor people to the whole population in the province where the firm is located, obtained from
the Monitoring report on rural poverty in China published by Chinese National Bureau of Statistics
 ROA The ratio of net income to total assets
 SIZE The natural logarithm of total assets
 TOP The percentage of shares owned by the firm’s largest shareholder
 TOP10 The percentage of shares owned by the firm’s top 10 shareholders

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