How do infectious diseases affect corporate social responsibility? Evidence from China

Abstract

Purpose: The recent decades have witnessed the rising frequency and severity of infectious diseases in the international context and their detrimental impacts on the corporate world as a result of growing interconnection among nations. This study examines the effect of previous infectious diseases (H5N1, H1N1, and MERS) on the disclosure of corporate social responsibility among listed Chinese firms from 2006 to 2017. Research design: We obtain firm-level financial and CSR data of Chinese non-financial listed firms from CSMAR. The data on corporate governance are collected from Bloomberg financial database. Three infectious diseases under examination are H5N1 (2006-2007), H1N1 (2009-2010), and MERS (2015-2016). This study employs the fixed-effect estimations to account for time-invariant differences among firms in our sample. Findings: We reveal that Chinese firms disclose less CSR information during the time of public health crises, and this impact is more pronounced in small-sized and low-growth firms. Besides, our analysis suggests that Chinese firms are becoming more resilient to infectious diseases. Originality: The study provides new insights into how businesses react to previous epidemics and pandemics at different scales other than the COVID-19 pandemic. Besides, our findings shed light on the dynamic of firms’ CSR engagement during and after the infectious outbreaks. Research implications: The findings provide implications for corporate stakeholders to understand corporate policies under uncertainties and inform vulnerable businesses to develop an appropriate CSR strategy in preparation for future health calamities.