How Does Corporate Social Responsibility Impact On Financial Constraints

ABSTRACT:As one part of Corporate Capital Structure Theory, Financial Constraints is always catching the attention, for it is the basic topic of capital market study. Under the developing market environment, almost every corporate needs to deal with financial constraints problem. Based on the financial nature, financial constrains includes endogenous financial constrain and exogenous financial constrain. The exogenous financial constrain includes equity financial constrain and debt financial constrain. With the development of modern economy and the global trend, more and more people in the whole world concern corporate social responsibility which is always named CSR. Also, CSR gains much attention in the society and academic field in China.Given the background of comprehensively deepening reform in China, this paper mainly study how CSR impacts on the two kinds of financial constraints (Equity financial constraint and Debt financial constraint). Meanwhile, from the aspect of ownership property and regional differentiation development, this paper would examine the concrete diversity effect. As an empirical accounting research paper, this article construct the sample from all the public firms included A-shares broad, growth enterprises broad, small and medium-sized enterprises board in Shenzhen and Shanghai Stock Exchange. Following the detailed empirical examination, I find that CSR can significantly relieve the two kinds of financial constraints. What’s more, from the ownership property perspective, I find that CSR has significantly different effect on state owned enterprise and the other enterprise. Meanwhile, CSR has different effect on equity and debt financial constraint, which is also different among state owned enterprise and the other enterprise. Given the regional differentiation development, I find that CSR impacts on financial constraints in different ways under different market development level. For the company in more developing area, CSR would affect financial constraints in a higher level. Also, CSR has significantly different effect on equity and debt financial constraint. Following the empirical examination to the whole sample data, this paper does robust test by changing the main model, the data range and the measure variable of equity financial constraint and approves the original empirical result. Eventually, this paper gives the polity suggestion. In consideration of characteristic socialism capital markets environment and the global enterprise operating model, it is essential to study how CSR impacts on the financial constraints. This study is beneficial for enterprise to build diversified financing structure, also beneficial for market to allocate resources more rationally.