Research On The Influence Of Corporate Social Responsibility On Corporate Mispricing

The concept of corporate social responsibility was developed in the 1920 s,and its connotation is highly compatible with the new development concept implemented by Chinese modernisation,which emphasises that enterprises should achieve their own sustainable development on the basis of harmonising economic,social and environmental benefits,so that Chinese enterprises should not only play the role of economic man,but also assume the role of social and ecological man.Sustainability has gradually become a new standard for investment in recent years,and the fulfilment of corporate social responsibility has increasingly become part of rational investment decisions by investors.As the trend towards sustainable investment continues to expand,it is likely that corporate social responsibility will have an impact on capital market pricing efficiency.The deviation of the market value of an enterprise from its intrinsic value,i.e.the mispricing of an enterprise,is a prominent manifestation of inefficient capital market pricing,which is detrimental to the long-term development of enterprises and the improvement of capital markets.In view of this,from the perspective of capital market pricing efficiency,this paper examines whether the strengthening of corporate social responsibility by Chinese enterprises will affect the corporate mispricing.From the existing literature,most of the studies focus on the impact of corporate social responsibility on corporate value,corporate innovation and investment efficiency,but few have studied the direct relationship between the level of corporate social responsibility implementation and the degree of corporate mispricing in China.Therefore,the main contribution of this paper is to incorporate corporate social responsibility and corporate mispricing of A-share listed enterprises in China into a unified research framework,and selects panel data of Chinese Ashare listed enterprises from 2009 to 2021 as the original sample and constructs aregression model to empirically test whether corporate social responsibility can effectively mitigate corporate mispricing and thus enhance capital market pricing efficiency.Specifically,the independent variable is corporate social responsibility rating provided by domestic mature third-party institution Huazheng ESG,and the dependent variable is the enterprise mispricing index constructed by the residual income method and the price-to-book ratio decomposition industry regression method.Firstly,the regressions were conducted on whether corporate social responsibility affects corporate mispricing in the full sample.Secondly,the specific effect of corporate social responsibility on mispricing of firms in different states is explored separately for the over-valued and under-valued firm samples.Again,the moderating effect of information asymmetry is verified by introducing illiquidity ratios.finally,the study is then extended to investigate the heterogeneity of corporate property rights and the performance of corporate social responsibility.Based on the research in this paper,the following conclusions can be drawn:(1)Corporate social responsibility can effectively alleviate corporate mispricing;(2)There is a significant negative correlation between corporate social responsibility and overestimating enterprises’ mispricing,and a significant positive correlation between corporate social responsibility and underestimating enterprises’ mispricing;(3)In the environment of capital market information asymmetry,the utility of undertaking corporate social responsibility to alleviate the enterprise mispricing will be strengthened;(4)The mitigating effect of corporate social responsibility is affected by the nature of corporate property rights and the practice of corporate social responsibility,especially for non-state-owned enterprises and enterprises with insufficient corporate social responsibility performance,the mitigating effect is more pronounced.In conclusion,for Chinese enterprises to actively practice corporate social responsibility is conducive to value discovery and value creation of the enterprise,helping enterprises to transform and upgrade,and ultimately alleviating the mispricing,contributing to their sustainable development.The improvement of pricing efficiency in the capital market can also further promote the healthy development of the market.