Does the nature of political connection matter for corporate social responsibility engagement? Evidence from China

We examine whether firms’political connection affects their corporate social responsibility (CSR) engagementsand how the effects vary with different political ties, namely symbolicand materialconnections.These ties reflect different degrees of political embeddedness, interest alignment, network size, and monitoring with the government, and thereforeimpartdivergenteffects on managerial incentives forCSR practices.Our analysisindicates that CSR in firms with symbolic connection ismuch more associated with agency cost thanCSR in firms with material connection.We also find that large firms with symbolic connection exhibit lower CSR performancethan those with material connection, probably because the former group tendstosubstitute the prestige of their political capitalfor the goodwill associated withCSR engagement. Theseresults showthat accounting for the effects of different types of political connection on managerial incentives contributes some clarity tothe debate about the compatibility of CSR with thecorporate mandate