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A Stakeholder Resource-based View of Corporate Social Irresponsibility: Evidence from China

Following stakeholder resource-based theory (SRBT), we conceptualize the value relevance of corporate social irresponsibility (CSI) based on the bargaining power that stakeholders possess regarding firms’ inputs and revenue generations. Accordingly, we classify the stakeholders into residual claimants (i.e. customers, shareholders) and fixed claimants (i.e. employees, environment). Using a curated news database to measure CSI in China, we find that CSI episodes alienating residual claimants’ stakeholders lead to greater shareholder value destruction. In line with the stakeholder salience, we also find that the adverse effect of CSI is stronger under higher legitimate the government concerns, more urgent the CSI episodes and more powerful the news source disclosing the CSI episodes. CSI episodes alienating employees with high urgency also brought an underperformance.