TYPE Original Research

PUBLISHED 18 August 2022

DOI 10.3389/fpsyg.2022.925323

Do financial performance and

OPEN ACCESS firm’s value affect the quality of
EDITED BY
Spyridon Ntougias,
Democritus University of Thrace,
corporate social responsibility
Greece

REVIEWED BY
disclosure: Moderating role of
Muhammad Zulqarnain Arshad,
Universiti Utara Malaysia, Malaysia
Federica Palazzi,
chief executive officer’s power
University of Urbino Carlo Bo, Italy
*CORRESPONDENCE
in China
Gaoliang Tian
[email protected]
Fawad Rauf Cao Na1 , Gaoliang Tian1*, Fawad Rauf2* and Khwaja Naveed3
[email protected] 1
School of Management, Xi’an Jiaotong University, Xi’an, China, 2 Centre for Management
SPECIALTY SECTION and Commerce, University of Swat, Swat, Pakistan, 3 Faculty of Management Sciences, Riphah
This article was submitted to International University, Islamabad, Pakistan
Organizational Psychology,
a section of the journal
Frontiers in Psychology

RECEIVED 21April 2022

ACCEPTED 26 July 2022
This paper investigates the correlation between the quality of corporate
PUBLISHED 18 August 2022 social responsibility disclosure (CSRD) and financial performance (FP). It also
CITATION investigates the moderating role of chief executive officer power (CEOP)
Na C, Tian G, Rauf F and Naveed K in the relationship between the quality of CSR disclosure and firm value
(2022) Do financial performance and
firm’s value affect the quality of (FV) in Chinese listed companies. The evidential research used the up-to-
corporate social responsibility date sample (3, 248) of unbalanced findings for the period of 2014–2020,
disclosure: Moderating role of chief
executive officer’s power in China. from the registered Chinese firms in the Shenzhen and Shanghai Stock
Front. Psychol. 13:925323. Exchanges as samples for the study. As a starting point technique, the STATA
doi: 10.3389/fpsyg.2022.925323
15 has been used to test pooled ordinary least squares (OLS) regression
COPYRIGHT
on a sample of Chinese listed companies. We use 1-year lagged regression
© 2022 Na, Tian, Rauf and Naveed.
This is an open-access article and two SLS regressions to monitor the potential endogeneity problem.
distributed under the terms of the The imbalanced data set was received from the China Stock Market and
Creative Commons Attribution License
(CC BY). The use, distribution or Accounting Research (CSMAR) web page, which is the most significant source
reproduction in other forums is of information for Chinese publicly listed firms. Data on CSR information
permitted, provided the original
author(s) and the copyright owner(s)
items and media reporting are compiled manually. The findings of the study
are credited and that the original revealed that there are positive FP consequences for the companies engaged
publication in this journal is cited, in
in the quality of CSR disclosure. We also report that higher CEO power
accordance with accepted academic
practice. No use, distribution or negatively enhances the quality of CSR disclosure effect on the FP of FV.
reproduction is permitted which does The research investigates the impact of CSR disclosure and FP by presenting
not comply with these terms.
evidence of the moderating role of CEO power. Therefore, it is suggested
that a higher law for CSR engagement and disclosure be implemented in
China, and robust measures for the implementation of CEO power, although
there are financial advantages to be gained. A key relevance to the empirical

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Na et al. 10.3389/fpsyg.2022.925323

quality of CSR disclosure research can be recognized as the moderating role

of CEO power in the quality of CSR disclosure, FP, and FV in the context
of Chinese study. The findings are robust with the use of an instrumental
variable method.

KEYWORDS

financial performance, corporate social responsibility disclosure, firm value, CEO

power, agency theory

Introduction methods (Chang et al., 2010). Hence, an organization researcher

almost always is able to find the theoretical perspective, which
Corporate social responsibility (CSR) was “invented” will allow to justify the existence of observed correlation.
in South Africa as a goodwill activity. The concept was Still, this justification would be rather weak and easy to
promulgated as a term in the West primarily ascribed to Bowen undermine in the context of other theoretical approaches.
and Johnson (1953). The United Nations (UN) then launched A good illustration of mentioned situation is the debate on
an environmentalist strategy in 1972 to urge corporations and the positive impact of internationalization on the outcomes
communities to take action on major global challenges, such of enterprises. The protagonists try to find and justify this
as inequality, human rights, and the environment. Following hypothesis by implementing different theories and explanations,
that, in 1987, the World Commission on Environment and while the others refute that (Chung et al., 2018; Hu et al.,
Development produced a report on environment protection 2018). The no-existence of homogeneous theory is also seen
in which the phrase “ecological sustainability” was used for as a problem in establishing the direction of cause-and-
the first time. In 2015, the United Nations published its Goals effect relation (Hui and Matsunaga, 2015; Singh et al., 2017).
of Sustainable development (UNSDG). The European Union Moreover, many organizational variables are related bilaterally
(EU) agreed to these development goals and took the lead or create a feedback loop (Jamali, 2008). The higher motivation
in formulating plans to attain them by 2030 (Qureshi et al., level determines effectiveness, which results in profits and, as
2020). CSR, on the other hand, is a relatively new idea in a consequence, higher salaries. This reward further increases
China compared to the West. Although China’s economy is the level of motivation (Fanelli and Misangyi, 2006). It is
becoming increasingly relevant globally, CSR practices are, very complicated to differentiate between the cause and the
nevertheless, in their infancy (Zhang et al., 2019; Ma and Bu, effect, i.e., the level of corporate social responsibility correlates
2021). China’s standards, attitudes, and working environment with financial outcomes, but what is the direction of this
differ from those in the West, and these variations have an relationship? Whether the corporations achieve better results as
impact on CSR conception and activities (Wang and Juslin, a consequence of implementing CSR or corporations with better
2009). Many publicly traded companies, for example, are outcomes are able to finance CSR activities (Reverte, 2009)?
not obligated to release CSR reports (Zhou, 2019). Global Answering the question of the direction of the relationship
governance metrics show that China’s governance level is low is frequently dependent on an arbitrary researcher’s choice
when compared to the United States and developed European (Hui and Matsunaga, 2015).
economies (Hewitt et al., 2021). These practices have been assumed to be an agency cost on
Referring to the vagueness of theoretical framework the part of firms and administrators (Li et al., 2016). In this
and analysis, according to Hanlon and Fleming (2009), the situation, the CEO with power was thought of suspiciously as a
conception of CSR is vague from its beginnings and turned tool for the covering of their payment, seeking behavior amidst
into a farce in the twenty first century. According to Hensel their authority-based operating potential of the disclosure policy
(Tan et al., 2016) (p. 68), proving the existence of the casual and material transparency. On the contrary, Tan et al. (2016)
link between perceived phenomena requires more than their discard the agency cost based on a speculative hypothesis.
coexistence identification. The organizational researchers have However, the outcomes in this domain are diverse, and the
a great number of variables in disposition, between which they literature does not have a definitive answer (Liu and Jiraporn,
can search for statistical relations (Mitchell et al., 1997; Liu and 2010; Tan et al., 2016).
Jiraporn, 2010). Unfortunately, the field of organization studies Corporate societal practices are perceived in different
faces dualism simultaneously: lack and excess of theories (Tan ways by different administration subgroups–stakeholders with
et al., 2016, p. 79–102). As a result, the theory of organization respect to their relative legitimacy and closeness. For example,
inquires about many theoretic concepts, implementing different a firm’s social action for a local community where the

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firm works will be valued differently by proximal teams 2006). Different companies seek various possibilities from their
and distant shareholders (Mitchell et al., 1997). Chang creditors and have updated systems of priorities. Managers
et al. (2010) describe the process of excellence in disclosure will offer additional scrutiny to their strains in companies
related to CEO compensation. They claim that delivering with extreme investors and show more CSR results, regardless
high qualitative information allows executives to have a of the degree of company results. Chau and Gray (2010)
good view of the firm’s underlying economic and strategic propose that the mixed outcomes of the association between
climate. Using comprehensive information, executives of the competitiveness and CSR disclosure could be underlined here
companies can easily scan the environment where they are by shifts in cultural and administrative problems between
operated, since parallel knowledge and information help them countries (Reverte, 2009).
in building successful strategic and organizational decisions Van der Laan Smith et al. (2005) find explorative evidence
(Chang et al., 2010). Consequently, it enables them to analyze for Norwegian, Danish, and US businesses that control CSR
and compare benefits and costs related to consumers’ choices disclosure through cultural and official influences. China has
and environmental disclosures. Therefore, we investigate the exclusive cultural and institutional geographies that influence
role of CEO control, encouraged by the comparative payment CSR management motivations and objectives in an effective
of the CEO, in the correlation between reporting of ESG process, and the decision of managers to report CSR details
and firm valuation. from now on. However, from the viewpoint of stakeholder
In this study, we use a robust CSR reporting proxy and management, investor pre-eminence (the belief that there are
a sufficient sample size to check whether CEO power has only two businesses making returns for investors) tends to
any effect on the relationship between firm values (FVs) dominate. The shareholders and firms have fewer incentives
and corporate social responsibility to confirm the connection for CSR (Van der Laan Smith et al., 2005). China has already
between FVs and CSR. Furthermore, by analyzing the essence declared many CSR stimulus programs, and the demand on
of the CEO in CSR transparency, we aim to explore the initial Chinese firms from investors to prove CSR is relatively small,
drivers of the association. While targeting this objective, we and there is little potential for investors (Lin, 2010). Risk
suggest disseminating previous tests of agency theory to clarify management and stakeholder theory imply that fair capital
how the success of an organization is associated with the investment and wealth resulting from investor association are
regulation of CEO power in the quality of CSR disclosure created by CSR (Lin, 2010).
efficiency. Most of the research has tested the connection This increased wealth generates company goodwill, which
between a company’s values and CSR (Hui and Matsunaga, 2015; can be a source of security as a guarantee in low-income regions.
Singh et al., 2017; Chung et al., 2018). However, what has not This hence boosts poor investors’ evaluation (Godfrey, 2005).
been addressed is the moderating role of CEO power between The stakeholder theory of social control rights that CSR has a
the associations. Therefore, this research is an endeavor to fill confident relationship with FP (Voinea et al., 2022). The agency
the gap and contributes to an existing body of research. theory postulates that a high-powered chief executive officer
A selection of research has found that a chief executive will generate a fight between management and owners who are
officer has the power to manipulate transparency policies. fundamental to the issue of the agency on the contradictory
Song et al. (2020) offer proof of the motivation of the chief thinking, and corporate and managerial thinking indicates
executive officer to monitor the details issued to the council. that strongly managed CEOs have extra benefits and are less
Also, a study by Goldman and Slezak (2006) considers the costly (Sah and Stiglitz, 1986). The relationship between chief
capacity of the CEO to stimulate knowledge disclosure. From executive officer pay and FP (Bebchuk and Fried, 2003) has been
the moment where the quality of disclosure represents the ability discussed in administrative control theory. The principle of stuff
of executives to consider the underlying business landscape rights indicates that the structure of possession has a favorable
and to predict potential performance effectively, better exposure relation with FP (Ceptureanu et al., 2017).
quality could suggest the Capability of the CEO to improve Similarly, several explorations have been carried out,
the FV (Hui and Matsunaga, 2015). The CEO’s efforts around particularly within economics and FV, relationships, and impact
the CSR acknowledgment can be a primary indicator of the among CSR and communal company results. The findings are
quality of transparency at the heart of the executive committee. still inconclusive and appear inconclusive because of certain
Therefore, we suggest that higher business expenses, induced characteristics (Griffin and Mahon, 1997), and as a result,
by CSR transparency, would be higher in the occurrence of the fragmented outcome opens doors for future researchers
more CEO Control, as customers will potentially perceive the to test the correlation between CSR and corporate financial
signaling impact of CSRD in terms of responsibility. performance (FP). Mishra and Suar (2010) have created a lot of
Furthermore, as per the principle of investor management interest among scholars. The association between CSR and FP
(Jamali, 2008), managers stabilize different knowledge has been identified in most research and is generally resounding.
requirements of many stakeholders. However, their benefits Previous research has shown that there is a strong relationship
and returns for all the stakeholders are not equal due to the between the quality of CSR disclosure, FP, and the role of CEO
specified objectives and goals of the firm (Fanelli and Misangyi, power (Barnett and Salomon, 2006; Hui and Matsunaga, 2015).

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A negative association was also conveyed in several other Theoretical framework and
studies (Wright and Ferris, 1997), while some studies have
acknowledged no correlation between CSR and corporate FP
hypothesis development
(Barnett and Salomon, 2006).
This study investigates the correlation of the firm’s FP and
Irrespective of their contrasting views toward the duty
firm’s value with the quality of CSRD under the moderating role
of managers, the view of owners and the view of creditors
of CEO power in China. The theory we have inculcated here is
are individually universal (Donaldson and Preston, 1995).
the stakeholder-agency theory. The entrenchment of the CEOs
The interactions between managers’ perceptions and owners
in Chinese firms makes it imperative to address the correlation
are difficult to match. But, a developing research stream
under this perspective (Cha and Rajadhyaksha, 2021), as the
demonstrates that there is an immense variation in the
extant literature has highlighted the difference in CSRD quality
motivations of managers to respond to the welfare of investors
across different contexts (Rauf et al., 2021b).
and/or investors, and hence we concentrate on a primary
Stakeholder–agency theory puts forward the compatibility
motivation “cupidity” for managers in this research. For
between the agency and stakeholder theory in the midst of
our research, this is a very important motivation, since we
the harmful contest between the principal (stakeholders) and
believe that top managers and executives’ cupidity disrupts the
the agents (CEO) (Shankman, 1999; Thosuwanchot, 2021).
normative perceptions of both the investor and the perspective
When an executive holds a powerful position, he or she
of the investors (Mannor et al., 2016; Gupta et al., 2020). Takacs
prioritizes his/her perceived efficiency, and the probability of
Haynes et al. (2017) have also been convinced that corporate
agency issues like data irregularity and misrepresentation, and
avarice adversely pushes the rights of shareholders as a show
moral hazards arise (Fama and Jensen, 1983), which entice
of manager opportunism. Instead of caring for the growth
risks of information asymmetry (Lemma et al., 2021). This
of shareholder equity, selfish chief executive officers direct
ambitiousness beyond the stakeholders’ interest aggravates the
additional capital from their businesses to personal interests,
agency issues. This agency problem is further exacerbated when
which outcome in a decrease in corporate profits (Takacs
a decision maker like a CEO with no concatenation of financial
Haynes et al., 2017). We strengthen this result by offering that
decision hazards has entrenchment in the firm in the shape of
arrogance, in the best financial interest of other clients, would
power. This could result in the incomplete and/or erroneous
also adversely influence the ability of managers to succeed.
reporting of the CSR while potentially harming the interests
More explicitly, we expect cupidity chief executive officers to
of the stakeholders. In the case of the non-entrenchment of
minimize corporate social responsibility expenditures and lead
the CEO, the regulators could check the stakeholders’ value-
their companies to the adverse effects of full shocks, actions
destroying activities. The agency theory hence argues for the
that therefore go beyond what is expected according to the
non-entrenchment of the CEOs to leverage a good-quality
investor’s point of view.
CSRD (Razzaq and Niazi, 2018).
To achieve the study’s goal, we gathered a panel of 3,248
publicly traded Chinese companies from 2014 to 2020. To the
best of the author’s knowledge, this study is the first attempt to
explore the association between the market value of firms and Corporate social responsibility
11 unique dimensions of CSR in China. The study contributes disclosure and firm financial
to the body of knowledge: First, overall CSR disclosure has a performance
negative influence on the FV of Chinese enterprises, implying
a win-lose position. Second, environmental management harms For more than three decades, several theoretical and
the market value of Chinese enterprises, whereas employee empirical studies have been carried out to address the potential
performance has a favorable impact. Third, contrary to the connection between CSR disclosure and FP (Marom, 2006; Sial
overall findings, there is a positive association between FP et al., 2018a; Voinea et al., 2022). Among all those, studies by
and the market firm’s value of sensitive industry enterprises, Anser et al. (2018) and Yang et al. (2019) are widely regarded
implying a win-win situation. Fourth, prominent Chinese as pioneering work in this area, focusing on the relationship
CEOs’ power integrates CSR investments with their companies’ between corporate social responsibility and FP (Anser et al.,
long-term goals, creating a win-win situation. The study’s 2018; Yang et al., 2019; Awaysheh et al., 2020). This research
findings are unaffected by industry bias when evaluated to also evaluates the direction, resilience, and causality of the
other CSR proxies. connection, generating both preliminary and conflicting results.
The rest of the paper is organized as follows: Section Many studies have examined the relationships between CSR
2 discusses theory and hypotheses in the purview of extant disclosure and FP in the existing industry sector (Arayssi et al.,
literature, Section 3 presents data and methodology, Section 4 2016; Cheng et al., 2016; Pham and Tran, 2020).
illuminates the empirical results, and lastly, Section 5 concludes The relationship between disclosure of corporate
the findings of the research study. governance and FP results, such as liquidity, ownership,

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organization size and age, leverage, productivity, solvency, their fulfillment of social obligations, by disclosing information
and assets turnover, was investigated by many researchers about social activities. In addition to that, disclosures are meant
(Almajali et al., 2012; Hermuningsih et al., 2020). For instance, to check on the rage of the people who view the corporate entity
Ghelli (2013) conducted a study including 3,248 Fortune as only a tool for money minting (Gupta, 2011; Dhar et al., 2022).
500 businesses and the scientists gathered data on financial CSRD contributes to shareholders in measuring the essential
reporting and CSR transparency from the CSMAR database. value of a business over recognizing maintainable organization
The results showed the strong and relevant cause–effect performance or liable liabilities, such as litigation, which balance
relationship between CSR disclosure with business success “intangible assets” that can consequence from the absence of rule
(ROA) and firm valuation (Tobin’s Q) and CEO power’s or execution like defending against ecological damages or the
significant negative cause–effect relationship. Nevertheless, human rights desecrations.
financial success (ROE) was found to be strongly correlated This is because CSRD interconnects an organization’s
with the disclosure of CSR. performance to minimize risk, produce inducements to manage
Haniffa and Cooke (2005) find that decent-performing risk, and deliver data on an organization’s human capital,
businesses contribute to more CSR disclosure details to its clients, and society. CSRD could increase a company’s
legitimize their truth. The positive relationship between community status and thus long−term investor wealth (Faisal
financial results and notification of CSR is attributed to the et al., 2020). According to the shareholder’s view, CSR
management of possibilities and flexibility to distribute further performance must be impartially revealed as valuable: “data
corporate social responsibility activities to investors (Haniffa is gilded to the shareholder”(Ortas and Gallego-Álvarez,
and Cooke, 2005). A good association was discovered between 2020). Considerable like economical reporting, CSRD would
financial results and disclosures related to the case (Tagesson contain dependable and applicable data on real corporate
et al., 2009; Mughal et al., 2021). It was found that there is social responsibility performance slightly than simply reckoning
a positive correlation between corporate social responsibility events that can decrease under corporate social responsibility.
disclosure (CSRD) and the firms’ financial results, provided the Reasonable demonstration stops companies from using CSRD
company has good economic standing and the business can as an advertising instrument to hide weak corporate social
manage the expense of CSRD. responsibility performance (Cho et al., 2015). If CSRD properly
Li et al. (2013) conclude that firms with a higher return exists and is of the best quality, it can raise information
on investment are regulated by CSR transparency of high and competence, and decrease transaction charges through
quality. A constructive association between financial reporting data irregularities.
and CSR transparency proposes that CSR obligations make it However, executives can use optional CSRD necessity
easier to report on investor expectations even though there resourcefully (Khan et al., 2022). The study proposes that
is no considerable change in corporate social responsibility they might have a positively prejudiced discernment of their
obligations and quality (credibility of worth and client’s corporate social responsibility actions (Cormier et al., 2004; Saz-
expectation). Adding to this, older industries with continuous Gil et al., 2020). Furthermore, companies with weaker corporate
success lead to CSR behavior in which concern is paid to social responsibility performance, usually in the ecological
sustainability impact (Withisuphakorn and Jiraporn, 2016; dimension, report more CSRD information (García-Sánchez
González-Rodríguez and Díaz-Fernández, 2020). Our research and Araújo-Bernardo, 2020), consuming positive language and
supports the study of Li et al. (2016) by seeing a wider China smaller inevitability than well-performing companies (Cho
business sample and by spanning a longer period from 2008 to et al., 2010). Thus, CSRD information can include positively
2015. We oppose a successful relationship between the financial prejudiced information when CSRD information is optional
results and CSRD among Chinese firms, based on the expense and when the administration prefers to cause–effect positive
debate (Li et al., 2016; Voinea et al., 2022). rather than negative information (Cho and Kim, 2012; Du
and Yu, 2021). This unfairness can result in prediction errors
Hypothesis (H1): All the composite financial performance and eventually in a sophisticated cost of capital. It is also
has a positive effect on CSR disclosure. recommended that the CSRD of companies with weaker
corporate social responsibility performance consequences in
developed forecast fault be slickened to companies with superior
CSR performance (Dhar et al., 2022). Hence, shareholders
Firm’s value and corporate social might have problems processing CSRD data appropriately
responsibility disclosure (Veprauskaitė and Adams, 2013). A higher quality of CSRD
can propose larger corporate social responsibility performance,
Concerning social responsibility disclosure, firms try to but the open experimental query remains as to whether
disclose their social obligation’s fulfillment. More elaborating, it shareholders trust the simple volume of CSRD or whether
means corporate entities try to communicate to outsiders about they measure corporate social responsibility performance

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with regard to its influence on essential business wealth of the company’s stock is impacted by management actions
(Buallay et al., 2020). So, we hypothesize that CSRD is and would also balance his/her inducements (Chithambo
positively related to business wealth and that the influence et al., 2020). However, it has also been discussed that
of business wealth effect on CSRD will be an influencer for reduced ownership concentration will contribute to suitable
the low−performing business organization than high corporate entrenched managers (Shakri et al., 2021). An existing chief
social responsibility performers. executive officer may govern the judgments of boards on
business strategy and rules relating to administrative social
behavior. Previous literature shows that executive ownership
Hypothesis (H2): The relationship between firm values is
has a detrimental impact on voluntary CSR disclosures
positively associated with CSR disclosure.
(Chau and Gray, 2010).
If a chief executive officer has retained his or her job
Moderating role of chief executive for a prolonged period, the agency issues will continue to
grow, since the service duration of the chief executive officer
officer power on firm’s financial
has been seen to raise formal authority (Chithambo et al.,
performance, firm value, and corporate
2020) concluded entrenchment. An influential chief executive
social responsibility disclosure officer is likely to put less focus on the rewards of clients and
will not be able to invest in societal events. A family chief
The potential influence of FV on the amount of CSRDs
executive officer (identified by friends and family) is often
by limiting the observing capacity of a board is chief
required to make choices that protect the family’s interests.
executive officer control. From multiple influences (Jackling
Likewise, a family chief executive officer has a key role in
and Johl, 2009), chief executive officer control, such as chief
recruiting members of the board and might appoint external
executive officer ownership, chief executive officer duality,
managers based on associates. In comparison, the family chief
family chief executive officer rank, and chief executive officer
executive officer tends to be less open to ordinary shareholders
tenure. A strong chief executive officer could influence the
(Lu et al., 2021). Therefore, it is estimated that relative to
management decisions (Lim and Chung, 2021), eventually
CSR policies and behavior, family chief executive officers will
minimizing the board’s effectiveness (Adomako et al., 2021).
be less involved than non-family chief executive officers. In
In comparison, administrators may engage in broader dialogue
short, a chief executive officer’s control is likely to be a result
and debate under the guidance of a controlling chief executive
of control, the duality of the chief executive officer, service
officer and deliberate on a wide variety of opinions (Zahra
duration, and family status.
and Pearce, 1989; Dabbebi et al., 2022). A Chief executive
In contrast to those reports, we consider only two
officer who often headed the committee can have a larger
inquiries involving chief executive officer control as a
influence on the committee (Chithambo et al., 2020), since
CSR disclosure moderator-financial success association
the chair also sets the task for committee meetings and can
(Javeed and Lefen, 2019). Li K. et al. (2018) analyzed the
also control the topics before the committee (Herawati and
impact of firm performance (Bloomberg ratings) on financial
Bernawati, 2020). Similarly, chief executive officers who assist
performance (ROA) and integrated 2,415 United Kingdom
as chairs often have an effective impact on the placement of
firm-year findings between 2004 and 2013. Chief executive
management seat candidates. This raises the probability of
officer influence became more evident in the favorable
insufficient influence of new independent board appointees of
management despite their independence. About this matter, effect of CSR transparency on financial results (Li Y. et al.,
Haniffa and Cooke (2002) aim to offer opposing advice.
When the two distinct characteristics of the chief executive
officer and chair are introduced by two different persons, the TABLE 1 Index of corporate social responsibility disclosure.

efficiency of monitoring checks and balances is strengthened S. no Items of CSR disclosure Scale
(Haniffa and Cooke, 2002). However, the division between
(1). Mentioning GRI standards or not 1.0
these two pieces is not obligatory on an ongoing basis, and (2). Inclusion of shareholder benefits 1.0
many businesses are well managed and show ownership of (3). Inclusion or exclusion of creditor interests 1.0
the power board in circumstances where these characters have (4). Inclusion or exclusion of employee interests 1.0
been individual. In businesses where a chief executive officer (5). Inclusion or exclusion of supplier interests 1.0
(6). Inclusion or exclusion of interests of clients and 1.0
has the role of duality, the chief executive officer also has
consumers
more control that will allow him/her to make a decision (7). Inclusion or exclusion environment 1.0
that does not consider investor interests (Saona et al., 2020). (8). Inclusion or exclusion of public and social welfare 1.0
This will also result in a loss of focus and involvement in (9). Inclusion or exclusion CSR system development 1.0
social or civic activities and thereby impair reports relevant (10). Inclusion or exclusion secure production 1.0
(11). Inclusion or exclusion deficiencies of the firm 1.0
to them. A chief executive officer who owns a majority

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2018; Javeed and Lefen, 2019). The correlation between Data, measurement, and research
investor participation (based on the Eth Vest database)
and environmental efficiency has also been found to be
methodology
correlated with three forms of chief executive officer
Sample area
authority (environmental data control, formal power over
the management board, and position power over the top
We used data from China-listed companies on the Shanghai
management) and suggested a moderator impact of all sorts on
and Shenzhen Stock Exchanges in our analysis. All the study
the environmental success of investor’s engagement connection
variables of the data were gathered from the Chinese Stock
(Walls and Berrone, 2017).
Market and Accounting Research (CSMAR) report. For the
The evidence on the association between FV and CEO
period 2014 to 2019, finally, after removing the findings with
power is also diversified. Recent research on the voluntary
missed values, we landed at a final sample of 3,248 findings for
release of financial detail records by CSR indicates that the
the business year.
authority of the CEO affects the consistency of CSR disclosure,
and high-quality disclosure of CSR improves the value of
the firm (Rashid et al., 2020; Xu et al., 2020). Nevertheless, Corporate social responsibility
there is no study exploring the role of the CEO in the
disclosure
disclosure of CSR, although Hui and Matsunaga (2015) offer
a subjective indicator that CEO control takes responsibility
As our dependent variable, we used CSRD. On the
for the relationship of firms with government investment. Our
bases of the yearly reports of listed companies in China
research ventures to inspect the role of CEO power in CSRD, and the reports of CSR information released by the China
specifically whether it affects the relationship between firm Stock Market and Accounting Research (CSMAR) official
valuation and CSRD. Therefore, we recommend the hypothesis websites. It has a specialist CSR measurement method that
as follows: has been described as the most up-to-date and reliable
dataset of adequate CSR information (Usman, 2020; Rauf
Hypothesis (H3a) The power of the CEO negatively impacts et al., 2021b). The detailed CSR disclosure score published
the level of CSRD. by CSMAR, ranging from 0 to 1, was also applied in
our research. In line with the previous research, we used
Hypothesis (H3b): CEO power negatively moderates the the CSR assessment model (Haniffa and Cooke, 2005; Sial
relationship between CSRD and the firm’s FP. et al., 2018b) Table 1 indicates the calculation of the CSR
disclosure information.
Hypothesis (H3c): The conclusion of FV on CSR A binary method is implemented through 1n x × 100 , where
P
n
disclosure is more noticeable when the firm negatively x equals 1 in case of reporting an item and otherwise 0, and n
moderates CEO power. represents the number of all items.

TABLE 2 Description of variables.

Variables Abbreviation Description

Corporate social responsibility disclosure CSRD Indicator variable equaling 1 for a firm voluntarily issuing a social responsibility report, and 0 otherwise
Financial performance (ROA) ROA It depicts the return on assets
Financial performance (ROE) ROE It is total profit divided by the ratio of equity.
Firm value (Tobin Q) FV To determine the Tobin Q-value, the numerator is the capital market value, the denominator is the gross sum of
the commodity per year.
CEO power CEOP If depicts the CEO incumbent appointment.
Firm size FS Complete assets of natural log.
Board size BS The entire number of directors on the panel
Independent director ID The number of independent directors is divided by total directors, multiplied by 100.
BTMA BTMA It is a variable concerning the book value over the market value of the equity of shareholders.
Asset growth FG It is the change in total assets.
Board meeting BM A total number of board meetings held in 1 year.
F_Leverage FL The proportion of total debt to total assets
CEO duality CEOD A dummy number that is equal to one of the CEOs acts as chairman, and 0.
State-owned enterprises SOEs If the state or government governs the company, a dichotomous vector equals 1,
Year and industry YI This dichotomous variable is meant to control the year-wise and industry-wise variations.

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Na et al. 10.3389/fpsyg.2022.925323

Financial performance

1.0000
(14)
In our study, the independent variable is FP Measures.

1.0000
(13)

0.11*
The market-based measures, like return on assets (ROA), are
usually used in current studies (Sial et al., 2018a; Song et al.,
2020); however, some scholars have contested its suitability

−0.02*
1.0000
(12)

0.02*
in China due to stock market efficiency (Liu et al., 2014).
In contrast, accounting-based constructs are considered more

−0.12*
reliable (Guest, 2009). Thus, we use ROA as a measure of FP.

1.0000
(11)

0.09*
0.09
Firm value

1.0000

−0.00
(10)

0.08*
0.22*

0.10
In our analysis, the value of the firm is another independent

−0.03*
1.0000
0.51*
0.10*

0.10*
0.31*
(9)
variable, which is Tobin Q. The marked-based Tobin Q
calculation shows the shareholders’ forward-looking valuations.
The value of the firm (Tobin Q) is the stock valuation of the

−0.05*

−0.12*
1.0000
0.20*

0.16*
0.51*

0.11*
(8)
company divided by the gross asset book value (Dushnitsky and
Lenox, 2006; Manrique and Martí-Ballester, 2017). The stock
valuation of the company is determined based on the market

−0.02*

−0.08*
1.0000
0.01*
0.15*

0.04*
0.14*

0.08*
(7)
value of the share plus the book value of the debt, where the
market price of the shares is calculated by calculating the gross

−0.02*

−0.13*
1.0000
equity by the current share price.

0.05*
0.48*
0.09*

0.11*

0.07*
0.00
(6)

Moderating role of chief executive

−0.01*

−0.07*
1.0000
0.07*
0.23*
0.31*
0.60*

0.20*
0.51*
0.11*
(5)

officer power
−0.07*

−0.09*

−0.01*
−0.10*

−0.23*
1.0000

0.03*
0.01*
0.01*

0.10*

0.03*
(4)

We calculated chief executive officer power (CEOP) in a

past analysis, where CEO power is the moderating component
(Veprauskaitė and Adams, 2013). This study has used Executive
−0.48*
−0.16*

−0.50*

−0.09*
−0.50*
1.0000
0.014*

−0.15
0.10*

0.13*
0.19*
0.11
(3)

compensation in replacement of CFO influence. The CEO

power was determined as an annual CEO salary split by all
rewards from the board members. To locate the companies
−0.01*

−0.20*
1.0000
0.008*
0.02*
0.01*
0.06*
0.04*
0.03*
0.07*

0.01*
0.09*
0.00
(2)

with high CEO strength, we built a quartile of the distribution.

Following the research by Li Y. et al. (2018), we assort 1 for the
−0.06*
−0.02*

−0.03*
−0.02*
−0.05*
−0.06*
−0.01*
−0.05*
1.0000
0.007*
0.006*

firms in the top quartile for high chief executive officer capacity
0.01*

0.04*

0.07*
(1)

at 1 and others at 0 (Li Y. et al., 2018).

33.270

30.814
22.000

57.000

28.624
Max

8.000
1.216
1.378

0.416

8.000
10.32
10.88

1.344
1.000

Estimating model
TABLE 3 Descriptive and correlation statistics.

*Represents the level of significance at 10%, respectively.

−0.776
−0.689

−0.828
18.265
Min

1.000

0.096
0.676

4.000
1.000
0.030

1.000
0.007
0.000
0.000

To inspect the main impact of financial efficiency and FV

effects on CSRD, we estimated Eqs. (1, 2), in line with previous
research (Li Y. et al., 2018; Javeed and Lefen, 2019; Zhou, 2019;
0. 839
2.479
1.996
1.783
4.387
0.384
1.747
2.282

1.153
0.343
4.790
0.214
0.362
0.489
SD

Usman, 2020; Rauf et al., 2021a; Voinea et al., 2022), to study the
effect of FP and value of the firm on the CSRD of the Chinese
Mean

23.192

10.215

stock exchange-listed manufacturing firms. We estimated Eqs.

5.807
2.421
2.564
2.954
0.179

9.483
3.493
1.186
0.166

0.509
0.155
0.599

(3, 4) (Hu et al., 2018) to check the moderating effect of CEO

power on the relationship between FP and CSRD and the FV
FV (Tobin,s Q)

and CSRD as follows:

Variables

FP (ROA)
FP (ROE)

N
CSRDQ

BTMA

CEOD
CEOP

X
CSRD(i,t) = a + β1 FP + βn controls(i,t) + E(i,t) ... (1)
SOEs
BM
AG
ID

FL
BS
FS

i=1

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N
X variables, assuming that they provide significant support on
CSRD(i,t) = a + β2 FV βn controls(i,t) + E(i,t) ... (2) the influence of CSR disclosures. These variables are firm size
i=1
(FS) (Kallmuenzer and Peters, 2018), independent director (ID)
CSRD(i,t) = a + β3 FP + β4 CEOP + β5 FPxCEOP (Ma and Khanna, 2016), book-to-market ratio (BTMA) (Cakici
N
X et al., 2017), asset growth (AG) (Chang et al., 2014), board
+ βn controls(i,t) + E(i,t) ... (3) meeting (BM) (Liang et al., 2013), financial leverage (FL) (Dalci,
i=1 2018), CEO duality (CD) (Rauf et al., 2021b), and state-owned
CSRD(i,t) = a + β6 FV + β7 CEOP + β8 FVxCEOP enterprises (SOEs) (Chung et al., 2018). Finally, for the real effect
N
X of industry, we introduced industry dummies to control which
+ βn controls(i,t) + E(i,t) ... (4) included year dummies. See Table 2 for more information.
i=1

Control variable Empirical finding

Based on earlier studies, at the company level, firm size, Descriptive statistics
independent directors, board size, asset growth, book-to-
market ratio, board meeting, financial leverage, CEO duality, Table 2 depicts the descriptive statistics of all the relevant
and state-owned enterprises were considered as controlled variables used in this analysis. The average value of CSR

TABLE 4 Regression results.

Variables Model 1 Model 2 Model 3 Model 4

CSRD Q OLS OLS OLS OLS

FP (ROA) 0.003*** – 0.039*** –
(0.01) (0.01)
FV (Tobin,s Q) – 0.016*** – 0.007***
(8.72) (5.39)
CEOP – – −0.444*** −0.498***
(−3.46) (−2.954)
FP × CEOP – – −0.012*** –
(−3.321)
FV × CEOP – – – −0.014***
(−2.75)
FS −0.011 −0.069 0.026 0.017
(−0.34) (−1.571) (0.633) (0.425)
BS −0.074* −0.057 −0.076* −0.065*
(−2.18) (−1.63) (−2.26) (−1.95)
ID 0.087 0.078 0.093 0.070
(0.97) (0.85) (1.04) (0.79)
BTMA −0.067 −0.010 −0.05 −0.050
(−1.25) (−0.18) (−1.02) (−0.94)
AG −0.009 −0.015 −0.027 −0.043
(−0.07) (−0.11) (−0.20) (−0.30)
BM −0.016 −0.027*** −0.019** −0.017*
(−1.91) (−2.92) (−2.287) (−2.06)
FL −0.323* 0.051 −0.2452 −4.132(
(−1.21) (0.19) (−0.91) −0.49)
CEOD −0.249* −0.225* −0.257* −4.267*
(−2.18) (−1.97) (−2.28) (−2.35)
SOEs 0.010** 0.013* 0.007 0.007
(0.03) (0.07) (0.30) (0.30)
Constant 6.075*** 6.963*** 62.35*** 5.133***
(7.00) (7.72) (3.77) (5.63)
YI Included Included Included Included
R2 0.1618 0.1277 0.1314 0.1637

*, **, *** depict significance at 10, 5, and 1%, respectively. The values in parentheses are that of T-statistics. A detailed description of variables is given in table 1.

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Na et al. 10.3389/fpsyg.2022.925323

disclosure is recorded as 5.807. The average value of FP is 2.421. (Gujarati and Porter, 2009), where the Pearson’s correlation
The average FV is 2.954. Furthermore, we can see that many matrix coefficient regarding the independent variables is higher
CEOs in the Chinese business are also the company’s founders. than 0.80. The correlation coefficient in our analysis is between
The average CEO power value is 0.179, depicting that 84% of 0.01 and 0.60. Table 3 indicates that any strong multicollinearity
the corporations have split the powers of CEO and Chairman. issue could not influence the outcomes. In comparison, the
The average company size is 23.19. The average board size is inflationary factor variance (VIF) did not reach the limit of 3,
9.483, and the number of independent directors is 49%. The and the maximum association between the variables remained
average BTMA in China is 1.186. The average asset growth value smaller than 0.80.
is 0.166, the mean financial leverage value is around 0.509, Board
meeting is 10.215 and CEO duality is 0.155. Finally, the mean
value of SOEs is 0.59. Results
The OLS regression findings for checking the hypothesis are
Correlation matrix displayed in Table 4 (H1). The direct influence of FP results on
CSR disclosure is shown in Model 1, and the coefficient of ROA
Table 3 presents the correlation matrix. According to is significant (t = 0.013, p < 0.001). The outcome withholds (H1)
Gujarati (2009), there is a strong multicollinearity problem fostering that aggregate FP is favorably correlated to the CSR

TABLE 5 Results with fixed effects and random effects (robustness test).

Fixed effects random effects

Variables Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8
CSRD Q OLS OLS OLS OLS OLS OLS OLS OLS
FP (ROE) 0.006*** – 0.0158** − 0.034*** – 0.038*** –
(0.01) (0.07) (0.01) (0.01)
FV (Tobin,s Q) – 0.014*** – 0.006*** – 0.001*** – 0.003***
(8.72) (5.37) (3.35) (3.18)
CEOP – – −0.442*** −0.498*** – – −0.444*** −0.4971***
(−3.46) (−2.95) (−3.46) (−2.96)
FP × CEOP – – −0.01*** – – – −0.014*** –
(−3.34) (−3.34)
FV × CEOP – – – −0.013*** – – – 0.017***
(−2.74) (2.79)
FS −0.014 −0.0783* 0.010 0.010 −0.031 −0.084* −0.004 −0.006
(−0.34) (−1.85) (0.268) (0.26) (−0.27) (−1.82) (−0.05) (−0.05)
BS −0.068* −0.057* −0.061* −0.061* −0.070 −0.054 −0.055* −0.055*
(−2.09) (−1.73) (−1.87) (−1.87) (−1.50) (−1.48) (−1.55) (−1.55)
ID 0.069 0.079 0.055 0.055 0.078 0.083 0.053 0.053
(0.78) (0.88) (0.626) (0.62) (0.69) (0.87) (0.52) (0.52)
BTMA −0.076 −0.012 −0.059 −0.059 −0.111 −0.043 −0.090 −0.093
(−1.44) (−0.24) (−1.15) (−1.15) (−1.27) (−0.77) (−1.21) (−1.21)
AG −0.004 0.006 −0.026 −0.026 0.008 0.050 0.004 0.004
(−0.04) (0.05) (−0.20) (−0.20) (0.06) (0.39) (0.03) (0.03)
BM −0.017* −0.023*** −0.017* −0.017* −0.018* −0.026*** −0.017* −0.016*
(−1.98) (−3.06) (−2.04) (−2.04) (1.16) (−2.67) (−1.17) (−1.17)
FL −0.277 0.052 −0.091 −0.091 −0.417 −0.075 0.230 −0.230
(−1.02) (0.18) (−0.33) (−0.33) (−0.81) (−0.246) − 0.64) (−0.64)
CEOD −0.255* −0.214* −0.266* −0.266* −0.219* −0.171* −0.216* −0.216*
(−2.21) (−1.81) (−2.30) (−2.30) (−1.76) (−1.46) (−1.74) (−1.74)
SOEs 0.0154*** 0.024*** 0.006 0.006 0.014*** 0.015** 0.006 0.006
(0.003) (0.01) (0.40) (0.40) (0.00) (0.04) (0.35) (0.35)
Constant 6.1578** 7.137***( 5.293*** 5.293*** 6.157*** 7.403*** 5.493*** 5.295***
*(7.214) 7.73) (5.76) (5.76) (7.21) (6.89) (5.76) (5.78)
YI Included Included Included Included Included Included Included Included
R2 0.1618 0.1277 0.1635 0.1639 0.16897 0.12525 0.163838 0.16377
Hausman test − − − − 10.78 *** 10.88 *** 10.99 *** 10.95 ***
(Chi2) (0.0045) (0.0056) (0.0059) (0.0062)

*, **, *** depicts significance at 10, 5, and 1%, respectively. The values in parentheses are that of T-statistics. The detailed description of variables is given in table 1.

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disclosure, and our analysis is in line with prior research results Model 4 was developed to test hypothesis (H4), and
(Choi et al., 2010; Li et al., 2013; Sial et al., 2018b; Voinea et al., the moderating influence of CEOP on the main effect
2022). was investigated. The coefficient of the interaction between
To examine hypothesis (H2), Model 2 expanded our study a FV × CEOP was substantially negative with the quality of
step further to assess whether FV influences CSR disclosure. The CSR disclosure, as the regression result indicated, in Model 4
FV coefficient (t = 8.72, p < 0.000) is also positively important, (t = −2.75, p < 0.000) Our results are in line with prior research
suggesting that FV importance is greater in CSR disclosure results (Velte, 2019).
and encourages greater CSR disclosure (H2). Our observations
are consistent with previous research results (Crisóstomo et al.,
2011; Hu et al., 2018).
We developed Model 3 to test the hypothesis (H3). We Robustness tests with fixed and
added CEO power as a moderator variable to our Model 3. random effects, an alternative measure
The coefficient of CEO power is also negatively significant with of corporate financial performance
the CSR disclosure in Model 3 and supports (H3a) in Model
3 (t = −3.46, p < 0.001). When we implemented our full The fixed and random effects are applied to the regression
interaction models FP × CEOP, the coefficient is also negatively to check the robustness. We also use return on equity (ROE)
significant with the CSR disclosure in Model 3 and supports instead of ROA as another metric to re-measure financial
(H3b) (t = 3.32, p < 0.005). Our results confirm that CEO power efficiency to verify the robustness of our results in this research.
acts as a quasi-moderator, as suggested by a previous study As presented in Table 5, the results remain significant and
(Javeed and Lefen, 2019). in line with our previous results listed in Table 5. The

TABLE 6 Regression results with one year lagged OLS and two-stage least square (2SLS).

Models Lagged OLS 2SLS

CSRDQ Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8

FP (ROA) 0.003*** –− 0.036*** –− 0.003*** – 0.037*** –
(0.01) (0.01) (0.01) (0.01)
FV (Tobin,s Q) – 0.0126** (8.74) − 0.005*** (5.37) − 0.017*** (3.36) − 0.002*** (3.18)
CEOP – – −0.440*** −0.496*** − – −0.442*** −0.499*** −
(−3.41) (-2.99) (−3.46) 2.96)
FP × CEOP – − −0.012*** − − – −0.012*** –
(−3.33) (−3.34)
FV × CEOP – − − −0.013*** − − − −0.017***
(−2.73) (−2.79)
FS 0.004 −0.063 0.025 0.025 −0.031 −0.084* −0.004 −0.004
(0.10) (−1.47) (0.61) (0.61) (−0.27) (−1.82) (−0.05) (−0.05)
BS −0.0553 −0.047 −0.049 −0.049 −0.070 −0.054 −0.055* −0.055*
(−1.62) (−1.41) (−1.50) (−1.50) (−1.50) (−1.48) (−1.55) (−1.55)
ID 0.0551 0.068 0.041 0.048 0.078 0.083 0.053 0.053
(0.60) (0.74) (0.46) (0.46) (0.69) (0.87) (0.52) (0.52)
BTMA −0.089 −0.027 −0.074 −0.074 −0.111 −0.043 −0.090 −0.097
(−1.62) (−0.51) (−1.42) (−1.42) (−1.27) (−0.77) (−1.21) (−1.21)
AG 0.007 0.029 −0.009 -0.009 0.08 0.050 0.004 0.047
(0.06) (0.22) (−0.07) (-0.07) (0.06) (0.39) (0.03) (0.03)
BM −0.015* −0.026*** −0.016* −0.016* −0.016* −0.026*** −0.017* −0.016*
(−1.87) (−2.93) (−1.86) (−1.85) (1.17) (−2.67) (−1.17) (−1.17)
FL −0.212 0.097 −0.047 −0.047 −0.417 −0.075 0.230 −0.230
(−0.77) (0.33) (−0.17) (−0.17) − 0.81) (−0.246) (−0.64) (−0.64)
CEOD −0.225 −0.180 −0.234* −0.23* −0.219* −0.171* −0.2162* −0.2167*
(−1.93) (−1.50) (−2.00) (−2.01) (−1.76) (−1.46) (−1.74) (−1.74)
SOEs 0.012** (0.020 0.015* (0.04) 0.006 0.012 0.014*** (0.05) 0.015* (0.045 0.006 0.006
(0.32) (0.17) (0.35) (0.35)
Constant 5.518*** 6.647*** 4.777*** 4.776*** 6.157*** 7.4035** 5.493*** 5.295***
(6.285) (7.16) (0.19) (5.18) (7.213) (6.89) (5.761) (5.78)
YI Included Included Included Included Included Included Included Included
R2 0.16403 0.12668 0.16534 0.16546 0.16891 0.12524 0.16383 0.16376

*, **, *** depict significance at 10, 5, and 1%, respectively. The values in parentheses are that of T-statistics. A detailed description of variables is given in Table 1.

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methodological findings remain largely unchanged, suggesting of entrenched power for CSRD quality in the context of the
that our hypothesis is solid. firm’s value and FP of firms. The findings foster that firms with
entrenched CEOs use their power to cover their inefficiencies.
However, the role of firms’ value and FP outweighs the agency
Controlling the endogeneity issue problems while explaining the behavior of firms with entrenched
power in China. This research also provides new evidence to
In Table 6, we use two distinct models to verify the the body of literature investigating the role of top management
endogeneity problem. First, as the FP requires time to impact the teams by examining the impact of their power, whether positive
decisions on CSR transparency, 1-year lagged financial results in terms of outcome in the quality of CSRD. In firms with good
are used in the (OLS) regression. The findings suggest that these FP and FV, the CEOs have different incentives to respond to
results are the same as those reported in Table 3. Second, we the call of CSRD and impact its quality. These findings and
use the 2-SLS regression model to discuss the probability of conclusions also shed light on whether the CEO‘s agency issues
endogeneity concerns (Bruynseels and Cardinaels, 2014) while are ameliorated in the context of firm performance and FV.
utilizing FV as an instrumental component. Models 5, 6, 7, and
8 of Table 6 indicate that the 2-SLS regression results have also
been confirmed by our key findings, as depicted in Table 3. Limitations and future research

In terms of limitations, though our results indicate

Conclusion and policy a favorable association between business value and CSR
implications transparency, first, to assess company value, this analysis is
controlled by FV metrics, such as Tobin Q. If it absorbs CSR
This study investigated the impact of CEO power on the disclosure or that increased standard of sustainability data
relationships between FP and CSRD quality and firms’ value contributes to higher business valuation or businesses with
and CSRD quality. greater business value appear to put more resources on the CSR
The findings depict a negative association between CEO disclosure, upcoming research could be required to explore the
power and relationships. In the midst of the low performance causal effects. A substitute technique is to clarify the relation
of Chinese CSR procedures (Liu and Jiraporn, 2010), the elements from an economic experimental perspective, outside
entrenched power of the CEOs could be one of the factors the traditional econometric framework we follow along the line
leading to it. The findings verify the premise of agency theory of a previous study (Ciasullo et al., 2017).
regarding CEO power[43]. CEO power has been termed as First, relevant CSRD, such as ecological and sustainability
a double-edged blade having the potential to affect the CG reports, reports on the security of staff and consumer rights,
dynamics in both directions (Ciasullo et al., 2017). We have reports on the protection of interests of stockholders, and other
shown that in cases of FP and CSRD quality and firms’ value CSR strategies, may be correlated to potential research, like
and CSRD quality, it hinders the monitoring function of analysis of content, such as the number of terms, phrases,
the corporate boards amid the entrenchment of CEO power. subsections, or other techniques. Second, to assess the financial
Moreover, the conflict of interest on part of the CEO arises from efficiency of a firm, this study is confined to FP metrics, such as
the perspective of agency theory due to their urge for control, ROE and ROA. To find the connection between business results
which keeps accountability at stake, a construct of good CG. and CSR reporting, the upcoming inquiry should add better
In the light of the above-mentioned argument, the business performance metrics.
stakeholders’ confidence in the top management shatters. It is
for this reason that the Securities Regulatory Commission of
China (CSRC) has prohibited CEO duality, and therefore other Data availability statement
forms of CEO entrenchment also need to be prohibited. Based
on the findings of this study, we imply that the selection of more The datasets presented in this study can be found in
independent boards can cater to this issue. online repositories. The names of the repository/repositories
Based on the agency theory perspective, we have shown an and accession number(s) can be found in the
aggregate positive impact of FP and firms’ value on the quality of article/supplementary material.
CSRD. Our findings imply that a firm is more potent to disclose
its CSR reports with more quality when it has better FP, better
value, and is not entrenched by the sole power of the CEO. Author contributions
This research contributes to the body of literature on the
role of the top management teams’ behavior by examining FR and CN: conceptualization. GT: methodology and
how the powerful CEOs make use of their resources in terms supervision. FR: software, formal analysis, investigation,

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Na et al. 10.3389/fpsyg.2022.925323

resources, and visualization. FR, GT, CN, and KN: validation, that could be construed as a potential conflict of
and writing—original draft preparation and review and editing. interest.
GT and KN: data curation. CN and GT: project administration.
All authors have read and agreed to the published version of the
manuscript. Publisher’s note
All claims expressed in this article are solely those of the
authors and do not necessarily represent those of their affiliated
Conflict of interest organizations, or those of the publisher, the editors and the
reviewers. Any product that may be evaluated in this article, or
The authors declare that the research was conducted claim that may be made by its manufacturer, is not guaranteed
in the absence of any commercial or financial relationships or endorsed by the publisher.

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