Government Trust and Corporate Social Responsibility

This study investigates the influence of governmental trust on corporate social responsibility (CSR) by analyzing data from publicly listed companies on the Shanghai and Shenzhen Stock Exchanges in China from 2017 to 2020. Our findings suggest that provincial-level governmental trust significantly enhances CSR performance. Importantly, trust in the central government exerts a stronger impact on CSR than trust in local governments. Further analysis indicates that the effect of governmental trust on CSR is more pronounced for companies characterized by features such as being located in provinces with weak formal institutions, lacking political connections, having limited resource endowments, or exhibiting a high degree of managerial myopia. Additionally, while governmental trust does not directly increase the propensity for voluntary CSR disclosures, it significantly enhances the level of CSR engagement once such disclosures are made. Furthermore, the positive influence of governmental trust on CSR remains significant after controlling for the effects of social trust, addressing potential endogeneity concerns, and conducting a battery of robustness checks. This research broadens our understanding of the factors driving CSR and the economic implications of governmental trust.