The Impact of Corporate Social Responsibility on the Relationship between Economic Policy Uncertainty and Corporate Value : Evidence from Chinese Listed Companies

[Purpose]This study analyzes the relationship between economic policy uncertainty (hereinafter, EPU) and corporate value, and verifies the differential effects of EPU on corporate value according to corporate social responsibility (hereinafter, CSR) activities. [Methodology]The study period was from 2010 to 2020, and the EPU indexes measured by Baker et al. (2016)’s method and Hexun’s CSR scores for companies listed on the Chinese stock market were used. Hexun is one of the three major evaluation agencies in China, and the CSR scores evaluated by this agency have been widely used in previous studies as a representative indicator of Chinese companies’ CSR performance. [Findings]The results of this study are as follows. First, EPU and corporate value were found to have a negative (－) relationship. Second, active CSR activities relieved the negative (－) relationship between EPU and corporate value. Finally, companies were divided into groups according to CSR activity scores to analyze the relationship and according to the result, the negative (－) relationship between EPU and corporate value was greater in the groups with low CSR activity scores than in the groups with high CSR activity scores. A lag model was applied to control endogeneity, and the results were consistent with the main results above. [Policy Implications]This study is significant in expanding previous research related to CSR activities by confirming that active CSR activities can be an advantageous tool for overcoming economic policy uncertainty. Lastly, there are implications in that it can present the importance of CSR activities to companies and promote companies’ voluntary CSR activities.