What Influences the Adoption Timing of Accounting Practices? An Investigation of the Voluntary Adoption of Stand-Alone Corporate Social Responsibility Reports in China

Abstract

Escalating societal concern about corporate social responsibility (CSR) issues has led regulators around the globe to publish CSR reporting guidelines, with China being a prominent actor in this field. Prior studies tend to predominantly focus on the Western institutional context and study the adoption of CSR reporting as a binary decision. In contrast, anchored in institutional theory, the theoretical aim of this thesis is to study factors influencing the timing of voluntary adoption of stand-alone CSR reports. Empirically, we focus on China’s socialist market economy as its hybridity enables a reconsideration of how adoption timing of accounting practices is influenced by institutional factors – both market-based and political. Using a sample of Chinese publicly listed firms from 2010 – 2020, we find that market factors and political factors coexist in China and interpenetrate each other to influence the adoption timing of stand-alone CSR reports. Firms with superior CSR performance, state ownership, and top executives serving on political councils are more likely to adopt stand-alone CSR reports earlier. Furthermore, although the relationship between CSR performance and the adoption timing is less pronounced for firms vulnerable to state influence, it remains positive and significant for these firms. Overall, our findings suggest that in the absence of hard laws and regulations, listed firms pursue both economic and symbolic resources, responding to both coercive institutional pressure as well as isomorphic pressure manifested as state signalling of priorities, a pressure that we label as state-sponsored isomorphism. The findings of this study have practical implications for investors, policymakers, and standard setters.