Government‐Initiated Corporate Social Responsibility and Corporate Risk‐Taking: Evidence From China's Targeted Poverty Alleviation Program

ABSTRACT

This study examines the relationship between government‐initiated corporate social responsibility (CSR) and corporate risk‐taking in the context of China's targeted poverty alleviation (TPA) program. We find that TPA participation is associated with lower volatility‐based measures of corporate risk‐taking. Further analyses suggest that political connections, social reputation, and investment efficiency represent potential channels underlying this relationship. The negative association is also more pronounced when managerial compensation is more performance‐sensitive and when firms face greater environmental uncertainty. Overall, these findings highlight the relevance of political and institutional contexts for understanding the relationship between corporate social engagement and financial behavior.