The relationship between CSR and firms’ financial performance: the moderating effect of blockholding and the various types of blockholders in the UK and Chinese contexts

Student thesis: Doctoral ThesisDoctor of Philosophy


This thesis empirically investigates the effect of total blockholders and their various types on the relationship between corporate social responsibility (CSR) and firms’ financial performance (FP). It utilises a sample of UK firms and a sample of Chinese State-Owned Enterprises (SOEs). The UK firms cover FTSE 350 listed companies from 2005 to 2017, and Chinese firms are drawn from the China Securities Index (CSI) from 2009 to 2017. This study
employs the UK and Chinese contexts because of the variation in their ownership structuresand corporate governance policies. While blockholders of UK firms are typically institutional
investors, the vast majority of ownership within the Chinese context is state-owned enterprises.

This thesis firstly investigates the extent to which the total percentage of shares held by blockholders negatively moderate the relationship between CSR and firms’ financial performance in the UK context. My findings show that the similar results for individual blockholders and institutional blockholders which are negatively affect the relationship. The findings are in line with higher percentages of total blockholders overseeing managers’
decisions that create agency problems, and ultimately affect firms’ financial performance. In addition, the results also show that individual and institutional blockholders seek private
benefits by investing in risky projects, hence, increasing agency costs in the firm. These findings are in compliance with agency theory propositions. On the contrary, state blockholders
positively moderate the relationship between CSR and firms’ financial performance. This finding indicates that state blockholders are actively engaged in welfare creation, CSR-related
activities and receive regulatory incentives that further strengthening the relationship (CSR and FP). This finding is aligned with both the stakeholder and legitimacy theories.

Secondly, in the Chinese context, the total percentage of shares held by state blockholders positively moderates the relationship between CSR and financial performance in SOEs. The findings imply that a large proportion of firms are owned by the Chinese government which has voting rights and enhanced monitoring and decision-making power in the firms. Results also suggest that state blockholders maximise social welfare instead of private benefit. Furthermore, I also report that the high political connection of such an ownership structure positively influences firms’ financial performance. These findings, again, provide further the stakeholder and legitimacy theories. On the other hand, the influence of non-state blockholders on the relationship between CSR and financial performance in Chinese
SOEs appears to be minimal and rather insignificant in both economic and statistical terms.

The overall results of this study offers important insight for investors and corporate managers on understanding the crucial role of blockholders and their effects on CSR investment and
firms’ financial performance. Additionally, the findings provide relevant policy recommendations for regulatory bodies in assessing appropriate levels of CSR engagement and
help other stakeholders in gaining a better understanding of the role of blockholders on the relationship between CSR and financial performance. These results can also be applied to other
developed and emerging countries with similar economic, political, social, and cultural environments.
Date of Award2022
Original languageEnglish
Awarding Institution
  • Coventry University
SupervisorPanagiotis Andrikopoulos (Supervisor), Alaa Alhaj Ismail (Supervisor) & Prabhu Udawatte (Supervisor)


  • Corporate Social Responsibility
  • Ownership Structure
  • Blockholders
  • Financial Performance
  • Moderating Effect

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