Corporate social responsibility and financialization: Is CSR used as a financial tool?

Abstract This study investigates whether corporate social responsibility (CSR) serves as a financial tool to mask corporate financialization. Using data from publicly listed non‐financial firms from 2008 to 2020 in China, we analyze the effects and mechanisms of CSR on corporate financialization. The results show that CSR, particularly those targeting stakeholders such as investors, customers, and the community, is positively associated with corporate financialization, suggesting that CSR acts as a financial tool that supports, rather than curtails, financialization. Employing the B‐Z three‐step method, we find that financing constraints partially mediate the effect of CSR on financialization, implying that CSR activities can ease financing constraints, thus providing funds for financial investments. This supports the view that enterprises' allocation of financial assets may be driven more by profit‐seeking motives than precautionary liquidity management. Further analysis reveals that the financial tool hypothesis is primarily reflected in the stage where financing constraints impact financing and is particularly pronounced in non‐state‐owned enterprises, firms with decentralized ownership structures, and those led by management teams prioritizing short‐term returns. This research offers a reference for studying the dual‐edged implications of CSR in global corporate practices.