How TMT Knowledge Background Affects Corporate Social Responsibility and Firm Financial Performance?

Abstract

The purpose of this study is to investigate the coupling relationship between corporate social responsibility (CSR)
and firm financial performance, and consider top management team (TMT) knowledge background as moderators.
Most of the existing studies focus on the one-way impact between CSR and firm financial performance. A few
studies mention the coupling relationship between them. TMT knowledge background reflects leadership in
organization which significantly impacts strategy of the company. With this concern, this study explores the
relationships among these three factors and identified the relationships by an empirical study, using panel data of
Chinese A-share listed companies from 2014 to 2019. 3SLS regression results show that CSR and firm financial
performance do have coupling relationship. And firm financial performance has lag effect on CSR. Function
background stands out of knowledge background to be a moderator between CSR and firm financial
performance. Education background could also affect firm financial performance. With this view, sustainable
development is becoming a trend, making profits and taking social responsibilities are both important. TMT
structure should be improved to recruit experienced TMT members to help set strategy for the company. It
conforms to the reform of specification of labor in China. Upgrading TMT education degree also makes sense for
growth. Suggestions for promoting leadership in organization are given.