Different kettles of fish: corporate social performance, media legitimacy, and corporate financial performance of Chinese firms

Employing stakeholder signaling theory and legitimacy theory, this study seeks to resolve the nexus between corporate social responsibility (CSP) and corporate financial performance (CFP). This study focuses on the investors' response and assumes that investors may read the CSP reports through various media and obtain the cognition and attitudes of the firms involved. Therefore, media legitimacy works as an important mediator between CSP and CFP. This paper categorizes CSP into three dimensions: market CSP, environmental CSP, and social CSP. In addition, we categorize media legitimacy into two dimensions: visibility and valence (tone). We study the mediating effects of both visibility and valence for 86 listed firms in China's markets. The results show that media legitimacy does mediate the relationship between CSP and CFP. Furthermore, the mediating mechanisms differ among market CSP, environmental CSP, and social CSP. The results have important implications for theory and practice.