Purpose

This study examines whether participation in China's large-scale, government-led corporate social responsibility (CSR) initiative, the Targeted Poverty Alleviation (TPA) campaign, affects firm credit ratings. It also explores the mechanisms through which such participation enhances creditworthiness.

Design/methodology/approach

Using a panel dataset of 1,480 listed firms in China from 2009 to 2021, we employ a multi-period difference-in-differences (DiD) framework to estimate the causal effect of TPA participation on credit ratings. We also conduct mediation analyses to identify the roles of ESG performance and media reputation, and perform robustness checks including PSM-DiD, placebo tests, and heterogeneity analyses.

Findings

Firms participating in the TPA campaign receive significantly higher credit ratings. The effect is stronger among non-state-owned enterprises, firms in underdeveloped regions, and those rated by international joint-venture agencies. Greater investment intensity in the program further amplifies the benefit. Improved ESG performance and media favorability partially mediate the relationship, suggesting that rating agencies value the reputational and sustainability signals conveyed through government-aligned CSR.

Originality

This is the first study to link participation in a state-led poverty alleviation program to enhanced credit ratings. It contributes to the limited literature on non-financial determinants of credit risk and underscores the signaling value of government-endorsed CSR initiatives.

Practical implications

The findings provide insights for firms seeking to improve creditworthiness and for policymakers aiming to align CSR incentives with development goals in emerging economies.