This paper explores how forced resignations of politically connected independent directors (political IDs for short) affect the performance of corporate social responsibility (CSR). Using a Communist Party of China regulation that forbids political officials from sitting on boards as an exogenous shock, this paper finds that the forced resignations of political IDs are associated with a decrease in firms' CSR performance. We further find that such reductions are not attributable to decreases in capital and knowledge resources. However, the negative association between political IDs' forced resignations and CSR performance is more prominent for firms under more political pressure, such as when political IDs are high-ranking incumbents, when firms located in the province with a high level of government intervention, or in polluting industries, and when firms have no government shareholdings. Therefore, we conclude that the reduction in CSR performance is due to the release of political pressure after the resignations of political IDs. Our results are robust to alternative CSR measures, varied sample periods, and sample selection bias correcting. The results of placebo tests also confirm our findings. Our study shows that political pressure imposed by politicians on firms is an important determinant of CSR.

Many studies examine the use of false news as a method of stock price manipulation. Empirical research shows, for example, that false news generates persistent abnormal returns and affects trading volume. Studies also show that institutions often know about news before it breaks. However, the role institutions play in false news events is still unclear. To understand that role, we track institutional order flow around the release of false news in the Chinese stock market. We find that institutions seem to have early information about false news releases. Their prerelease order flows predict false news sentiments and market reactions. We further find that the early information may come from the media outlets reporting the false news. We also find evidence that institutions reverse their positions several days after the denial releases rather than when the news breaks. In turn, our evidence shows which trading patterns could bring more potential profits than reversing right on the news breaks. Our results provide unique insights into price movements and institutional reactions on false news, as well as evidence regarding regulating institutions, media platforms, and information manipulation in the stock market.