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The Consequences of Mandatory Corporate Sustainability Reporting: Evidence from Four Countries


Ioannis Ioannou


London Business School

George Serafeim


Harvard University - Harvard Business School

August 20, 2014

Harvard Business School Research Working Paper No. 11-100

Abstract:     
We examine the effect of mandatory sustainability reporting on firm disclosure practices and valuation. Specifically, we explore the implications of regulations mandating the disclosure of environmental, social, and governance information in China, Denmark, Malaysia, and South Africa using differences-in-differences estimation with propensity score matched samples. We find that relative to propensity score matched control firms, treated firms significantly increased disclosure following the regulations. We also find increased propensity by treated firms to receive assurance to enhance disclosure credibility and increased propensity to adopt reporting guidelines that enhance disclosure comparability. These results suggest that even in the absence of a regulation that mandates the adoption of assurance or specific guidelines, firms seek the qualitative properties of comparability and credibility. We do not find any evidence that, on average, the disclosure regulations adversely affected shareholders. Instrumental variables regressions suggest that increases in disclosure driven by the regulation are associated with increases in firm valuations, as reflected in Tobin’s Q.

Number of Pages in PDF File: 36

Keywords: sustainability reporting, mandatory reporting, corporate social responsibility, integrated reporting

JEL Classification: A13, I31, J24, J28, M00, M1, M14, M41, D82, D83, D84

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Date posted: April 3, 2011 ; Last revised: November 24, 2014

Suggested Citation

Ioannou, Ioannis and Serafeim, George, The Consequences of Mandatory Corporate Sustainability Reporting: Evidence from Four Countries (August 20, 2014). Harvard Business School Research Working Paper No. 11-100 . Available at SSRN: http://ssrn.com/abstract=1799589 or http://dx.doi.org/10.2139/ssrn.1799589

Contact Information

Ioannis Ioannou
London Business School ( email )
Sussex Place
Regent's Park
London, NW1 4SA
United Kingdom
02070008748 (Phone)
HOME PAGE: http://www.london.edu
George Serafeim (Contact Author)
Harvard University - Harvard Business School ( email )
381 Morgan Hall
Boston, MA 02163
United States
HOME PAGE: http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=ovr&facId=15705
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