Signaling Through Corporate Accountability Reporting

44 Pages Posted: 7 Sep 2012 Last revised: 31 Mar 2015

Date Written: February 1, 2015

Abstract

We document that corporate social responsibility (“CSR”) expenditures are not a form of corporate charity nor do they improve future financial performance. Rather, firms undertake CSR expenditures in the current period when they anticipate stronger future financial performance. We show that the causality of the positive association between CSR expenditures and future firm performance differs from what is claimed in the vast majority of the literature and that corporate accountability reporting is another channel through which outsiders may infer insiders’ private information about firms’ future financial prospects.

Keywords: Corporate Accountability Reporting, Corporate Social Responsibility, Voluntary Disclosure, Signaling

JEL Classification: M41, D82, G14, G30, G32, G34

Suggested Citation

Lys, Thomas Z. and Naughton, James P. and Wang, Clare, Signaling Through Corporate Accountability Reporting (February 1, 2015). Available at SSRN: https://ssrn.com/abstract=2143259 or http://dx.doi.org/10.2139/ssrn.2143259

Thomas Z. Lys

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Department of Accounting & Information Systems
Evanston, IL 60208
United States
847-491-2673 (Phone)
847-467-1202 (Fax)

James P. Naughton (Contact Author)

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

Clare Wang

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States
847 491 2670 (Phone)

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