Does CSR Reporting Destroy Firm Value? Empirical Evidence on GRI-aligned European Firms

Abstract

This paper contributes to the existing literature about the effects of Corporate Social Responsibility (CSR) on market valuation. In particular, we investigate the impact of sustainability reporting under the global reporting initiative (GRI) on the firm value of non-financial EUROSTOXX 600 firms. Our findings show that the highest level of GRI-aligned reporting (GRI A) has a negative and significant influence on the firm value of smaller or less profitable firms. However, no significant impact is detected for larger and more profitable firms. These results may reflect the high costs of implementing GRI A -level reporting for smaller or less profitable firms.

Keywords: corporate social responsibility, sustainability accounting, global reporting initiative, market valuation, Tobin’s q, capital market

JEL Classification: G1, G3, M14