Do Voluntary CSR Reports Affect Earnings Informativeness?
50 Pages Posted: 16 Dec 2014 Last revised: 20 May 2017
Date Written: March 27, 2017
This study examines whether voluntary issuance of stand-alone CSR reports affects the informativeness of earnings information. We find that the first-time voluntary adoption of CSR reporting is associated with higher subsequent earnings response coefficients, suggesting that CSR reporting improves earnings informativeness. Our cross-sectional tests show that the content of CSR reports matters; CSR reports only improve the informativeness of earnings to the extent that they address key firm-specific business risks of concerned by investors and stakeholders, which could threaten firms’ sustainability. The findings are consistent with the notion that CSR reports enhance earnings informativeness by helping investors assess earnings persistence.
Keywords: CSR Disclosure; Earnings Informativeness; Voluntary Disclosure; Earnings Persistence
JEL Classification: M41
Suggested Citation: Suggested Citation