Determinants and Economic Consequences of Nonfinancial Disclosure Quality

50 Pages Posted: 26 Jan 2015 Last revised: 28 Nov 2016

See all articles by Yi Dong

Yi Dong

Shanghai University of Finance and Economics

Renhui Fu

Shanghai Jiao Tong University (SJTU) - Antai College of Economics and Management

Fang Gao

Donghua University

Chenkai Ni

Fudan University

Date Written: January 26, 2015

Abstract

This paper examines the determinants and economic consequences of nonfinancial disclosure quality, which is measured according to the ratings of corporate social responsibility (CSR) disclosure provided by the Ministry of Economic Affairs in the Netherlands. We find that firms with better CSR performance, greater external financing needs, and stronger corporate governance tend to provide higher quality CSR disclosures. In return, these firms gain greater analyst coverage, higher levels of institutional ownership, greater stock liquidity, higher valuations in SEOs, and lower yields to maturity in bond issuances. These benefits apply largely to firms with strong CSR performance. Collectively, our findings suggest that higher quality CSR disclosures deliver economic benefits.

Keywords: corporate social responsibility; nonfinancial disclosure quality; capital market

JEL Classification: G17, M14, M40

Suggested Citation

Dong, Yi and Fu, Renhui and Gao, Fang and Ni, Chenkai, Determinants and Economic Consequences of Nonfinancial Disclosure Quality (January 26, 2015). European Accounting Review 25 (2): 287–317, 2016, Available at SSRN: https://ssrn.com/abstract=2555416

Yi Dong

Shanghai University of Finance and Economics ( email )

Shanghai, Shanghai 200433
China

Renhui Fu (Contact Author)

Shanghai Jiao Tong University (SJTU) - Antai College of Economics and Management ( email )

1954 Huashan Road
Shanghai Jiao Tong University
Shanghai, Shanghai 200030
China
+862152301575 (Phone)

Fang Gao

Donghua University ( email )

Shanghai 200051
China

Chenkai Ni

Fudan University ( email )

Guoshun Road 670
Yangpu
Shanghai, Shanghai 200433
China

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