Determinants and Economic Consequences of Nonfinancial Disclosure Quality
50 Pages Posted: 26 Jan 2015 Last revised: 28 Nov 2016
Date Written: January 26, 2015
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: Suggested Citation