CSR disclosures in Buyer-Seller Markets: The Impact of Assurance of CSR Disclosures and Incentives for CSR Investments

48 Pages Posted: 18 Aug 2015 Last revised: 16 Jul 2018

See all articles by Karen De Meyst

Karen De Meyst

Miami University of Ohio; KU Leuven

Eddy Cardinaels

Tilburg University - Tilburg University School of Economics and Management; KU Leuven

Alexandra G. H. L. Van den Abbeele

Katholieke Universiteit Leuven (K.U.Leuven)

Date Written: June 1, 2018

Abstract

This study examines the behaviors of preparers and users of corporate social responsibility (CSR) disclosures in experimental markets. In addition to making price offers, sellers, as preparers of the disclosures, indicate their levels of corporate giving (our proxy for CSR investments). These disclosures can deviate from actual corporate giving. Buyers, as users of disclosures, select their sellers using this information. We manipulate whether assurance of CSR disclosures is present or absent and whether preparers receive incentives for their CSR investments. We predict that the assurance of CSR disclosures affects economic outcomes in markets, particularly when markets offer incentives for preparers, which can create social expectations among market participants to invest in CSR. Consistent with our theory, results show that when assurance is combined with incentives, preparers invest more in CSR and users tend to pay higher prices. By examining the economic impact of CSR disclosures, we add to recent debates about market effects of CSR disclosures.

Keywords: corporate social responsibility (CSR); experimental markets; sustainability reports; assurance; incentives

JEL Classification: M41, M42, D64

Suggested Citation

De Meyst, Karen and Cardinaels, Eddy and Van den Abbeele, Alexandra G. H. L., CSR disclosures in Buyer-Seller Markets: The Impact of Assurance of CSR Disclosures and Incentives for CSR Investments (June 1, 2018). Available at SSRN: https://ssrn.com/abstract=2645965 or http://dx.doi.org/10.2139/ssrn.2645965

Karen De Meyst (Contact Author)

Miami University of Ohio ( email )

Oxford, OH 45056
United States

KU Leuven

Belgium

Eddy Cardinaels

Tilburg University - Tilburg University School of Economics and Management ( email )

P.O. Box 90153
Warandelaan 2
Tilburg, 5000 LE
Netherlands
+31 134668231 (Phone)

HOME PAGE: http://www.tilburguniversity.edu/webwijs/show/?uid=e.cardinaels

KU Leuven ( email )

Naamsestraat 69
Leuven, B-3000
Belgium
+32 16326984 (Phone)

HOME PAGE: http://www.kuleuven.be/wieiswie/nl/person/00013472

Alexandra G. H. L. Van den Abbeele

Katholieke Universiteit Leuven (K.U.Leuven) ( email )

Department of Accountancy, Finance & Insurance
Naamsestraat 69
B-3000 Leuven, 3000
Belgium
+32 16 32 69 36 (Phone)
+32 16 32 67 32 (Fax)

HOME PAGE: http://www.econ.kuleuven.be/alexandra.vandenabbeele

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