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
Date Written: June 1, 2018
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: Suggested Citation