Corporate Social Responsibility Reporting in Controversial Industries

22 Pages Posted: 8 Jan 2017

See all articles by John W. Byrd

John W. Byrd

University of Colorado at Denver

Kent Hickman

Gonzaga Univesity

Charles Richard Baker

Adelphi University - School of Business

Bruno Cohanier

Universitaria EADA - EADA Business School

Date Written: January 6, 2017

Abstract

We examine the sustainability reporting activities of companies in controversial industries, e.g., alcohol, firearms, for-profit prisons, gambling, tobacco, marijuana and payday loans. For each industry we identify its controversial social problem – the “elephant in the room.” We then examine whether the company issued a sustainability report in the last three years and, if so, how the report dealt with the firm’s controversial social issue. Compared to two non-controverisal sectors – grocery stores and department/discount stores – companies in controversial industries publish sustainability or CSR-type reports at a lower rate (28% versus 43%). We also find significant differences in how the two groups of companies allocate space in their CSR reports. We categorize pages in the reports as dedicated to social and community efforts or environmental issues. The non-controversial companies devote significantly more of their reports to environmental issues than do controversial companies. The controversial companies have a higher ratio of their reports dedicated to social and community activities relative to environmental activities. This result is consistent with firms in controversial industries using social and community actions to attain legitimacy by taking actions that offset the social ills inherent in their core business. It also suggests that these companies believe that doing good in one arena substitutes for harm done elsewhere, This notion of offsetting harm with good deeds elsewhere becomes problematic if the people harmed are from vulnerable populations, don’t have the resources to address the harm or are minors.

Keywords: Controversial Industries, CSR Reporting, Legitimacy, Sin Stocks

JEL Classification: M14, Q56

Suggested Citation

Byrd, John W. and Hickman, Kent and Baker, Charles Richard and Cohanier, Bruno, Corporate Social Responsibility Reporting in Controversial Industries (January 6, 2017). Available at SSRN: https://ssrn.com/abstract=2894789 or http://dx.doi.org/10.2139/ssrn.2894789

John W. Byrd (Contact Author)

University of Colorado at Denver ( email )

Department of Finance
Denver, CO
United States
970-247-9182 (Phone)

Kent Hickman

Gonzaga Univesity ( email )

Spokane, WA
United States

Charles Richard Baker

Adelphi University - School of Business ( email )

1 South Avenue
Garden City, NY 11530
United States
516-877-4628 (Phone)

Bruno Cohanier

Universitaria EADA - EADA Business School ( email )

CIF ESG08902645
C/ Aragó 204
Barcelona, CP 08011
Spain

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
283
Abstract Views
1,057
rank
111,694
PlumX Metrics