Investment Professionals’ Use of Corporate Social Responsibility Disclosures

52 Pages Posted: 17 Aug 2017

See all articles by Markus C. Arnold

Markus C. Arnold

University of Bern - Institute for Accounting

Christoph Hörner

Tilburg University

Patrick Martin

Indiana University - Kelley School of Business

Donald V. Moser

University of Pittsburgh - Accounting Group

Date Written: August 17, 2017

Abstract

We conduct an experiment to examine investment professionals’ use of corporate social responsibility (CSR) disclosures when making personal investment decisions or investment recommendations to clients. We predict and find that investment professionals are more willing to personally invest and recommend investment to a client when a firm discloses positive CSR performance than when it makes no CSR disclosures. Investment professionals’ decisions and recommendations are influenced by CSR disclosures both because, on average, they believe that better CSR performance results in better current and longer-term financial performance and because they value the societal benefits of CSR activities. We also find that investment professionals’ general beliefs regarding whether CSR activities benefit society affect how they assess firms’ CSR performance and their view of the relation between CSR performance and financial performance. Finally, investment professionals’ experience appears to protect them from the potential biasing effect of appealing pictures that accompany many CSR disclosures.

Keywords: Corporate social responsibility, CSR, professional investors, CSR disclosures

Suggested Citation

Arnold, Markus C. and Hörner, Christoph and Martin, Patrick and Moser, Donald V., Investment Professionals’ Use of Corporate Social Responsibility Disclosures (August 17, 2017). Kelley School of Business Research Paper No. 17-61; AAA 2018 Management Accounting Section (MAS) Meeting. Available at SSRN: https://ssrn.com/abstract=3020887 or http://dx.doi.org/10.2139/ssrn.3020887

Markus C. Arnold

University of Bern - Institute for Accounting ( email )

Engehaldenstr. 4
Bern, 3012
Switzerland

Christoph Hörner (Contact Author)

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC 5000 LE
Netherlands

Patrick Martin

Indiana University - Kelley School of Business ( email )

1309 E. 10th Street
Bloomington, IN 47405
United States

Donald V. Moser

University of Pittsburgh - Accounting Group ( email )

264 Mervis Hall
Pittsburgh, PA 15260
United States
412-648-1726 (Phone)
412-648-1693 (Fax)

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