Information Content of Corporate Social Responsibility Disclosures in Europe: An Institutional Perspective

76 Pages Posted: 22 Apr 2019

See all articles by Stephanie Mittelbach-Hoermanseder

Stephanie Mittelbach-Hoermanseder

WU Vienna

Katrin Hummel

University of Zurich

Margarethe Rammerstorfer

Vienna University of Economics and Business - Department of Corporate Finance

Date Written: April 4, 2019

Abstract

For a sample of STOXX Europe-600 constituents and a reporting period of nine years, we investigate the role of the institutional environment on the value relevance of corporate social responsibility (CSR) disclosures in firms’ annual reports. Using textual analysis, we construct topic-specific disclosures measures that examine the prevalence of CSR topics with respect to the EU CSR directive, namely environmental, social and employee matters, human rights, and anti-corruption and bribery. The results reveal the value relevance of CSR disclosures, although the sign depends on the regulatory setting; it is positive before the issuance of the CSR directive and negative after it. Furthermore our results indicate that the incremental value relevance of topic-specific CSR disclosure is affected by the institutional environment, specifically, it is negatively related to country-level CSR awareness as well as employee protection and positively related to both, the legal strength and the level of enforcement. Our results also vary depending by the underlying topics.

Keywords: CSR disclosures, value relevance, information environment, textual analysis

Suggested Citation

Mittelbach-Hoermanseder, Stephanie and Hummel, Katrin and Rammerstorfer, Margarethe, Information Content of Corporate Social Responsibility Disclosures in Europe: An Institutional Perspective (April 4, 2019). Available at SSRN: https://ssrn.com/abstract=3365521 or http://dx.doi.org/10.2139/ssrn.3365521

Stephanie Mittelbach-Hoermanseder (Contact Author)

WU Vienna ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

Katrin Hummel

University of Zurich ( email )

Rämistrasse 71
Zurich, CH-8006
Switzerland

Margarethe Rammerstorfer

Vienna University of Economics and Business - Department of Corporate Finance ( email )

Welthandelsplatz 1
1020 Vienna
Austria

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