Adoption of CSR and Sustainability Reporting Standards: Economic Analysis and Review

121 Pages Posted: 31 Jul 2019 Last revised: 9 Aug 2019

See all articles by Hans Bonde Christensen

Hans Bonde Christensen

University of Chicago - Booth School of Business

Luzi Hail

University of Pennsylvania - The Wharton School

Christian Leuz

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); Center for Financial Studies (CFS); University of Pennsylvania - Wharton Financial Institutions Center; CESifo Research Network

Date Written: July 27, 2019

Abstract

This study provides an economic analysis of the determinants and consequences of corporate social responsibility (CSR) and sustainability reporting. To frame our analysis, we consider a widespread mandatory adoption of CSR reporting standards in the United States. The study focuses on the economic effects of standards for disclosure and reporting, not on the effects of CSR activities and policies themselves. It draws on an extensive review of the relevant academic (CSR and non-CSR) literatures in accounting, economics, finance, and management. Based on a discussion of the fundamental economic forces at play and the key features and determinants of (voluntary) CSR reporting, we derive and evaluate possible economic consequences, including capital-market effects for select stakeholders as well as potential firm responses and real effects in firm behavior. We also highlight issues related to the implementation and enforcement of CSR reporting standards. Our analysis yields a number of insights that are relevant to the current debate on CSR and sustainability reporting and provides scholars with avenues for future research.

Keywords: Accounting, Regulation, SASB, GRI, Standard setting, Mandatory disclosure, Sustainability, CSR, Environmental and social and governance (ESG) factors

JEL Classification: F30, G30, K20, L21, M14, M41, M48

Suggested Citation

Christensen, Hans Bonde and Hail, Luzi and Leuz, Christian, Adoption of CSR and Sustainability Reporting Standards: Economic Analysis and Review (July 27, 2019). European Corporate Governance Institute - Finance Working Paper No. 623/2019. Available at SSRN: https://ssrn.com/abstract=3427748 or http://dx.doi.org/10.2139/ssrn.3427748

Hans Bonde Christensen

University of Chicago - Booth School of Business ( email )

5807 South Woodlawn Avenue
Chicago, IL 60637
United States

Luzi Hail (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States
215-898-8205 (Phone)
215-573-2054 (Fax)

Christian Leuz

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-834-1996 (Phone)

HOME PAGE: http://faculty.chicagobooth.edu/christian.leuz/

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://www.nber.org

European Corporate Governance Institute (ECGI)

Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Center for Financial Studies (CFS) ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

University of Pennsylvania - Wharton Financial Institutions Center

3641 Locust Walk
Philadelphia, PA 19104-6218
United States

CESifo Research Network

Poschinger Str. 5
Munich, DE-81679
Germany

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