Undervaluation and Non-Financial Disclosure: Evidence from Voluntary CSR News Releases

49 Pages Posted: 17 Apr 2020

See all articles by Mohammed Benlemlih

Mohammed Benlemlih

Green reply Luxembourg

Jingwen Ge

ESSCA school of management

Sujiao (Emma) Zhao

Eurofidai (CNRS and University of Grenoble 2)

Date Written: March 31, 2020

Abstract

In this paper, we examine whether stock market imperfection plays a role in a firm’s decision to disclose non-financial information and if yes, what are the underlying channels. To address our questions, we web-scraped corporate social responsibility (CSR) news for a sample of publicly traded non-financial US firms from CSRwire and explored the exogeneous variation in stock valuation driven by institutional price pressure. Our empirical results show that firms facing stock market undervaluation are more likely to release CSR news and the effect is concentrated in firms with low CSR commitment and low stock price informativeness. Lastly, we find evidence that stock market reacts positively to CSR news released by undervalued firms, and more so for undervalued firms with high information asymmetry.

Keywords: Market undervaluation, voluntary disclosure, non-financial information, information asymmetry, institutional price pressure

JEL Classification: G30, G32, D03, D22

Suggested Citation

Benlemlih, Mohammed and Ge, Jingwen and Zhao, Sujiao (Emma), Undervaluation and Non-Financial Disclosure: Evidence from Voluntary CSR News Releases (March 31, 2020). Available at SSRN: https://ssrn.com/abstract=3565465 or http://dx.doi.org/10.2139/ssrn.3565465

Mohammed Benlemlih (Contact Author)

Green reply Luxembourg ( email )

Luxembourg
Luxembourg

Jingwen Ge

ESSCA school of management ( email )

1 avenue Lakanal
Angers, 49000
France

Sujiao (Emma) Zhao

Eurofidai (CNRS and University of Grenoble 2) ( email )

150 Rue de la Chimie
Saint-Martin-d'Hères, 38040
France

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