Financially Constrained Firms and Voluntary Non-Financial Disclosure: A Study of Initiation of Corporate Social Responsibility Reporting
49 Pages Posted: 12 May 2020
Date Written: April 18, 2020
We examine effects of initiation of corporate social responsibility reporting (CSRR) concurrent with experiencing a negative event. In primary analyses, we examine whether these firms experience an increase in investor interest and a reduction in cost of capital, postdisclosure. In general, we find little evidence that these firms experience capital market benefits from CSRR initiation. However, these primary tests ignore the relative CSR performance scores of our sample firms. In additional analyses, we find a positive association between CSR performance scores and firm profitability. We also find a positive association between changes in CSR performance scores and institutional investor interest. Finally, we examine the effects of earnings announcements in relation to the timing of initial CSR disclosures on shareholder value and find that shareholders earn greater abnormal returns when CSR disclosures are released after or concurrent with earnings announcements.
Keywords: CSR, negative event, voluntary disclosure
JEL Classification: G32, M14
Suggested Citation: Suggested Citation