The complementarity between CSR disclosures and CSR contracting

56 Pages Posted: 24 Sep 2020

See all articles by Isabella Grabner

Isabella Grabner

Vienna University of Economics and Business - Institute for Markets and Strategy

Annelies Renders

BI Norwegian School of Business

Lu Yang

Monash University

Date Written: July 14, 2024

Abstract

Over the past decades, companies faced increasing pressure to provide information about their Corporate Social Responsibility (CSR). Firms differ however in the extent to which they communicate their CSR-related efforts to stakeholders and incorporate CSR-based performance measures in executives' incentive contracts. We examine the relationship between CSR disclosures and contracting and argue that these two practices are complements in signaling a CSR commitment. Using hand-collected data to capture the disclosure quality of CSR reports and intensity of CSR contracting for S&P 500 firms, we show that firms indeed align the adoption choices of the two practices. Further, firms using both practices intensively are associated with a stronger CSR commitment and more credible CSR disclosures. Finally, we document that firms that face higher credibility concerns show stronger complementarity between these two practices.

Keywords: CEO annual incentive contract, CSR disclosure, CSR contracting, CSR commitment, Performance measurement, Complementarity theory JEL codes: M14, M40

JEL Classification: M41

Suggested Citation

Grabner, Isabella and Renders, Annelies and Yang, Lu, The complementarity between CSR disclosures and CSR contracting (July 14, 2024). Available at SSRN: https://ssrn.com/abstract=3670738 or http://dx.doi.org/10.2139/ssrn.3670738

Isabella Grabner (Contact Author)

Vienna University of Economics and Business - Institute for Markets and Strategy ( email )

Annelies Renders

BI Norwegian School of Business ( email )

Lu Yang

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
556
Abstract Views
1,959
Rank
106,775
PlumX Metrics