Economic Policy Uncertainty and Corporate Social Responsibility Disclosure Similarity: Evidence from China

Abstract

While the Chinese government has increasingly emphasized greater development balance between the economy, society, and the environment, little is known regarding how the state’s economic policy uncertainty affects within-firm corporate social responsibility (CSR) disclosure over time. Based on the institutional perspective, we propose that firms that face higher economic policy uncertainty likely issue CSR reports that are similar to their own past reports (i.e. CSR time-series disclosure similarity), reflecting few changes in corporate CSR activities. Further, such effects weaken for firms that experience strong external supervision or state ownership while they strengthen when the market reacts comparatively positively to previous reports (which we term “appreciation”). Empirical results derived from a sample of Chinese listed firms for a period running from 2009 through 2017 offer strong support for our hypotheses. Overall, our study contributes to the literature on corporate CSR disclosure and research on the consequences of economic policy uncertainty.

Keywords: Economic policy uncertainty; Corporate social responsibility; Disclosure similarity; China

JEL Classification: G12 G14 G2