This paper develops a tractable model to study the impact of corporate social responsibility (CSR) on real decisions (i.e., production and disclosure decisions) of a firm which can learn from the stock price. Firms with high CSR disclose more precise information, improving the stock liquidity and price efficiency, which also benefit liquidity traders and consumers. Interventions by regulators in firms' disclosure decisions, such as mandatory disclosure, can improve social welfare, but their effectiveness depends on the degree of CSR. We also discuss the implications of learning from the price.

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The 21th century has seen huge changes of corporations. While companies' business grew rapidly, attention and recognition on corporate social responsibility has gradually been attracted and put on a vital strategy position. It has been proofed to be a crucial way that enterprises share their social responsibility actively in order to enhance their competitive advantage. With more and more enterprises knowing how important social responsibility is for their development, they released a new method which is called sustainability report to show them determine and confidence to take social responsibility.This thesis can be divided into six parts. The first part is about introduction and background. The second part is literature review. The third part is the development of hypotheses. The fourth part is research method and the fifth part is a conclusion. The last part is the reference.

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