Corporate Social Responsibility: Country-Level Predispositions and the Consequences of Choosing a Level of Disclosure

Abstract

We study the different levels of corporate social responsibility (CSR) disclosures of the largest European firms. We find that firms are more predisposed to disclose more CSR information in countries with: better investor protection, higher levels of democracy, more effective government services, higher quality regulations, more press freedom, and a lower commitment to environmental policies. Our analysis of the association of different levels of CSR disclosure with share prices indicates that a high level of CSR disclosure is associated with higher share prices, whereas a low level of CSR disclosure in sensitive industries is associated with lower share prices (compared to no disclosure).These results are also present when we analyse changes in CSR disclosure, and are robust to the inclusion of an accounting quality measure in our model. The overall effect of the association of higher levels of CSR disclosure with higher share prices is stronger in countries with more democracy, more government effectiveness, better regulatory quality, and more press freedom. Therefore, market participants find CSR disclosures more informative in countries where investors are in a better position to voice their concerns and where there is better regulation and more effective government implementation of regulations.

The influence of integrated reporting and internationalisation on intellectual capital disclosures

“…Prior research has investigated why managers choose to voluntarily disclose non-financial information (Beattie and Smith, 2012;de Villiers, 1999;Marr et al, 2003). Reporting of non-financial information has been found to be valuerelevant, reducing the cost of equity capital and improving analyst forecast accuracy (de Villiers and Marques, 2016;Dhaliwal et al, 2011;Dhaliwal et al, 2012). Although IC itself has been found to have a positive impact on market value and financial performance (Abdolmohammadi, 2005;Chen et al, 2005;Swartz et al, 2006), IC disclosures have also been found to be of a low quality, often providing qualitative rather than quantitative information (Guthrie, Petty, Ricceri, 2006).…”

Assessing corporate environmental issues in international companies: A study of explanatory factors

“…In addition, companies belonging to these industries are perceived as damaging to the environment and hence face greater pressure from their stakeholders in regard to environmental concerns than companies operating in industries considered environmentally non-sensitive. As a result, if they do not disclose environmental information, this could be interpreted by their stakeholders as a sign of poor environmental performance (Campbell, 2003;Cho & Patten, 2007;De Villiers & Marques, 2016). Jenkins and Yakovleva (2006) reveal that companies in the oil, chemical and mining industries are more likely to report on health, safety and environmental issues, while financial sector firms generally focus more on philanthropic and social needs.…”

Corporate Social Responsibility Reporting and Varieties of Capitalism: an International Analysis of State‐Led and Liberal Market Economies

“…The GRI guidelines were chosen because they represent the most widely recognised international standards that involve external reporting on both social and environmental issues (De Villiers & Marques, 2016). A disclosure index was then created to perform the analysis.…”