Corporate Social Responsibility Disclosure: Responding to Investors’ Criticism on Social Media

Abstract

Companies use corporate social responsibility (CSR) disclosures to communicate their social and environmental policies, practices, and performance to stakeholders. Although the determinants and outcomes of CSR activities are well understood, we know little about how companies use CSR communication to manage a crisis. The few relevant CSR studies have focused on the pressure on corporations exerted by governments, customers, the media, or the public. Although investors have a significant influence on firm value, this stakeholder group has been neglected in research on CSR disclosure. Grounded in legitimacy theory and agency theory, this study uses a sample of Chinese public companies listed on the Shanghai Stock Exchange to investigate CSR disclosure in response to social media criticism posted by investors. The empirical findings show that investors’ social media criticism not only motivates companies to disclose their CSR activities but also increases the substantiveness of their CSR reports, demonstrating that companies’ CSR communication in response to a crisis is substantive rather than merely symbolic. We also find that the impact of social media criticism on CSR disclosure is heterogeneous. Non-state-owned enterprises, companies in regions with high levels of environmental regulations, and companies in regions with local government concern about social issues are most likely to disclose CSR information and report substantive CSR activities. We provide an in-depth analysis of corporate CSR strategies for crisis management and show that crises initiated by investors on social media provide opportunities for corporations to improve their CSR engagement.

Consumers’ Perspectives and Behaviors towards Corporate Social Responsibility—A Cross-Cultural Study

“…Recently, CSR has received attention due to its importance to customers, employees, shareholders, suppliers, the environment, and society as a whole. The practice of CSR is one of the effective ways by which an enterprise can enhance its reputation [2] and sharpen its competitive edge, which is subsequently reflected in a firm's profitability [3]. These days, in particular, with competition becoming increasingly tougher, CSR should be taken into consideration.…”

Empowering Green Development: How Social Media Interaction Influences Environmental Information Disclosure of High-Polluting Firms

“…(2) The information on corporate EID was manually extracted using the content analysis of corporate annual reports or corporate social responsibility reports. (3) Data on corporate ownership, analyst coverage, and basic financial indicators were collected from the China Stock Market and Accounting Research (CSMAR) database, which has been widely used in prior research [ 4 , 5 , 20 ].…”

“…Previous studies also provide evidence that aggregated social media attention exerts pressure on firms to improve their information disclosure to preempt activism at their firms and avoid potential risks [ 52 ]. On the other hand, heated discussions and massive interactions on social media may introduce a large amount of attention to and scrutiny from the regulatory authorities [ 20 , 40 ], which may increase the risk of administrative intervention and legal punishment.…”

“…Despite the academic attention directed towards the relationship between social media and corporate voluntary information, the empirical findings remain limited and controversial. Some scholars find that social media plays an active supervisory role in constraining corporate violation disclosure and enhancing the quality of information disclosure [ 18 , 19 , 20 ]. Lei et al [ 19 ] demonstrate that Twitter-adopting firms are more active in releasing more transparent voluntary nonfinancial information.…”

“…Third, this paper contributes to the social media literature by elaborating the mechanism through which social media influences EID decisions. While previous research has provided evidence on the positive impact of social media on corporate non-financial disclosure, it is still not very clear how social media influences corporate EID decisions [ 18 , 19 , 20 ]. We conduct a mechanism-based analysis to verify the three mechanisms of information function, market pressure, and government intervention, which strengthens our understanding of how social media influences corporate EID decisions.…”