Does it pay to be forthcoming? Evidence from CSR disclosure and equity market liquidity

Egginton, Jared F.; McBrayer, Garrett A.

doi:10.1002/csr.1691

Cited by 66 publications

(23 citation statements)

References 54 publications

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“…Currently, the automotive market is offered competitively, which indicated that the automotive companies with a bad reputation would not be offered any opportunity for winning the market shares. Additionally, the firms having a higher CSR reputation could benefit from the improved relationship with the investors and customers, which facilitates their access to the capital (Egginton & McBrayer, ; Orlitzky et al, ). Accordingly, this leads to the following hypothesis.Hypothesis Corporate social responsibility has a positive impact on corporate financial performance.…”

Section: Literature Reviewmentioning

confidence: 99%

Market differentiation threshold and the relationship between corporate social responsibility and corporate financial performance

Lin

Law

Azman-Saini

2019

Corp Soc Responsibility Env

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This study assesses the impact of corporate social responsibility (CSR) on corporate financial performance (CFP) by using an innovative threshold estimation technique.We examine whether the CSR effect on CFP is varied with the distinct levels of market differentiation. The empirical analysis is based on a world automotive panel dataset for the period of 2011-2017. We unveil an inverted V-shaped relationship between CSR and CFP and confirm that the increasing nonparametric regression line up to a certain threshold level indicates a positive effect on CFP, whereas a decreasing line indicates a negative effect. Hence, these findings support the idea that engagement in CSR can boost firm performance by incorporating with market differentiation, since higher firm performance is associated with strong differentiation (i.e., less substitutability), but CSR may not provide large benefits in firms with too high market differentiation. K E Y W O R D S corporate financial performance, corporate social responsibility, market differentiation, threshold regression

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Section: Literature Reviewmentioning

confidence: 99%

Market differentiation threshold and the relationship between corporate social responsibility and corporate financial performance

Lin

Law

Azman-Saini

2019

Corp Soc Responsibility Env

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“…First, environmental disclosure reduces the investment risk perceived by investors, bringing a decrease in the required return on investment. Second, environmental disclosure improves stock demand and liquidity, thus reducing COE [10,13,37]. Third, high-quality environmental disclosure improves the accuracy of analysts' earnings forecasts, which reduces the cost of equity financing by reducing information risk [38].…”

Section: Theoretical Foundations and Hypotheses Developmentmentioning

confidence: 99%

Effect of Environmental Penalties on the Cost of Equity – The Role of Corporate Environmental Disclosures

Ding¹,

Shahzad²

2022

Pol. J. Environ. Stud.

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Environmental administrative penalty is a powerful way for the government to realize environmental pollution control. When a firm is subjected to an environmental administrative penalty, how the penalty affects its equity cost is a hot issue in academia and industry. Using the ordinary least square method and the Bootstrap method, it is found that environmental penalties significantly increase corporate equity costs in the following year through their disclosure increments; the disclosure increment plays a mediating role in the positive effect. It is also found that the reduced negative information disclosures can increase the effect, while the increased positive information can reduce the effect. These findings help us understand environmental management's significance to a firm's financing sustainability and have practical enlightenment on environmental management and environmental pollution control.

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“…Several studies have investigated the CSR-CFP relationship for both developed and developing nations. While a few studies documented positive CSR-CFP relationship (Waddock and Graves, 1997;Brammer and Millington, 2008;Saleh et al, 2011;Rodgers et al, 2013;Taylor et al, 2018;Egginton and McBrayer, 2019), others have observed it to be negative (Brammer et al, 2006;Makni et al, 2009;Vergalli and Poddi, 2011;Peng and Yang, 2014;Akben-Selcuk, 2019;Liu and Tian, 2019). Those who supported the positive linkage often argue that CSR lessens the excessive risk-taking or its avoidance (Albuquerque et al, 2019) and CSR activities positively impact the firm's market value (Verschoor, 1998;Moser and Martin, 2012).…”

Section: Review Of Literaturementioning

confidence: 99%

Impact of mandatory corporate social responsibility on corporate financial performance: the Indian experience

Sharma¹,

Aggarwal²

2021

SRJ

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Purpose The purpose of this paper is to investigate the impact of mandatory corporate social responsibility (CSR) expenditure on the firm’s financial performance in the aftermath of insertion of Section 135 in the Companies Act, 2013 for Indian listed companies. Design/methodology/approach The paper uses independent sample t-test, one-way ANOVA, fixed effect panel regression model and principal component analysis on a data set of 153 non-financial companies listed in BSE-500 companies for a period of 2015–2019. Findings The empirical results of the paper suggest that the mandatory CSR expenditure negatively impacts the company’s profitability. Practical implications The study has important implications for regulators and listed companies. Firstly, the mandatory CSR expenditure acts as a burden onto the on-going activities of the firms. CSR activities, therefore, should be integrated with the existing skillsets and expertise of the firms. Secondly, the government can encourage CSR activities by making the expenditure tax deductible. Moreover, the Schedule VII list of activities has a scope to become more inclusive rather than the present exhaustive list. Originality/value The paper highlights the gap in the expectation and actualisation of the CSR mandate by studying the recent data of the sample companies of the BSE-500 index. The paper adds to the CSR literature in the emerging market context.

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Does it pay to be forthcoming? Evidence from CSR disclosure and equity market liquidity

Cited by 66 publications

References 54 publications

Market differentiation threshold and the relationship between corporate social responsibility and corporate financial performance

Market differentiation threshold and the relationship between corporate social responsibility and corporate financial performance

Effect of Environmental Penalties on the Cost of Equity – The Role of Corporate Environmental Disclosures

Impact of mandatory corporate social responsibility on corporate financial performance: the Indian experience

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