Implicit Versus Explicit Corporate Social Responsibility Disclosure: A Textual Analysis

Abstract

In this paper, we investigate whether companies located in liberal market economies report more explicitly about specific CSR topics than firms located in coordinated market economies. For a sample of 3,384 CSR reports of European and US firms, we perform a textual analysis over the period 2008 -2016. Our results confirm that companies located in LMEs report more explicitly about education and philanthropy; for parental leave and climate, we find a negative and significant association. We also find that CSR performance, size and report length are positively associated with the explicitness of our topic-specific CSR disclosure scores. Our results are robust to a variety of alternative measures. EXPLICIT CORPORATE SOCIAL RESPONSIBILITY DISCLOSURE:A TOPIC-BASED APPROACH disclosure to specific industries, cross-national differences are less likely considered.However, our study results suggest that the institutional setting not only affects the explicitness of topic-specific CSR disclosure but also differs depending on the CSR topic under consideration. Therefore, our contribution to the literature is threefold.First, to the best of our knowledge, the current study is the first to apply an explicit topic-based approach to the measurement of CSR disclosure. The fact that CSR is composedby its nature -of different topics is not considered when conducting CSR disclosure research based only on (often dichotomized) levels of disclosure. Interestingly, most of the empirical and large-sample evidence focuses on levels of CSR disclosure. Thus, our textual measure of CSR topics accounts for this caveat and allows for a more accurate representation of CSR.

Board structures, liberal countries, and developed market economies. Do they matter in environmental reporting? An international outlook

“…Hence, Hypothesis cannot be rejected. Our evidence suggests that companies operating in LMEs disclose more environmental information than companies operating in coordinated market economies, consistent with evidence from Jackson and Apostolakou () and Hummel et al (). In line with an institutional perspective, CME countries tend to adopt fewer standards focused on CSR like environmental issues (Jackson & Apostolakou, ).…”

“…The findings demonstrate that liberal and developed market economies are associated with environmental reporting, in line with Jackson and Apostolakou () and Hummel et al (). In LMEs, policymakers tend to issue fewer laws and rules concerning environmental reporting, but companies are engaged with environmental issues.…”

“…Contrary to this, companies operating in CMEs may adopt many implicit forms of CSR, such as environmental issues, being stronger in the adoption of minimum standards of CSR (Jackson & Apostolakou, ). In line with above arguments, Hummel, Mittelbach‐Hoermanseder, Cho, and Matten () find that in LMEs, there is relatively less regulation on CSR practices such as environmental disclosure, but companies are more engaged with the disclosure of social and environmental information, whereas CME countries have more environmental regulations, (although the reporting of social and environmental issues is limited). It can, therefore, be assumed that companies located in LMEs are more likely to disclose CSR information such as environmental matters than companies located in CMEs.…”

A Textual Analysis of US Corporate Social Responsibility Reports

“…As noted by Hummel et al (2017), the use of computer-based textual analysis involving CSR reports is in its infancy. Prior to computer-based textual analysis, researchers used small-sample content analysis in order to detect patterns of interest.…”

“…4 More recently, studies in the existing CSR literature employ computerbased textual analysis on much larger samples, revealing interesting patterns. For example, Hummel et al (2017) document differences in CSR report topic emphasis, readability, and tone for firms in liberal versus coordinated market economies.…”