Is CSR reporting always favorable?

Abstract

Purpose In addition to their profit maximization objective, firms are often challenged to meet environmental and social demands. The purpose of this paper is to test whether a firm’s macroeconomic environment moderates the efficiency of its social and environmental disclosures. Design/methodology/approach The study uses the Bloomberg database to collect data on the FTSE 350 listed firms for the years 2007-2012. The sample is split into crisis and post-crisis periods, to study the investor reaction to social disclosures under different economic conditions. Findings The results suggest that the effect of corporate social responsibility (CSR) disclosure on future firm performance depends on the surrounding macroeconomic environment. During tight economic situations, market participants become more self-centered and penalize firms diverting scarce resources toward non-profitable societal engagements. Moreover, the findings indicate that firms with a high participation of outside directors and low accounting profit experience negative future performance when engaging in social disclosures during times of crisis. Practical implications Corporate governance is a system of interconnected practices that is affected by various firm and environmental characteristics. The results are in line with the premise that, depending on macroeconomic changes and specific firm attributes, CSR reporting may have dissimilar implications across different situations and conditions. Social disclosures and engagements are not always favorable, and should only be utilized in non-recessionary periods by firms possessing certain characteristics in terms of board composition and accounting profitability. Originality/value This study identifies key moderating variables which present additional obstacles for firms engaging in CSR during adverse economic conditions. Outsiders’ inferior firm-specific expertise, along with the firm’s poor accounting performance, present additional financial constraints for firms engaging in CSR activities during economic downturns.

Corporate Governance Configurations and Corporate Social Responsibility Disclosure: Qualitative Comparative Analysis of Audit Committee and Board characteristics

“…Several investigations (Adams, Almeida, & Ferreira, 2005; Khan et al, 2013; Zaid, Abuhijleh, & Pucheta‐Martínez, 2020; Zubeltzu‐Jaka, Álvarez‐Etxeberria, & Ortas, 2020) claim that larger boards would have a variety of knowledge and experiences, which improves the ability of board to supervise and control the company's disclosures; thus, improve CSR. However, others (Al‐Dah, Dah, & Jizi, 2018; Yasser, Al Mamun, & Ahmed, 2017) find an inverse relationship, and they argue that larger boards increase the conflict of interest (Jensen, 1993), and are difficulty managed; thereby smaller board would be often more active in a role in supervising and controlling more than larger board (Jizi et al, 2014). While Fuente, García‐Sánchez, and Lozano (2017) find an insignificant association.…”

The effect of the board on corporate social responsibility: bibliometric and social network analysis

“…checklist, counting words and sentences (Appuhami & Tashakor, 2017;Barakat et al, 2015;Jizi et al, 2014;Khan et al, 2013;Kolsi & Attayah, 2018;Sharif & Rashid, 2014;Zaid et al, 2019). Other studies measure CSRD using ESG rating depending on Bloomberg database (Al-Dah et al, 2018;Cucari et al, 2018;Giannarakis et al, 2014), and by using KPMG international surveys of CSR reporting (Fernandez-Feijoo et al, 2014), using a dummy variable (Liao et al, 2018;Pucheta-Martinez & Chiva-Ortells, 2018), Dow Jones Sustainability Indices (Chang et al, 2017), and GRI database (Cabeza-Garcia et al, 2018;Fuente et al, 2017). Almost 44% of the sampled articles used CSRD as a dependent variable (see Table 9), while nearly 54% used CSR (performance, practices, actions, engagement, and strategies).…”

Perceived corporate social responsibility and affective commitment: The mediating role of psychological capital and the impact of employee participation

“…On the other hand, employees' capacity of resilience was reported to be high both for Ps and NPs, which constitutes a unique finding that may be attributed to the context of Greece where socioeconomic turbulence has prevailed for more than a decade (Papacharalampous et al, 2019). While employees of Greek firms have sustained vast financial sacrifices and great pressure at their workplace with frequent layoffs, they have become more self‐centered and resilient to hardships (Al‐Dah et al, 2018). According to Youssef and Luthans (2007), resilience reflects how employees experience risk factors and uncertainty in the workplace and how they develop personal resources and emotions to achieve favorable outcomes.…”