Market Reactions to the First-Time Disclosure of Corporate Social Responsibility Reports: Evidence from China

Wang, Kun Tracy; Li, Dejia

doi:10.1007/s10551-015-2775-1

Cited by 136 publications

(126 citation statements)

References 52 publications

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“…In line with the classical agency‐theoretical assumptions, the opportunistic agent has an information advantage over the principal, which results in information asymmetry between the parties. In order to reduce the resulting risk of moral hazard to a minimum, lenders, who are interested in both a timely repayment of the principal and a risk‐adequate interest, base the likelihood and terms of lending on their assessment of potential financial distress, which determines the firm's future performance, its expected future cash flows, and its ability to repay the obligation (Gong, Xu, & Gong, 2018; Wang & Li, 2015). Since creditors, as an outside party to the company, face high information asymmetries and have only limited access to a firm's private information, they build their estimate of potential financial distress on the publicly available information (Leftwich, Watts, & Zimmerman, 1981).…”

Section: Theoretical Backgroundmentioning

confidence: 99%

Does it pay off? Integrated reporting and cost of debt: European evidence

Gerwanski

2020

Corp Soc Responsibility Env

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Although the (Integrated Reporting) Framework defines providers of financial capital as both equity and debt holders, there is a distinct lack of research on the association between IR and debt. This study is the first to examine the effect of the voluntary preparation of an integrated report on the marginal cost of public debt. From an agency theoretical standpoint, we assume that IR decreases information asymmetries, facilitates lenders' assessments of a firm's risk of default, and thus is negatively related to a firm's cost of public debt. On the basis of a European sample, consisting of 2,196 firm‐year observations between 2015 and 2017, we find that IR significantly decreases a firm's cost of debt. In subsequent moderation analyses, the results reveal that this effect (a) is stronger for firms with lower ESG performance and (b) holds only for firms operating in environmentally sensitive industries. The results are robust to a battery of statistical models. We expand on earlier empirical literature on IR and provide valuable implications for research, practice, and standard setting.

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Section: Theoretical Backgroundmentioning

confidence: 99%

Does it pay off? Integrated reporting and cost of debt: European evidence

Gerwanski

2020

Corp Soc Responsibility Env

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“…Advocates of voluntary reporting attach strong strategic value to the development of CSR, which spreads as a result of the value attributed to it by the company and managers, and where there is a positive relationship between non-financial reporting and company share value [15]. Therefore, the development of proactive CSR practices and the consequent (voluntary) non-financial reporting help to generate trust among investors [14,16] and improve company reputation [17].…”

Section: The Quality Of Non-financial Reporting: Voluntary Versus Manmentioning

confidence: 99%

The Non-Financial Reporting Harmonization in Europe: Evolutionary Pathways Related to the Transposition of the Directive 95/2014/EU within the Italian Context

et al. 2019

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Since 2016, the European context has been characterised by the introduction of the Directive 95/2014/EU on mandatory non-financial reporting. The Directive has been transposed in the Italian context through the Legislative Decree 254/2016. However, following evidence previously collected from other jurisdictions, a high degree of scepticism by academics still characterises the debate on the effectiveness of this form of regulation. In fact, the literature highlights that the effects of a mandatory approach to non-financial reporting are limited to an increase in the annual quantity of information provided and not by an effective organizational change. Therefore, the contribution of our paper is twofold: a gap analysis between the overall degree of non-financial reporting quality between the years 2015 and 2017 and an empirical analysis, factors of which have impacted on the quality of non-financial reports prepared in 2017.

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“…To the first one belong those studies that support the voluntary character of NFI disclosure, while managers have the task to recognize CSR strategic value [88]. In this context, empirical researches provided evidence that, for listed companies, the quality of NFI disclosure positively affects the company equity value [89,90]. To the second group belong those authors who support the mandatory disclosure of NFI, as they posit that it is more complete, accurate, neutral, objective, and comparable than the voluntary disclosure [91,92].…”

Section: Nonfinancial Information (Nfi) and Financial Outcomementioning

confidence: 99%

The “Walk” towards the UN Sustainable Development Goals: Does Mandated “Talk” through NonFinancial Disclosure Affect Companies’ Financial Performance?

2020

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With its Global Compact, the United Nations (UN) called companies to align strategies and operations with universal principles on human rights, labor, environment, and anti-corruption, while settling and pursuing the seventeen UN Sustainable Development Goals (SDGs). Achieving SDGs in business reporting is part of the lively debate in the literature about the ability of nonfinancial reporting in providing stakeholders with useful and value-relevant information about companies' behaviors. This paper intends to address this issue in the aftermath of the recent European Union EU policy (Directive 95/2014/EU) of mandating companies to disclose nonfinancial information (NFI) according to some of the SDGs matters. To this end, the Italian context was analyzed, and main findings provide some early evidence of the absence of association between NFI and financial/market performance. At the same time, the positive association between companies' Beta factor and size and NFI is supported. This implies that stakeholders still do not appreciate NFI reported according to the new rules and probably that more time is needed to assess the possible advantages of an improved regulation about NFI. However, results show that larger companies and/or companies with higher risk profiles (Beta) have already started to improve their NFI.

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Market Reactions to the First-Time Disclosure of Corporate Social Responsibility Reports: Evidence from China

Cited by 136 publications

References 52 publications

Does it pay off? Integrated reporting and cost of debt: European evidence

Does it pay off? Integrated reporting and cost of debt: European evidence

The Non-Financial Reporting Harmonization in Europe: Evolutionary Pathways Related to the Transposition of the Directive 95/2014/EU within the Italian Context

The “Walk” towards the UN Sustainable Development Goals: Does Mandated “Talk” through NonFinancial Disclosure Affect Companies’ Financial Performance?

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