Signaling through corporate accountability reporting

Lys, Thomas Z.; Naughton, James P.; Wang, Clare

doi:10.1016/j.jacceco.2015.03.001

Cited by 700 publications

(470 citation statements)

References 27 publications

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“…62 See MONEYCONTROL, CNBC-TV18 News, August 6, 2010, op cit;INDIACORPLAWBLOG, August 7, 2010, op cit. 63 Lys, Naughton and Wang (2015) present evidence that CSR activity may signal future financial performance. 64 For example, in 1993 the US Congress enacted Section 162(m) of the US tax code.…”

mentioning

confidence: 89%

The impact of mandated corporate social responsibility: Evidence from India’s Companies Act of 2013

Dharmapala

Khanna

2018

International Review of Law and Economics

125

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Firms' Corporate Social Responsibility (CSR) activity has become the subject of a large literature in recent years. This paper analyzes CSR activity using quasi-experimental variation created by Section 135 of India's Companies Act of 2013, which requires (on a "comply-orexplain" basis) that firms satisfying specific size or profit thresholds spend a minimum of 2% of their net profit on CSR. Our analysis uses financial statement and stock price data on Indian firms from the Prowess database, along with hand-collected data from firms' disclosures of CSR activity. By combining a regression discontinuity (RD) framework (based on a nonparametric local polynomial regression approach) with a standard event study, we find a negative and substantial effect on the value of affected firms (relative to unaffected firms) around the crucial event date. This effect seems to be concentrated among firms that are less customer-facing, as indicated by low advertising expenditures. Using a difference-in-difference approach, we find significant increases in CSR activity among firms affected by Section 135, especially in the fraction of firms engaging in CSR spending. The fraction of firms subject to Section 135 that engage in advertising expenditures appears to have declined, consistent with substitution between advertising and CSR. There is no robust evidence of any significant impact on sales or accounting performance, although a modest decline in the return on assets cannot be ruled out. For a subset of large firms, we hand-collect comprehensive CSR data and find that while firms initially spending less than 2% increased their CSR activity, large firms initially spending more than 2% reduced their CSR expenditures after Section 135 came into effect. We explore various explanations for this presumably unintended consequence of Section 135, and also seek to derive some wider implications of this analysis for understanding the role of CSR. Terms of use: Documents in EconStor mayJEL-Codes: K220.Keywords: corporate social responsibility, India, company law, event study. (2014) argue that exogenous improvements in governance lead to reduced growth in CSR spending. They use the 2003 tax reform in the US (that reduced tax rates on dividends) as source of variation in insider ownership. They also find that close shareholder votes (just above 50%) for measures that improve governance lead to slower CSR growth. On the other hand, Ferrell, Liang and Renneboog (2014) use a dataset of...

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confidence: 89%

The impact of mandated corporate social responsibility: Evidence from India’s Companies Act of 2013

Dharmapala

Khanna

2018

International Review of Law and Economics

125

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“…Independent assurance on sustainability reports, and in particular on the CSP information disclosed, may increase stakeholders' confidence in companies' integrity regarding their accountability for their CSP, thus enhancing their corporate reputation (Simnett et al, 2009;Hahn & Kühnen, 2013;Casey & Grenier, 2015). Enhanced stakeholder confidence in the credibility of the CSP information disclosed may also result in competitive advantages, such as better access to finance (Cheng et al, 2014), a reduced cost of equity capital (Dhaliwal et al, 2011), increased analyst coverage, lower analyst forecast errors and dispersion, a reduction of monitoring costs (Dhaliwal et al, 2012;Casey & Grenier, 2015), and higher future cash flows (Lys et al, 2015;Plumlee et al, 2015).…”

Section: Theoretical Background and Development Of Hypothesesmentioning

confidence: 99%

Corporate Sustainability Performance and Assurance on Sustainability Reports: Diffusion of Accounting Practices in the Realm of Sustainable Development

Braam

Peeters

2017

Corp Soc Responsibility Env

138

111

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In response to investors and other stakeholders questioning the credibility of the performance information displayed in sustainability reports, companies increasingly have their sustainability reports voluntarily assured by an independent third party. However, voluntary third-party assurance on sustainability reports (SA) may vary considerably in terms of the choice of the assurance provider as well as the scope and level of assurance. In this study, the relationship between corporate sustainability performance (CSP) and choices related to SA is explored.Using a panel data set of 4686 listed companies (from 21 European and North American countries) during the period 2009-2014, the results indicate that companies with a superior CSP are more likely to employ third parties to provide assurance on their sustainability reports than companies with an inferior sustainability performance. For companies that employ third parties to provide assurance, we also find that, among the companies headquartered in the more shareholder-oriented countries, CSP plays a significant role in explaining variation in the choice of the assurance provider, while predominantly in the more stakeholder-oriented countries, companies with a good CSP are more likely to choose a broader assurance scope than companies with a poor CSP. The results support the notion that companies with a superior CSP make different choices related to SA than companies with an inferior CSP. The results also indicate that country-specific characteristics are important for understanding the variation in choices related to SA. We discuss the findings and their implications.

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“…It intends to respond to the limitations of the report, avoiding time lag in the information provided and false decision making, going beyond, for a concise communication vision about global value creation (DRUCKMAN, 2013;BAKKER, 2013). Due to the fact that this work is still under development, it was not used in Portugal, except for the banking and insurance sector, which is expressed in a single piece using the Extensible Business Reporting Language (XBRL) (CAETANO and EUGÉNIO, 2015) of information and in universal language the global knowledge of the business, from the purely financial to the social and environmental component (LYS, NAUGHTON and WANG, 2015). Despite proponents of the integrated report, authors like Flower (2014) or Adams (2015) understand that integrated reporting is not a solution, since accounting needs to be further developed and the sustainability report already provides information in the social and environmental context.…”

Section: -558mentioning

confidence: 99%

Tipos de divulgação da informação financeira e não financeira de responsabilidade social empresarial

Faria

2017

Cad. EBAPE.BR

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Corporate social responsibility information assumes, in recent decades, a high importance to preparers and users has intensified since 2007, with the US financial crisis, reflected in Portugal since 2008. The growing volume of information presents several forms of dissemination aimed it is to promote actions that have an impact on business performance and reflection on the vision that stakeholders have of the company in the community in which it operates. The purpose of this article is to list different forms of information dissemination of corporate social responsibility and highlight the channels used strategically for this purpose. Cumulatively want to list advantages and disadvantages of the means to contribute to the questioning of the current use of resources for the promotion of socially responsible information. The methodology used was a literature review of recent studies in which it sought a general area of the state of the art. Cumulatively was used a descriptive research in domestic companies listed on the Lisbon values in the 1st half of 2016 in order to record, analyze and relate the facts established in the literature review in the Portuguese context. We conclude that there is a multitude of information disclosed by companies of their social responsibility: written and unwritten, financial and non-financial, and internal and external. The web pages and traditional reports seem to be the most used, although difficulties persist measure the quantitative report over the quality, it requires greater rigor to ensure superior quality in the produced social responsibility information.Keywords: Social responsibility. Disclosure. Financial information. Not financial. Tipos de divulgação da informação financeira e não financeira de responsabilidade social empresarial ResumoA informação de responsabilidade social empresarial assumiu, nas últimas décadas, uma importância elevada para preparadores e utilizadores e intensificou-se desde 2007, com a crise financeira americana, espelhada em Portugal desde 2008. O crescente volume de informação apresenta várias formas de divulgação de ações que tenham impacto no desempenho das empresas e reflexo na visão dos stakeholders acerca da empresa na comunidade em que se insere. O objetivo deste artigo é elencar diferentes formas de divulgação de informação de responsabilidade social pelas empresas e destacar os canais usados estrategicamente para o efeito. Cumulativamente, são listadas vantagens e desvantagens dos meios utilizados para contribuir para o questionamento dos atuais recursos em uso para a divulgação da informação socialmente responsável. A metodologia adotada foi a análise bibliográfica de estudos recentes para levantar o estado da arte sobre o tema. Trata-se de pesquisa descritiva realizada em empresas nacionais cotadas na bolsa de valores de Lisboa no 1º semestre de 2016. Conclui-se que existe uma multiplicidade de informações divulgadas pelas empresas acerca das suas ações de responsabilidade social: escrita e não escrita, financeira e não financei...

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Signaling through corporate accountability reporting

Cited by 700 publications

References 27 publications

The impact of mandated corporate social responsibility: Evidence from India’s Companies Act of 2013

The impact of mandated corporate social responsibility: Evidence from India’s Companies Act of 2013

Corporate Sustainability Performance and Assurance on Sustainability Reports: Diffusion of Accounting Practices in the Realm of Sustainable Development

Tipos de divulgação da informação financeira e não financeira de responsabilidade social empresarial

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