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The effect of voluntary and mandatory corporate social responsibility disclosure on firm profitability: Evidence from China

Shuyu Xue, Qi Chang and Jingwen Xu

Pacific-Basin Finance Journal, 2023, vol. 77, issue C

Abstract: We examine the association between a firm's profitability and its voluntary and mandatory CSR disclosures. We find both voluntary and mandatory CSR disclosure has a negative effect on the firm's profitability and voluntary CSR disclosure has a stronger negative effect than mandatory CSR disclosure. In addition, for firms with better corporate governance and better financial condition, the negative effect of voluntary disclosure on profitability weakens. We believe the firms voluntarily disclosing CSR are eager to attract more long-term investors, so they spend more on CSR activities and lower their profitability. We also find that firm with voluntary CSR disclosure attracts more institutional investors, has higher stock return, and raises more debt.

Keywords: Corporate social responsibility (CSR) disclosure; Mandatory disclosure; Voluntary disclosure; Firm profitability (search for similar items in EconPapers)
JEL-codes: G30 G31 G32 G38 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:77:y:2023:i:c:s0927538x22002141

DOI: 10.1016/j.pacfin.2022.101919

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