The Consequences of Mandatory Corporate Sustainability Reporting

Ioannis Ioannou () and George Serafeim ()
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Ioannis Ioannou: London Business School
George Serafeim: Harvard Business School, Accounting and Management Unit

No 11-100, Harvard Business School Working Papers from Harvard Business School

Abstract: We examine the effect of mandatory corporate sustainability reporting (MCSR) on several measures of social responsibility using both country and firm-level data. Using data for 58 countries, we show that after the adoption of MCSR laws and regulations, the social responsibility of business leaders increases and both sustainable development and employee training become a higher priority for companies. Moreover, for companies in countries with MCSR, corporate governance improves and on average, companies implement more ethical practices, bribery and corruption decrease, and managerial credibility increases. These effects are larger for countries with stronger law enforcement and more widespread assurance of sustainability reports. We complement the country-level analysis using environmental, social and governance metrics at the firm-level in conjunction with a differences-in-differences research design and we find that for the treatment group, energy as well as waste and water consumption significantly decline, while investments in employee training significantly increase after the adoption of MCSR laws and regulations.

Keywords: sustainability reporting; mandatory reporting; corporate sustainability; corporate social responsibility (search for similar items in EconPapers)
Pages: 45 pages
Date: 2011-03, Revised 2012-10
New Economics Papers: this item is included in nep-soc
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Citations: View citations in EconPapers (12)

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