Corporate social responsibility and information flow

Gary Chen, Bin Wang and Xiaohong Wang

Accounting and Finance, 2021, vol. 61, issue 2, 2759-2807

Abstract: We find that a firm’s greater commitment to corporate social responsibility (CSR) increases firm‐specific information incorporated into stock prices. We further show that information searches increase around major disclosure events for firms that are more socially responsible, as observed through requests for newly released annual (10‐K) filings on EDGAR and company ticker searches on Google around earnings announcements. Using alternative empirical specifications, we establish a robust and positive relation between CSR and stock price informativeness. Our results are consistent with the ethical and reputational view that a commitment to CSR encourages information acquisition and facilitates information flow into stock prices.

Date: 2021
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