The Impact of Mandatory Corporate Social Responsibility Disclosure on Enterprise Risk-Taking: Facilitative or Constraining?

Xiaomei Guo, Changlan Yang, Qi Ban () and Yang Xie ()
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Xiaomei Guo: School of Law, Chengdu University of Technology, Chengdu 610059, China
Changlan Yang: School of Economics, China Agricultural University, Beijing 100091, China
Qi Ban: Postdoctoral Station of Applied Economics, Fudan University, Shanghai 200433, China
Yang Xie: School of Economics and Management, Southwest University, Chongqing 400715, China

Sustainability, 2024, vol. 16, issue 12, 1-20

Abstract: Using Chinese A-share listed companies from 2006 to 2013 as the research sample, this paper empirically examines the impact and mechanism of the mandatory CSR disclosure policy on Chinese firms’ risk-taking by combining the difference-in-differences (DID) approach. This study finds that the implementation of the policy increases firms’ operating costs and leads to an increase in their financing constraints, which ultimately creates a disincentive for firms to take risks. Second, we also find that, relative to firms that do not disclose CSR reports, the sales revenues, R&D investment and investment levels of firms subject to CSR disclosure are significantly reduced, which may be the result of firms’ tendency to operate conservatively. In addition, heterogeneity analyses suggest that the dampening effect of mandatory CSR disclosure policies on risk-taking is stronger for firms with higher financing costs and for non-state-owned firms. This study further explores the mechanism of the impact of mandatory CSR disclosure on firms’ risk-taking, which will help the government to formulate and improve the information disclosure policy regarding driving the transformation of corporate development in the future.

Keywords: mandatory CSR disclosure; risk-taking; financial constraints; agency costs (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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