The effect of mandatory CSR disclosure on stock liquidity

Zhiyuan Li, Wenlian Lin and Sili Zhou

China Economic Review, 2024, vol. 87, issue C

Abstract: This study examines the effect of mandatory CSR disclosure on stock liquidity in the China's stock market. Using a difference-in-differences method, we find supportive and robust evidence that mandatory CSR disclosure significantly reduces stock liquidity by diminishing informational advantages for certain traders, causing them to exit the stock market. Our study highlights unintended liquidity effects of mandatory CSR disclosure, suggesting that policymakers need to consider reactions of the information-advantaged traders, especially in emerging markets with high information asymmetry.

Keywords: Mandatory CSR disclosure; Stock liquidity; Information asymmetry (search for similar items in EconPapers)
JEL-codes: G33 G34 M14 M48 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:87:y:2024:i:c:s1043951x24001214

DOI: 10.1016/j.chieco.2024.102232

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