The effect of mandatory CSR disclosure on firm profitability and social externalities: Evidence from China

Yi-Chun Chen, Mingyi Hung and Yongxiang Wang

Journal of Accounting and Economics, 2018, vol. 65, issue 1, 169-190

Abstract: We examine how mandatory disclosure of corporate social responsibility (CSR) impacts firm performance and social externalities. Our analysis exploits China's 2008 mandate requiring firms to disclose CSR activities, using a difference-in-differences design. Although the mandate does not require firms to spend on CSR, we find that mandatory CSR reporting firms experience a decrease in profitability subsequent to the mandate. In addition, the cities most impacted by the disclosure mandate experience a decrease in their industrial wastewater and SO2 emission levels. These findings suggest that mandatory CSR disclosure alters firm behavior and generates positive externalities at the expense of shareholders.

Keywords: Mandatory CSR disclosure; Firm performance; Social externalities; China (search for similar items in EconPapers)
JEL-codes: K20 M14 M4 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (343)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:65:y:2018:i:1:p:169-190

DOI: 10.1016/j.jacceco.2017.11.009

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