The role of corporate social responsibility (CSR) information in supply-chain contracting: Evidence from the expansion of CSR rating coverage

Alper Darendeli, Peter Fiechter, Jörg-Markus Hitz and Nico Lehmann

Journal of Accounting and Economics, 2022, vol. 74, issue 2

Abstract: We examine the effect of CSR information on stakeholder decision-making, specifically on supply-chain contracting. To obtain plausibly exogenous variation in CSR information, we exploit the 2017 expansion of CSR rating coverage from Russell 1000 to Russell 2000 firms (hereafter, “treated firms”) by Thomson Reuters Asset4. Using a difference-in-differences design with the previously covered Russell 1000 supplier firms as the control group, we find a negative effect of the CSR information shock for treated suppliers with comparatively low CSR ratings. On average, these suppliers experience reductions in their number of contracts and corporate customers. In cross-sectional analyses, we document variation in our treatment effects consistent with two underlying mechanisms: (i) benchmarking of suppliers' CSR by corporate customers and (ii) CSR-related public pressure on customer-supplier contracting. Collectively, our findings provide novel evidence on the causal effect of CSR information on stakeholder decision-making.

Keywords: Corporate social responsibility (CSR); Stakeholder decision-making; CSR information shock; Supply chain contracting; CSR rating vendors (search for similar items in EconPapers)
JEL-codes: G24 G34 M14 M40 M41 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:74:y:2022:i:2:s0165410122000489

DOI: 10.1016/j.jacceco.2022.101525

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