CSR Performance, Financial Reporting, and Investors’ Perception on Financial Reporting

Lukas Timbate and Cheong Kyu Park
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Lukas Timbate: Department of Business Administration at Ajou University, Suwon 16499, Korea
Cheong Kyu Park: Department of Business Administration at Ajou University, Suwon 16499, Korea

Sustainability, 2018, vol. 10, issue 2, 1-16

Abstract: This study examines whether socially responsible firms behave differently from other firms in their financial reporting. Specifically, we question whether firms that are better in their corporate social responsibility (CSR) performance also behave in a responsible manner to maintain their financial reporting quality and whether the market rewards such responsible behaviors. Using data from S&P 500 US companies, we find that socially responsible firms are less likely to manage their earnings. However, we fail to find significant relationships between CSR and investors’ perceptions on earnings, measured by stock returns and earnings response coefficient. We interpret the results as investors not fully reflecting the benefits from CSR performance. Our findings are consistent with the notion that CSR activities are motivated by managers’ ethical incentives to serve the interests of stakeholders.

Keywords: corporate social responsibility; financial reporting quality; investors’ perception on financial reporting (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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