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Institutional Ownership and Value Relevance of Corporate Social Responsibility Disclosure: Empirical Evidence from China

Ramiz ur Rehman (), Zahid Riaz (), Charles Cullinan (), Junrui Zhang () and Fanghua Wang ()
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Ramiz ur Rehman: School of Management, Xi’an Polytechnic University, Xi’an 710048, China
Zahid Riaz: Faculty of Business Administration, Lahore School of Economics, Lahore 53200, Pakistan
Charles Cullinan: Department of Accounting, Bryant University, Smithfield, RI 02828, USA
Junrui Zhang: Department, School of Management, Jiaotong University, Xi’an 710049, China
Fanghua Wang: College of Film and Television, Hebei University of Science and Technology, Shijiazhuang 050018, China

Sustainability, 2020, vol. 12, issue 6, 1-18

Abstract: We examine the relationship between corporate social responsibility (CSR) disclosure and firm value in China. Using a sample of listed companies on the Shanghai Stock Exchange from 2008 to 2012, we find that market value of a firm is higher when a company makes a lower level of CSR disclosure. Other things being equal, this relationship becomes positive when the CSR disclosure is moderated with the institutional ownership. With regard to the CSR disclosure, we found consistent results with respect to the little evidence that the amount of CSR disclosure is significantly associated with market value among those companies who chose to provide CSR disclosures. Taken together, these results indicate that the decision to disclose or not to disclose CSR information is value relevant to the level of institutional investors. These findings are important as they have made an attempt to resolve the earlier contradictory findings with respect to the relationship between market value and CSR disclosure. Furthermore, it has highlighted the value relevance of CSR disclosure regarding the type of shareholders/institutional investors.

Keywords: disclosure; corporate social responsibility; firm value; institutional investors; China (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2020
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