Market Reactions to the First-Time Disclosure of Corporate Social Responsibility Reports: Evidence from China

Kun Tracy Wang and Dejia Li ()
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Dejia Li: The Australian National University

Journal of Business Ethics, 2016, vol. 138, issue 4, No 4, 682 pages

Abstract: Abstract We examine whether investors value the disclosure of first-time standalone corporate social responsibility (CSR) reports, and whether market valuations differ between government-controlled and privately controlled firms. Using a matched sample of Chinese publicly listed firms, we find that CSR initiators have higher market valuations than matched CSR non-initiators, and CSR initiators controlled by the central and local governments have lower market valuations than CSR non-initiators and CSR initiators controlled by private shareholders. Additional analyses demonstrate that CSR initiators with high CSR reporting quality and perceived credibility have higher market valuations than CSR initiators with low CSR reporting quality and medium or low perceived credibility of CSR reporting. We do not find convincing evidence that CSR mandate, litigation risk, and prior stock returns affect market reactions to CSR reporting. Overall, we find that the market values standalone CSR reports, and that CSR reporting quality and perceived credibility are important factors in market valuation.

Keywords: Corporate social responsibility; Performance; Market value; Ownership; Government (search for similar items in EconPapers)
JEL-codes: G14 G32 M14 M41 P31 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (54)

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DOI: 10.1007/s10551-015-2775-1

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