Corporate Social Responsibility and Corporate Disclosures: An Investigation of Investors’ and Analysts’ Perceptions

Audrey Hsu (), Kevin Koh (), Sophia Liu () and Yen H. Tong ()
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Audrey Hsu: National Taiwan University
Kevin Koh: Nanyang Technological University
Sophia Liu: National Taiwan University
Yen H. Tong: Nanyang Technological University

Journal of Business Ethics, 2019, vol. 158, issue 2, No 13, 507-534

Abstract: Abstract We conjecture that corporate social responsibility (CSR) can be indicative of managerial ethics and integrity and examine whether equity investors and financial analysts consider CSR performance when they assess firms’ disclosures of actual and forecasted earnings. We find that only adverse CSR performance affects investors’ assessments of these disclosures. In contrast, we find that both positive and adverse CSR performance affect analysts’ forecast revisions in response to firms’ disclosures. We also find that firms with adverse CSR performance exhibit lower disclosure quality and earnings persistence, but do not find that firms with positive CSR performance exhibit higher levels of both measures. This asymmetric result is consistent with investors’, but not analysts’, assessments of the effect of CSR performance on corporate disclosures. Our results are robust to using a three-stage least squares approach to address endogeneity concerns and to a battery of robustness and sensitivity analyses. Overall, our findings suggest that investors and analysts consider CSR when assessing the information in earnings-related corporate disclosures.

Keywords: Corporate social responsibility (CSR); Managerial ethics; managerial integrity; stock price changes; Analysts’ reaction; Corporate disclosures (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (14)

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DOI: 10.1007/s10551-017-3767-0

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