Mandatory Non-financial Disclosure and Its Influence on CSR: An International Comparison

Gregory Jackson (), Julia Bartosch, Emma Avetisyan, Daniel Kinderman and Jette Steen Knudsen
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Gregory Jackson: Freie Universität Berlin
Julia Bartosch: Freie Universität Berlin
Emma Avetisyan: Audencia Business School
Daniel Kinderman: University of Delaware
Jette Steen Knudsen: Tufts University

Journal of Business Ethics, 2020, vol. 162, issue 2, No 5, 323-342

Abstract: Abstract The article examines the effects of non-financial disclosure (NFD) on corporate social responsibility (CSR). We conceptualise trade-offs between two ideal types (government regulation and business self-regulation) in relation to CSR. Whereas self-regulation is associated with greater flexibility for businesses to develop best practices, it can also lead to complacency if firms feel no external pressure to engage with CSR. In contrast, government regulation is associated with greater stringency around minimum standards, but can also result in rigidity owing to a ‘one-size-fits-all’ approach. Given these potential trade-offs, we ask how mandatory non-financial disclosure has been shaping CSR practices and examine its potential effectiveness as a regulatory instrument. Our analysis of 24 OECD countries using the Asset4 database shows that firms in countries that require non-financial disclosure adopt significantly more CSR activities. However, we also find that NFD regulation does not lead to lower levels of corporate irresponsibility. Furthermore, our analysis demonstrates that, over time, the variation in CSR activities declines as firms adopt increasingly similar practices. Our study thereby contributes to understanding the impact of government regulation on CSR at firm level. We also discuss the limits of mandatory NFD in addressing regulatory trade-offs between stringency and flexibility in the field of corporate social responsibility.

Keywords: Corporate social responsibility; Corporate social irresponsibility; Mandatory non-financial disclosure; Private governance (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (52)

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DOI: 10.1007/s10551-019-04200-0

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