Corporate Social Responsibility Disclosures and Investor Judgments in Difficult Times: The Role of Ethical Culture and Assurance
Andrew C. Stuart (),
Jean C. Bedard () and
Cynthia E. Clark ()
Additional contact information
Andrew C. Stuart: Suffolk University
Jean C. Bedard: Bentley University
Cynthia E. Clark: Bentley University
Journal of Business Ethics, 2021, vol. 171, issue 3, No 8, 565-582
Abstract:
Abstract We conduct an experiment with 459 nonprofessional investors to examine whether they evaluate companies differently based on management’s stated purpose for undertaking corporate social responsibility (CSR) activities in the presence versus absence of a company-specific negative event. Specifically, we vary whether or not management intends to achieve financial returns from CSR activities in addition to promoting social good. We address investors’ decision processes by investigating whether their judgments are mediated by perceptions of future cash flows and/or the underlying ethical culture of the company. Results show that absent a negative event, investment judgments are stronger when CSR activities are intended to achieve financial returns, through expectations of higher future cash flows. However, when a negative event occurs, we find a moderating effect of independent assurance of CSR disclosures. When disclosures are not assured, investors prefer CSR undertaken only for societal benefit, mediated by perceptions of a stronger ethical culture. However, when disclosures are assured, ethical culture is viewed similarly regardless of management’s intention to achieve financial returns from CSR activities. This suggests that management’s willingness to obtain independent assurance on disclosures is viewed as a positive ethical signal. Thus, assurance complements disclosure of CSR activities by contributing to protection against the impact of negative events.
Keywords: Investor judgments; Ethics; Negative event; Corporate social responsibility; CSR disclosure; CSR assurance (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)
Downloads: (external link)
http://link.springer.com/10.1007/s10551-020-04454-z Abstract (text/html)
Access to full text is restricted to subscribers.
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:kap:jbuset:v:171:y:2021:i:3:d:10.1007_s10551-020-04454-z
Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10551/PS2
DOI: 10.1007/s10551-020-04454-z
Access Statistics for this article
Journal of Business Ethics is currently edited by Michelle Greenwood and R. Edward Freeman
More articles in Journal of Business Ethics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().