Foreground or background my social responsibility: impact of the trade war on the readability of corporate social responsibility disclosures

Ruixi Long () and Shuyang Jia ()
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Ruixi Long: Tianjin University
Shuyang Jia: Xi’an Jiaotong University

Information Technology and Management, 2023, vol. 24, issue 1, No 5, 79-97

Abstract: Abstract This study empirically investigates the impact of the U.S.-China trade war on corporate social responsibility (CSR) disclosure readability. We first propose a measure of CSR disclosure readability with the latest word embedding model of Word2Vec. Using the U.S.-China trade war as an exogenous shock, we conduct a difference-in-differences analysis and find that firms release more readable CSR disclosures in response to the trade war. We interpret this finding to indicate that CSR disclosure can be a strategic tool to enhance the firms’ reputations when they suffer a negative shock. Moreover, such an effect is more pronounced for firms with tighter internal governance or external supervision. Our results are robust to confining our sample with a Coarsened Exact Matching algorithm and a battery of robust checks. Finally, we find that the trade war leads to increased charitable donations, indicating that our CSR readability measure is more likely to reflect actual CSR activities.

Keywords: Trade war; Readability; Corporate social responsibility; Reputation theory; Textual analysis (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s10799-022-00384-6

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