Nothing but the Truth? Private Information and Reporting on Corporate Social Responsibility
Jean-Etienne de Bettignies,
Hua Fang Liu and
David Robinson
No 28159, NBER Working Papers from National Bureau of Economic Research, Inc
Abstract:
We develop and test a model in which firms can make non-verifiable statements about their CSR engagement, and hence may have incentives to mislead markets with exaggerated CSR claims. Firms may privately receive a signal correlated with their CSR engagement - e.g. a measure of greenhouse gas emissions - and have discretion over whether to publicly disclose it. Based on whether a signal is disclosed to them, and on what the signal is, markets form beliefs about the firm's CSR activities and the truthfulness of its claims. The model illustrates the disciplining effect of ex post private signal availability on firms' ex ante reporting on their CSR engagement. We test the model using a difference-in-differences approach that exploits special features of the introduction of the UK Companies Act of 2013, and find evidence supporting the model's predictions.
JEL-codes: D62 J31 M14 M52 Q58 (search for similar items in EconPapers)
Date: 2020-12
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
Note: CF PR
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Citations: View citations in EconPapers (2)
Published as Jean-Etienne De Bettignies & Huafang Liu & David Robinson, 2024. "Nothing but the Truth? Private Information and Reporting on Corporate Social Responsibility," Academy of Management Proceedings, vol 2024(1).
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