Stakeholder engagement (SE) is recognized as a key process to align firm and stakeholder interests and to identify material content for sustainability reporting (SR). Research on SE quality in an SR context has, however, been largely neglected. This paper investigates the current state and quality of SE within SR within a sample of 55 sustainability reports issued by European firms that used the new Global Reporting Initiative's G4 Guidelines. It will focus on why, how, and with whom firms are involved in SE based on an SE disclosures analysis framework and investigate the extent to which reporting maturity influences the state of SE disclosures and SE quality. While SE seems common practice, many firms are failing to provide full disclosure on how stakeholders have been engaged in defining report content. Less than half of the studied reports contained clear disclosures on how firms had responded to stakeholder concerns. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment

Many global challenges cannot be addressed by one single actor alone. Achieving sustainability requires governance by state and non-state market actors to jointly realise public values and corporate goals. As a form of public–private governance, voluntary standards involving governments, non-governmental organisations and companies have gained much traction in recent years and have been in the limelight of public authorities and policymakers. From a firm perspective, sustainability standards can be a way to demonstrate that they engage in corporate social responsibility (CSR) in a credible way. To capitalise on their CSR activities, firms need to ensure their stakeholders are able to recognise and assess their CSR quality. However, because the relative observability of CSR is low and since CSR is a contested concept, information asymmetries in firm–stakeholder relationships arise. Adopting CSR standards and using these as signalling devices is a strategy for firms to reduce these information asymmetries, by revealing their true CSR quality. Against this background, this article investigates the voluntary ISO 26000 standard for social responsibility as a form of public-private governance and contends that, despite its objectives, this standard suffers from severe signalling problems. Applying signalling theory to the ISO 26000 standard, this article takes a critical stance towards this standard and argues that firms adhering to this standard may actually emit signals that compromise rather than enhance stakeholders’ ability to identify and interpret firms’ underlying CSR quality. Consequently, the article discusses the findings in the context of public-private governance, suggests a specification of signalling theory and identifies avenues for future research.

The relationship between corporate social responsibility (CSR) and earnings management (EM) has only emerged recently as a topic of academic research. Literature suggests that firms may strategically use CSR to compensate for EM or to deflect stakeholder attention from EM. Studies on the EM-CSR relationships have so far yielded contradictory results. Additionally, research has largely neglected the influence of industry on this relationship. As scholars of both CSR and EM have suggested that industry effects may play a role, this study examines the relationship between the level of CSR performance of companies, the extent of EM firms are practising and the effect of industry (high vs. low environmental impact as a proxy for experienced stakeholder pressure). Using the Modified Jones model, discretionary accruals are estimated and used as a proxy for EM (accrual-based EM). Firm CSR performance is captured by using the Kinder, Lydenberg, Domino (KLD) database. Using a sample consisting of 5494 observations of US listed companies for the fiscal years 2003 until 2009, this study (1) finds no relationship between EM and CSR and (2) finds that the firms in the category high environmental impact do not seem to practice EM but do display higher levels of CSR performance. Finally, the article reflects critically on the concepts used in studying the EM-CSR relationship and its contribution to the literature.