Are CSR Disclosures Value Relevant? Cross-Country Evidence

Abstract

Using proprietary data that rate corporate social responsibility (CSR) disclosures of firms in 21 countries, this study examines how the strength of nation-level institutions affects the extent of CSR disclosures. We then examine the valuation implications of CSR disclosures and consider how the relation between CSR disclosures and firm value varies across countries. In contrast to prior studies, we separate CSR disclosures into an expected and unexpected portion where the unexpected portion is a proxy for the incremental information contained in CSR disclosures. We observe a positive relation between unexpected CSR disclosure and firm value measured by Tobin's Q. We also find that, while countries with strong nation-level institutions promote more CSR disclosures, the valuation of a unit increase in unexpected CSR disclosures is higher when nation-level institutions are weak.

Exploring factors relating to extinction disclosures: What motivates companies to report on biodiversity and species protection?

“…Overall, the findings of these additional analyses make us fairly confident that our results do not appear to be driven by any potential endogenous sample selection problems. In addition, we followed Cahan, De Villiers, Jeter, Naiker, & Van Staden, and run a change analysis as an additional analysis to provide evidence of a casual relationship and in general, our results are in line with our results in the original model and go in the same directions.…”

Does context matter for sustainability disclosure? Institutional factors in Southeast Asia

“…It also emphasises the importance of examining the nature of institutional pressures to understand how their configurations of in different countries could shape non‐market practise such as SD (Hartmann & Uhlenbruck, ; Jamali & Carroll, ). Finally and in line with the above argument, our study measures each of the three institutional influences as denoted by Scott (); regulative, normative, and cultural‐cognitive, and thereby addressed criticisms in extant studies of focusing on a single institutional influence (see Adelopo & Moure, ; Cahan, Villiers, Jeter, Naiker, & Staden, ; Gallén & Peraita, ; Kılıç, Iuar, & Karaman, ), as well as the lack of theoretical justification in identifying institutional influences derived upon founded upon neo‐institutional theory (Martínez‐Ferrero & García‐Sánchez, ). By adopting Scott's () arguments to consider all the three institutional influences in tandem to generate a comprehensive understanding of institutions which could engender SD , we provide an alternative framework to identify external influencing factors, and overcomes the narrow operationalisation of institutions (Abdelnour, Hasselbladh, & Kallinikos, ).…”

Carbon disclosure, emission intensity and cost of equity capital: multi‐country evidence

“…() did not distinguish between the decision to disclose and the extent of disclosure. Indeed, some studies have alluded to the quality of environmental disclosure and how it influences COC (Reverte, ; Plumlee et al ., ; Cahan et al ., ). Accordingly, we hypothesise that high quality and extensive carbon disclosure will affect investors’ perception of COC that is associated with a firm's carbon emissions.…”

“…Cahan et al . () split CSR disclosure into two portions (expected and unexpected portions), with the unexpected portion representing the incremental information. Their findings provide evidence of a positive association between unexpected CSR disclosure and firm value.…”