Corporate social responsibility performance and information asymmetry: The moderating role of analyst coverage

Naqvi, Syeda Khiraza; Shahzad, Faisal; Rehman, Ijaz Ur; Qureshi, Fiza; Laique, Usama

doi:10.1002/csr.2114

Cited by 50 publications

(30 citation statements)

References 91 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…By adopting CSPR, firms communicate about the unobservable quality (i.e., concern for environmental and social issues) to the stakeholders to gain market premium. Naqvi et al (2021) argued firms reporting sustainability practices confront less information asymmetry. Thus, CSPR can show their unobservable quality to the stakeholders in the market to gain the potential benefit from the stakeholders (Ramchander et al, 2012).…”

Section: Theoretical Perspectivementioning

confidence: 99%

Revisiting the influence of corporate sustainability practices on corporate financial performance: An evidence from the global energy sector

2022

View full text Add to dashboard Cite

The purpose of this study is to theoretically and empirically extend the debate of the curvilinear linkage between corporate sustainability performance and its reporting practices (CSPR) and corporate financial performance (CFP) over its linearity assumption. The study focused on the financial and non‐financial metrics of the top global energy firms from 2006 to 2018 to accomplish this objective. It employed an estimated generalized least square method on the balanced panel of 3211 firm‐year observations. The findings assert the existence of a curvilinear relationship by spurning the linearity assumption. Further, results revealed a significant inverted U‐shaped relationship between CSPR and CFP. In addition to this, the investigation reveals that this relationship exists with the environmental and social attributes of CSPR. While the governance attribute was initially insignificant, however, it also exhibits a significant inverted‐U relationship after interacting with earnings. As a result, it adds to the existing literature by identifying earnings as a significant moderator in explaining the curvilinear relationship between CSPR and CFP. The inverted U‐shaped relationship may assist top management in developing a sustainable social and environmental policy based on a reactive strategy and help in formulating strategies to balance the value‐cost trade‐off for sustainable development.

show abstract

Section: Theoretical Perspectivementioning

confidence: 99%

Revisiting the influence of corporate sustainability practices on corporate financial performance: An evidence from the global energy sector

2022

View full text Add to dashboard Cite

show abstract

“…Prior research often views financial analysts as important information intermediaries and outside monitors of firms' management (Healy & Palepu, 2001; Jensen & Meckling, 1976; Jo & Harjoto, 2014; Naqvi et al, 2021). Analysts can maintain a high degree of attention on companies and have certain ways to obtain private information.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Analyst coverage and corporate social responsibility decoupling: Evidence from China

Zhang

2021

Corp Soc Responsibility Env

View full text Add to dashboard Cite

This study investigates the impact of analyst coverage on corporate social responsibility (CSR) decoupling using a sample of listed firms in China for 2010–2019. Results reveal that analyst coverage decreases CSR decoupling, and that the negative association is more pronounced for non‐state‐owned firms and for firms with high information asymmetry. The baseline results remain consistent after application of several robustness and endogeneity tests, including two‐stage least squares (2SLS) and Heckman two‐stage analysis. The results extend the literature on analyst coverage and scarce studies on determinants of CSR decoupling. Practitioners may alleviate CSR decoupling by properly using the monitoring role of financial analysts in corporate governance.

show abstract

“…In the research on enterprises from the theory of principal–agent, analysts are regarded as an information intermediary between firms and external stakeholders (Brauer and Wiersema, 2018). As highly trained security experts, analysts can conduct professional analysis of corporate decisions and activities based on information of enterprises they cover and provide analysis reports to the public (Naqvi et al , 2021).…”

Section: Literature Reviewmentioning

confidence: 99%

Government subsidy, asymmetric information and green innovation

Liu

Wang

2021

View full text Add to dashboard Cite

PurposeThe presence of asymmetric information exists between firms and the government about the firms' green innovation; this may lead to the firm's moral hazard problem of misusing the government subsidy on the green innovation. Such a problem is not fully considered by the existing literature. The purpose of this study is to explore how government subsidy affects green innovation when the information of firms' innovation cannot be completed observed, and figure out the mechanisms that can alleviate the negative impact of information asymmetry, which helps to explain the factors that motivate the firms to actively engage into the green innovation with the government subsidy.Design/methodology/approachIn a theoretical model under imperfect information in which the firm's activity on green innovation may not be fully observed, the firm could be either altruistic or not; an altruistic firm has stronger incentive to engage into corporate social responsibility (CSR) activities such as green innovation. With the presence of asymmetric information, the authors analyze the possibility of a firm's moral hazard and try to find out the condition on the information quality that can avoid such problem. To examine the results of theoretical analysis, the authors use the data of Chinese listed companies in a corresponding empirical analysis. On the basis of both theoretical and empirical the authors try to figure out the effect of the government subsidy on the green innovation by enterprise and the role of firm's characteristics of social responsibility and information quality in the green innovation with the government subsidy.FindingsThe results show that the government subsidy can promote the firm's green innovation, especially for those that are more socially responsible. The asymmetric information, however, leads to inefficiency on the green innovation. This is because that the low-quality information about the firm's behavior raises the possibility of a moral hazard. Moreover, the analyst coverage could be an efficient way to improve the quality of information, alleviating the moral hazard problem of the firm's green innovation. The main contribution is to fill the gap in the study of the government subsidy on green innovation under asymmetric information and to provide the mechanism to improve the efficiency of the subsidy to motivate green innovation by enterprise.Practical implicationsA crucial implication to policymakers is to complete and improve the system of information in the market, which can form an efficient incentive compatibility between the enterprises and the public. Such incentive compatibility can attract the enterprises to better use the government subsidy into green innovation and receive a long-run return from the public's positive feedback for their contribution on the social good.Originality/valueExisting studies are concerned about antecedents of green innovation do not completely focus on the relationship between government subsidy and green innovation. The present paper considers that information asymmetry between the government and firms may affect the impact of government subsidy on the firms' green innovation. This conjecture is studied by the theoretical model and verified by an empirical analysis using the data of Chinese listed companies. Additionally, the empirical analysis explores the moderating effect of CSR characteristics of firms, and the analyst coverage can positively affect the promotion of the government subsidy on the firms' green innovation.

show abstract

Corporate social responsibility performance and information asymmetry: The moderating role of analyst coverage

Cited by 50 publications

References 91 publications

Revisiting the influence of corporate sustainability practices on corporate financial performance: An evidence from the global energy sector

Revisiting the influence of corporate sustainability practices on corporate financial performance: An evidence from the global energy sector

Analyst coverage and corporate social responsibility decoupling: Evidence from China

Government subsidy, asymmetric information and green innovation

Contact Info

Product

Resources

About