Does corporate social responsibility reduce information asymmetry? Empirical evidence from Australia

Nguyen, Van Ha; Agbola, Frank W.; Choi, Bobae

doi:10.1177/0312896218797163

Cited by 44 publications

(89 citation statements)

References 102 publications

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“…Information asymmetry changes human behavior toward the adoption of technology, making financial payments, selection of products and services and many more. A similar trend is also discussed by Rhodes (2010) and Nguyen et al (2019) which supports the argument that quality of information would lead to a proper and systematic investment of CSR funds. It is also hypothesized that lack of clarity of information causes a delay in decisions, causes inappropriate usage of funds and moreover leads to decay in the efficiency of the desired outcome.…”

Section: Literature Reviewsupporting

confidence: 77%

Social and financial aid for disaster relief operations using CSR and crowdfunding

Behl

Dutta

2019

BIJ

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Purpose The purpose of this paper is to understand the interlinkages between corporate social responsibility (CSR) and crowdfunding in the context of disaster relief operations (DRO). It intends to explore how information quality moderates the relationship of CSR and crowdfunding to achieve financial and social stability. The study also controls variables such as type of disaster, size of the firm and sector to which the firms belong while drawing implications. Design/methodology/approach The study collects empirical data in an Indian context through a structured questionnaire. The respondents belong to organizations which made a financial contribution toward DRO during the past decade (2008–2018). The sample size for data analysis is 232 responses belonging to different industries like plastic, chemical, textile and apparel, automotive parts and electronics, and construction. The study employs partial least squares structural equation modeling for testing the hypothesis. Findings Results indicate a positive effect of CSR activities on donation-based crowdfunding to achieve financial and social normalcy in a DRO. CSR can thus be used as an alternate way to support DRO. Results also reveal that quality of information positively impacts the relationship between crowdfunding and social aid as well as financial aid offered to the victims of the disasters. It is further observed that the type of disaster accounts for the inflow and frequency of funds made by companies as a part of their CSR activities. Research limitations/implications The study restricts its analysis to CSR contributions made by Indian firms for DRO in an Indian context. While the study is centered in an Indian context, it holds strong implications by offering guidelines and framework for integrating funds of the government, CSR contributions of companies and donations made by citizens. The outcome also provokes thoughts on testing the results with multiple disasters across the globe in order to validate the findings and possibly extend them. Originality/value The approach of the study holds a unique slot in understanding concepts relating to CSR, crowdfunding and information science literature in the context of DRO. The study offers unique contribution in making the readers aware how CSR funds, when guided through a donation-based crowdfunding platform can help achieve social and financial aid for the victims of natural disaster.

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Section: Literature Reviewsupporting

confidence: 77%

Social and financial aid for disaster relief operations using CSR and crowdfunding

Behl

Dutta

2019

BIJ

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“…Using a sample of Korean firms, Choi et al (2010) document a positive relationship between CSR and corporate financial performance. Nguyen et al (2018), studying the effect of CSR on information asymmetry using a sample of Australian firms and find that CSR mitigates information asymmetry significantly.…”

Section: Discussionmentioning

confidence: 99%

The effect of corporate social responsibility (CSR) on shareholder value: evidence from the 9/11 terrorist attack

Ongsakul

Jiraporn²,

Tong³

et al. 2020

ARJ

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Purpose This paper aims to explore the effect of corporate social responsibility (CSR) on shareholder value using the stock market reactions to a terrorist attack. This paper exploits the September 11 terrorist attack as an unanticipated exogenous shock that reduced shareholder wealth suddenly and unexpectedly. Based on the risk-mitigation hypothesis, the argument is that more socially responsible firms should suffer less negative market reactions. Design/methodology/approach This paper uses the standard event study methodology to estimate the stock market reactions to the 9/11 terrorist attack. Then, the study executes a cross-section analysis to determine whether CSR offers any protection in the presence of a sudden negative shock. Additional analysis includes propensity score matching, instrumental-variable analysis and using Oster’s (2019) method for testing coefficient stability. Findings The results show that the negative stock market reactions to the shock are significantly alleviated for firms with strong social responsibility. A rise in CSR by one standard deviation improves the market reactions by 22.56% of the average decline. This is consistent with the prediction of the risk mitigation hypothesis, where CSR spawns moral capital or goodwill that functions as an insurance-like defense in case of an adverse event. Research limitations/implications The study focuses on short-term market reactions because this method is more likely to show a causal effect. Future research may investigate long-term effects. Originality/value While prior research has investigated the effect of CSR on firm value, it has been challenging to establish causality. The approach is more likely to show causality as it is based on a sudden and unanticipated negative shock. This paper also uses several methods to reduce endogeneity, making it more likely that the results show causality, rather than merely an association.

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“…Many studies examine a range of CFP measures (operational, accounting and market) for their association with the ESGP measure of interest (e.g., all the meta‐analytical studies reviewed in this article include multiple CFP measures). From a disclosure perspective, the literature shows evidence of ESGP as reducing informational asymmetry between the firm and key stakeholders (Fombrun and Shanley, 1990; Aghion and Holden, 2011; Nguyen et al , 2018), as well as being directed to a more specific outcome, for example ESG disclosure and dividend payments (Cheung et al , 2018; Ni and Zhang, 2019). Although ESG disclosures may be a proxy for actual ESGP (Beck et al , 2018), pressure from stakeholder groups in and outside the firm shape financial decisions, with firm decision‐making taking into account how disclosure may favourably address stakeholder concerns (Coleman et al , 2010), raising risks of green‐ or white‐washing.…”

Section: Alternative Accountsmentioning

confidence: 99%

Environmental, social and governance (ESG) activity and firm performance: a review and consolidation

Huang

2019

Accounting & Finance

260

109

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Interest in why firms conduct environmental, social and governance (ESG) activity is longstanding and increasing. Our understanding, however, remains fragmented with alternative accounts that seek to explain the relationship between ESG performance (ESGP) and corporate financial performance (CFP). This paper reviews alternative accounts for the relationship and finds that the weight of empirical evidence shows a positive, statistically significant but economically modest ESGP–CFP link, consistent with theoretical expectations. This economically modest relationship suggests ESG activity is unlikely to be primarily motivated by narrow measures of CFP. Further scholarship viewing ESG as part of overall firm activity would be constructive.

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Does corporate social responsibility reduce information asymmetry? Empirical evidence from Australia

Cited by 44 publications

References 102 publications

Social and financial aid for disaster relief operations using CSR and crowdfunding

Social and financial aid for disaster relief operations using CSR and crowdfunding

The effect of corporate social responsibility (CSR) on shareholder value: evidence from the 9/11 terrorist attack

Environmental, social and governance (ESG) activity and firm performance: a review and consolidation

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