Does CSR Reporting Destroy Firm Value? Empirical Evidence on GRI-aligned European Firms

Corporate Social Responsibility: Country-Level Predispositions and the Consequences of Choosing a Level of Disclosure

“…Given that we know from the correlation statistics in Table 2 that some of the country variables we wish to study are highly correlated, we cannot include these variables in the same model without testing for multicollinearity. 8 The fact that about a third of the firms in our sample use GRI may seem low, but note that Gietl et al (2012), using a sample of Eurostoxx 600 firms over the same time period (2007)(2008)(2009)(2010) The directions of these associations are all consistent with the correlation table results (Table 2). Our results suggest that firms disclose higher levels of GRI information in countries with better investor protection (less anti-self-dealing), a greater ability to choose your own government, greater government efficiency, better regulatory quality, more press freedom, and less government commitment to environmental policy and law.…”

“…Dhaliwal et al (2012) find that analyst forecast accuracy is better for firms that publish a standalone CSR report. Schadéwitz and Niskala (2010), De Klerk and De Villiers (2012), and De Klerk et al (2015 provide evidence in support of a positive relationship between CSR disclosure and share prices, whereas Gietl et al (2012) report a negative correlation with market values. Prior research on the value relevance of the environmental aspect of CSR disclosure also provides inconsistent results, reporting a negative correlation (Hassel et al 2005), no correlation for non-financial CSR disclosure (Moneva and Cuellar 2009), or a positive correlation (Clarkson et al 2013, Plumlee et al 2010).…”

Corporate social responsibility, country-level predispositions, and the consequences of choosing a level of disclosure

“…This combination is not helpful, as the relationship between these two different aspects and any economic consequences are potentially in opposite directions. The potentially confounding disclosure measure used in Gietl et al (2012) could explain their main finding, namely that disclosure at the GRI A level, validated by a third party, is associated with a lower Tobin"s Q. The study reports that the relation with the similarly defined GRI B and GRI C levels of validated disclosure is not significantly related to Tobin"s Q.…”

“…The only multi-country study we are aware of that use a GRI-based disclosure measure, assesses firm value via Tobin"s Q (Gietl et al 2012). However, this study has two major shortcomings, namely that it ignores country differences (and only include firm level control variables), and that the CSR disclosure measure used in their study considers a combination of the GRI level of disclosure and whether the GRI level is validated by a third party.…”

“…However, the prior research does not consistently report a positive relationship between CSR and economic outcomes. For example, Hassel, Nilsson, and Nyquist (2005) report a negative correlation with share prices, and Gietl, Göttsche, Habisch, Roloff and Schauer (2012) find a negative correlation with Tobin"s Q. These counterintuitive findings suggest a need for further study to gain a better understanding of the conditions where CSR disclosures are linked with positive economic performance, as well as the characteristics of an appropriate measure to proxy CSR disclosures.…”