Mandatory Corporate Social Responsibility (CSR) Reporting and Financial Reporting Quality: Evidence from a Quasi-Natural Experiment

Wang, Xue; Cao, Feng; Ye, Kangtao

doi:10.1007/s10551-016-3296-2

Cited by 186 publications

(196 citation statements)

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“…To some extent, our results are consistent withWang et al (2016) andChen et al (2018), suggesting that mandatory CSR reporting changes firms' CSR behaviors and that financial performance appears to be an inferior factor in firms' CSR decisions.5 | DISCUSSION AND CONCLUSIONIn this article, we sought to investigate the shifting role of financial performance in CSR reporting in the context of institutional transitions.Our results illustrate that market development weakens and that privatization strengthen the relation between financial performance and firms' propensity for CSR reporting. However, these firms are also under institutional and competitive pressures-the coefficient of GDP per capita is positive and significant, while the coefficient of private is negative and significant.…”

supporting

confidence: 77%

“…The relation between financial performance and the quality of mandatory CSR reporting, which is not significant in this paper, also reflects the complicated buffer role of financial performance. Wang et al (2016) and Chen et al (2018) deem that mandatory CSR reporting changes firms' CSR behaviors. This study may provide a substitute explanation: With homogenous and mandatory pressures, the buffer role of financial performance is weakened, and hence, firms cannot respond flexibly to institutional and market pressures based on their own financial performance.…”

Section: Discussionmentioning

confidence: 99%

“…Some studies show that mandatory CSR reporting has changed firms' CSR behaviors and generates positive externalities, such as environmental improvements (Chen, Hung, & Wang, 2018) and a decrease in earnings management (Wang, Cao, & Ye, 2016 *P < .10, **P < .05, ***P < .01 (two-tailed tests); year and industry dummies are included but not reported here. However, the institutional pressures on the firms that issue mandatory CSR reports are very different-they are homogeneous.…”

Section: Does Financial Performance Play a Buffer Role In Mandatorymentioning

confidence: 99%

“…However, the institutional pressures on the firms that issue mandatory CSR reports are very different-they are homogeneous. Some studies show that mandatory CSR reporting has changed firms' CSR behaviors and generates positive externalities, such as environmental improvements (Chen, Hung, & Wang, 2018) and a decrease in earnings management (Wang, Cao, & Ye, 2016). In this context, does financial performance still play a buffer role in CSR reporting?…”

Section: Does Financial Performance Play a Buffer Role In Mandatorymentioning

confidence: 99%

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Institutional transitions and the role of financial performance in CSR reporting

Sun

Zhao

Cho

2018

Corp Soc Responsibility Env

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While many extant studies focus on the relation between financial performance and corporate social responsibility (CSR) reporting, less attention has been given to the shifting role of financial performance in CSR reporting in a changing institutional environment. The objective of this study is to investigate whether, why, and how institutional transitions affect the role of financial performance in CSR reporting. Using samples of A-share listed companies from 2008 to 2015, we separately examine the impacts of institutional transitions on firms' propensity to issue standalone CSR reports, the quality of voluntary CSR reports, and the quality of mandatory CSR reports. We find that financial performance buffers against external pressures brought by institutional transitions rather than only serving as a slack resource. By highlighting the buffer role of financial performance, our study provides deeper insights on the relation between financial performance and CSR reporting and contributes to extant institutional research on CSR reporting.

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supporting

confidence: 77%

Section: Discussionmentioning

confidence: 99%

Section: Does Financial Performance Play a Buffer Role In Mandatorymentioning

confidence: 99%

Section: Does Financial Performance Play a Buffer Role In Mandatorymentioning

confidence: 99%

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Institutional transitions and the role of financial performance in CSR reporting

Sun

Zhao

Cho

2018

Corp Soc Responsibility Env

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“…Shareholder-related CSR activities include sound financial structures, transparent information disclosures, positive innovations, and high-level stock returns. The sound employment of funds is the basic rule for a firm to meet its shareholders' interests, since unsafe, unreasonable financial structure directly induces shareholders' financial losses, such as high-level debts [59] and excessive earnings management [60]. In addition, in order to create high-level of return for shareholders, companies need to continuously engage in product and/or technological innovations.…”

Section: Shareholder-related Csr and Organizational Resiliencementioning

confidence: 99%

What Dimension of CSR Matters to Organizational Resilience? Evidence from China

Wei

et al. 2019

Sustainability

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Prior work on corporate social responsibility (CSR) has focused mainly on its effects on the short-term performance of firms from developed countries. In this article, we shed light on its effects on organizational resilience, which is defined as the firm's ability to positively cope with environmental turbulence, and operationalized by long-term, improved sales growth and financial volatility. In line with this operationalization, we adopt CSR's performance-enhancing and performance-insuring mechanisms to disentangle the relationship between CSR and organizational resilience. Furthermore, we divide CSR into five dimensions, namely shareholder, employee, business, society and environment-related CSR, and respectively examine their impacts on organizational resilience. The empirical study on a large sample of public firms in China from 2010 to 2017 shows that CSR as a whole significantly increases the firms' long-term growth and reduces their financial volatility. As for the five specific dimensions, they all have a significant negative effect on financial volatility, and the employee, business, environment-related CSR are positively associated with long-term growth. Yet, the empirical results did not indicate significant associations between shareholder and society-related CSR and firms' long-term growth. This study first explores the impacts of CSR's different dimensions on organizational resilience. Also, we contribute to enriching the literature on CSR by examining the long-term performance-insuring effect of CSR with a quantitative analysis of emerging markets. Finally, we discuss some important managerial implications, as well as promising directions for future research.2 of 23 conditions, unestablished industrial structures, and the intense, chaotic competition brought by rapid development, Chinese enterprises are likely to face more changes and uncertainties in their business environment, which makes them more vulnerable than those from developed countries. Second, as the concern about CSR in China comes far later than that in developed countries, the effect of Chinese CSR on organizational resilience may be different. The Kinder, Lydenberg, and Domini (KLD) database, for example, began to internationally provide ratings of corporate social performance in 1991. While, the first official research report on Chinese CSR was released in 2009, and then Chinese listed companies were required to issue their annual CSR reports. In line with this, we aim at providing some new insights of CSR and its effects on organizational resilience with evidence from emerging markets.In doing so, we first clarify the conceptualization and operationalization of organizational resilience. Defined as the ability of an organization to respond positively to environmental changes, organizational resilience is a latent, unobservable construct usually measured by its outcomes [6]. The most desired outcome of organizational resilience recognized in extant literature is a firm's persistent superior performance in the changing business en...

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The mediating mechanism of earnings management on the relationship between life cycle and financial reporting quality: Finding from MRA and fsQCA

Khương

Anh

2022

Bus Strat Dev

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The study examined the relationship between organization life cycle (OLC) and financial reporting quality (FRQ) in the Vietnamese context with the mediating role of earnings management (EM). We used estimation OLS, fixed effects model, and other robustness tests to validate the results on a sample of 408 Vietnamese listed companies over the period 2010–2017. In addition, we compare the regression results with a recently established approach is, fuzzy‐set qualitative comparative analysis (fsQCA). The multiple regression analysis results suggest that firms with low profits or poor financial performance have low‐quality financial statements. On the other hand, when firms mature or have significant retained earnings, the quality of financial information improves and peaks. Besides, throughout the OLC, real earnings management behaviors are less likely to be used than accruals earnings management. Finally, because of the mediating effect of EM, the influence of OLC on FRQ is increased. The fsQCA findings indicate complex configurations between OLC, EM and other controls factors to the outcome of FRQ. This research contributes empirical evidence to the scientific literature on accounting and corporate governance. Next, the main contribution of our study is the examination of mediating role of EM on OLC‐FRQ association through both regression analysis and the fsQCA approach. Additionally, we conducted this study in Vietnam, where the legal framework in protecting the investors is still not complete; this will significantly contribute to the literature overview of OLC and FRQ.

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Mandatory Corporate Social Responsibility (CSR) Reporting and Financial Reporting Quality: Evidence from a Quasi-Natural Experiment

Cited by 186 publications

References 50 publications

Institutional transitions and the role of financial performance in CSR reporting

Institutional transitions and the role of financial performance in CSR reporting

What Dimension of CSR Matters to Organizational Resilience? Evidence from China

The mediating mechanism of earnings management on the relationship between life cycle and financial reporting quality: Finding from MRA and fsQCA

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