Market Reactions to the First-Time Disclosure of Corporate Social Responsibility Reports: Evidence from China
- 2k Downloads
We examine whether investors value the disclosure of first-time standalone corporate social responsibility (CSR) reports, and whether market valuations differ between government-controlled and privately controlled firms. Using a matched sample of Chinese publicly listed firms, we find that CSR initiators have higher market valuations than matched CSR non-initiators, and CSR initiators controlled by the central and local governments have lower market valuations than CSR non-initiators and CSR initiators controlled by private shareholders. Additional analyses demonstrate that CSR initiators with high CSR reporting quality and perceived credibility have higher market valuations than CSR initiators with low CSR reporting quality and medium or low perceived credibility of CSR reporting. We do not find convincing evidence that CSR mandate, litigation risk, and prior stock returns affect market reactions to CSR reporting. Overall, we find that the market values standalone CSR reports, and that CSR reporting quality and perceived credibility are important factors in market valuation.
KeywordsCorporate social responsibility Performance Market value Ownership Government
JEL ClassificationG14 G32 M14 M41 P31
We thank Albert Tsang, Mark Wilson, Greg Shailer, two anonymous reviewers, and workshop participants at the Australian National University and the Journal of Business Ethics Special Issue Conference on Business Ethics in Greater China for helpful comments. Kun Tracy Wang acknowledges financial support from the College of Business and Economics at the Australian National University (R62860 60B4).
- Ballou, B., Heitger, D. L., & Landes, C. E. (2006). The future of corporate sustainability reporting: A rapidly growing assurance opportunity. Journal of Accountancy, 202, 65–74.Google Scholar
- Blay, A. D., & Geiger, M. A. (2001). Market expectations for first-time going-concern recipients. Journal of Accounting, Auditing & Finance, 16, 209–226.Google Scholar
- Campbell, J. Y., Lo, A. W., & MacKinlay, A. C. (1997). The econometrics of financial markets. Princeton, New Jersey: Princeton University Press.Google Scholar
- China WTO Tribune. (2010). Research on corporate social responsiblity reporting in China 2010. China WTO Tribune, http://www.csrreport.cn.
- Clarkson, M. E. (1995). A stakeholder framework for analyzing and evaluating corporate social performance. Academy of Management Review, 20, 92–117.Google Scholar
- Clarkson, P., Fang, X., Li, Y., Richardson, G.D., (2010). The relevance of environmental disclosures for investors and other stakeholder groups: Are such disclosures incrementally informative?, Working Paper, University of Queensland.Google Scholar
- Lin, L.-W. (2010). Corporate social responsibility in China: Window dressing or structural change. Berkeley Journal of International Law, 28, 64–100.Google Scholar
- Shleifer, A. (1998). State versus private ownership. Working Paper, National Bureau of Economic Research.Google Scholar
- Wang, K., & Shailer, G. (2012). Government control and performance criteria for Chinese listed companies, Paper presented at the Accounting and Finance Association of Australia and New Zealand Conference (AFAANZ 2012). Australia: Melbourne.Google Scholar
- Zhang, W., Li, D. (2012). Zhongguo A-gu shangshi gongsi shehui zeren baogao yanjiu 2012 (The 2012 CSR research report for Chinese listed corporations). China Association for Public Companies, and Securities Times, http://csr.stcn.com/common/csr/pdf/pdf2.pdf.
- Zheng, Y. L. (2009). It’s not what is on paper, but what is in practice: China’s new labor contract law and the enforcement problem. Washington University Global Studies Law Review, 8, 595–617.Google Scholar