When Corporate Social Responsibility Causes Tone Inflation in Earnings Press Releases: Evidence from the Oil and Gas Industry

  • Özgür Arslan-Ayaydin
  • James ThewissenEmail author


This study focuses on the impact of corporate social responsibility (CSR) on managers’ reporting behavior of qualitative information in the oil and gas industry. Firms in the oil and gas industry have garnered enormous attention from their stakeholders, who place increasing expectations on them to engage in socially responsible investments. However, there is ample evidence that CSR investments addressing broader stakeholder concerns do not necessarily lead to maximization of shareholders’ wealth. Based on 1700 earnings press releases (EPR) issued by the universe of US firms in the oil and gas industry between 2005 and 2014, we show that managers of more socially responsible firms opportunistically inflate the tone of their qualitative disclosures to signal their shareholders that CSR investments are not executed at the expense of their wealth. We also show that the tone of the EPR of socially responsible firms in the oil and gas industry contains less incremental information value to predict future firm performance, which lends considerable support to our assumption that optimistic tone in EPR is used for covering up the poorer accounting performance.


Corporate social responsibility Oil and gas industry Impression management Future firm performance 


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Copyright information

© Springer International Publishing Switzerland 2016

Authors and Affiliations

  1. 1.University of Illinois at ChicagoChicagoUSA
  2. 2.Accounting, Finance and InsuranceKatholieke Universiteit LeuvenAntwerpBelgium

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