Do Corporate Social Responsibility Reports Convey Value Relevant Information? Evidence from Report Readability and Tone
Journal of Business Ethics 172 (2):253-274 (2021)
AbstractCorporate social responsibility reporting is becoming mainstream, yet there is limited research on whether and how CSR reports communicate value relevant information. We examine the effects of CSR report readability and tone on future CSR performance and the market reaction around the release of CSR reports. Using a hand-collected dataset of Fortune 500 companies that published stand-alone CSR reports from 2002 to 2014, we find that 1-year-ahead CSR performance is positively associated with the changes in both CSR report readability and tone, suggesting that more readable text and more optimistic tone in a firm’s CSR report are indicative of better future CSR performance. Furthermore, consistent with the view that CSR reports communicate important value relevant information to the market, we document significant market reactions to report readability and tone around the release of CSR reports. Additional analyses suggest that CSR report readability enhances the association between the abnormal returns and the change in CSR report tone, and that the market reaction to CSR report readability is more pronounced for firms with lower analyst following and higher financial opacity. Taken together, our results substantiate the important roles of CSR report readability and tone in communicating future CSR performance and imparting value relevant information to the market.
Added to PP
Historical graph of downloads
References found in this work
Opportunity Platforms and Safety Nets: Corporate Citizenship and Reputational Risk.Charles J. Fombrun, Naomi A. Gardberg & Michael L. Barnett - 2000 - Business and Society Review 105 (1):85-106.
How Sustainability Ratings Might Deter 'Greenwashing': A Closer Look at Ethical Corporate Communication. [REVIEW]Béatrice Parguel, Florence Benoît-Moreau & Fabrice Larceneux - 2011 - Journal of Business Ethics 102 (1):15-28.
Corporate Social Performance and Organizational Attractiveness to Prospective Employees.Daniel W. Greening & Daniel B. Turban - 1996 - Proceedings of the International Association for Business and Society 7:489-500.
SMEs and CSR Theory: Evidence and Implications From an Italian Perspective.Francesco Perrini - 2006 - Journal of Business Ethics 67 (3):305-316.
Does Corporate Social Responsibility Affect Information Asymmetry?Jinhua Cui, Hoje Jo & Haejung Na - 2018 - Journal of Business Ethics 148 (3):549-572.
Similar books and articles
Corporate Social Responsibility Report Narratives and Analyst Forecast Accuracy.Albert Tsang, Suresh Radhakrishnan, Sunay Mutlu & Volkan Muslu - 2019 - Journal of Business Ethics 154 (4):1119-1142.
Can the Written Information to Research Subjects Be Improved?--An Empirical Study. E. Bjørn, P. Rossel & S. Holm - 1999 - Journal of Medical Ethics 25 (3):263-267.
Market Reactions to the First-Time Disclosure of Corporate Social Responsibility Reports: Evidence From China.Kun Tracy Wang & Dejia Li - 2016 - Journal of Business Ethics 138 (4):661-682.
Transparency of Corporate Social Responsibility in Dutch Breweries.Lizet Quaak, Theo Aalbers & John Goedee - 2007 - Journal of Business Ethics 76 (3):293-308.
Social Reporting by Companies Listed on the Alternative Investment Market.Sepideh Parsa & Reza Kouhy - 2008 - Journal of Business Ethics 79 (3):345-360.
An Evaluation of the Quality of Corporate Social Responsibility Reports by Some of the World’s Largest Financial Institutions.S. Prakash Sethi, Terrence F. Martell & Mert Demir - 2017 - Journal of Business Ethics 140 (4):787-805.
Changes in Corporate Responsibility Reporting in Malaysia.Huey Jiuan Yan & Kim Len Yap - 2018 - Proceedings of the International Association for Business and Society 29:40-52.
Corporate Citizenship, Social Responsibility, and Sustainability Reports as “Would-Be” Narratives.Michel Dion - 2017 - Humanistic Management Journal 2 (1):83-102.
The Information Role of Earnings Conference Call Tone: Evidence from Stock Price Crash Risk.Xi Fu, Xiaoxi Wu & Zhifang Zhang - 2019 - Journal of Business Ethics 173 (3):643-660.
Effect of Stakeholders’ Pressure on Transparency of Sustainability Reports Within the GRI Framework.Belen Fernandez-Feijoo, Silvia Romero & Silvia Ruiz - 2014 - Journal of Business Ethics 122 (1):53-63.
Canadian Corporate Social Responsibility Reports: Practitioner Responses to (Selected) Academic Ideas.Richard Hudson - 2007 - Proceedings of the International Association for Business and Society 18:162-167.
Painting with the Same Brush? Surveying Unethical Behavior in the Workplace Using Self-Reports and Observer-Reports.Franziska Zuber & Muel Kaptein - 2014 - Journal of Business Ethics 125 (3):1-32.
Corporate Perspectives on the Development and Use of Sustainability Reports.Cory Searcy & Ruvena Buslovich - 2014 - Journal of Business Ethics 121 (2):1-21.
Characteristic and Analysis of Structural Elements of Corporate Social Responsibility.J. S. Bilonog - 2015 - Granì 18 (5).
Communicative Action and Corporate Annual Reports.Kristi Yuthas, Rodney Rogers & Jesse F. Dillard - 2002 - Journal of Business Ethics 41 (1-2):141 - 157.