Beneficial or Detrimental? The Relationship Between Mandatory CSR Disclosure and Firm Performance

Abstract

Using a sample of listed Chinese companies for the period 2003–2015, this study investigates the relationship between mandatory CSR disclosure and financial performance. To better clarify the mechanism between mandatory CSR disclosure and financial performance, this paper employed a dual model of financial performance, that is, short-term and long-term financial performance. The results suggest that mandatory CSR disclosure has a negative impact on short-term performance, but a positive impact on long-term performance. Moreover, this study found that corporate environmental investments mediate the relationship between mandatory CSR disclosure and short-term firm performance; the community-related, employee-related, and environmental CSR strategies mediate the relationship between mandatory CSR disclosure and long-term firm performance. The implications and future research directions are discussed.