Corporate Social Responsibility Disclosure and Financial Performance: The Mediating Role of Financial Statement Comparability

Cao Thi Mien Thuy,Nguyen Thi Canh,Nguyen Thanh Liem,Nguyen Vinh Khuong

doi:10.3390/su131810077

Abstract

The aim of this study is to investigate the relationship between corporate social responsibility (CSR) disclosure and financial performance with the consideration of the mediating role of financial statement comparability (FSC) for a sample of Vietnamese listed firms. We used content analysis of the information related to the GRI Standards on annual reports in order to construct CSR disclosure score. We used a dataset of 1125 firm-year observations, covering 225 firms listed on Vietnam’s stock market in the period 2014–2018. Applying OLS and GMM estimation methods, Sobel test, and using different proxies of the mediator variable to increase the robustness, we obtained two remarkable conclusions. First, CSR disclosure has a positive impact on the financial performance of listed companies in Vietnam. Second, there is a complementary mediation effect of financial statement comparability in the above relationship. Our results suggest that it is necessary to develop a legal framework for the practice and disclosure of CSR as well as to apply the international accounting standards in the Vietnamese stock market.

Highlights

Originating from developed countries, the concept of Corporate Social Responsibility (CSR) has more than 60 years of history
Our study proposed to use financial statement comparability (FSC) as a mediator variable to understand the mechanism through which CSR disclosure directly and indirectly affects financial performance
CSR has a mean value of 0.255 with a standard deviation of 0.145, suggesting that the level of CSR disclosure in Vietnam is still low compared to the criteria outlined in Global Reporting Initiative (GRI) Standards

Summary

Introduction

Originating from developed countries, the concept of Corporate Social Responsibility (CSR) has more than 60 years of history. The concept of CSR began to pervade Vietnam more than two decades ago through the Sustainability Report of multinational corporations operating in Vietnam, such as Honda, Coca-Cola, or Unilever. 2016, only a few large domestic enterprises publicly disclosed their CSR-related activities in their reports. In Vietnam, specific laws regulated the social responsibility of enterprises to relevant stakeholders, such as Labor Law, Contract Law, Environmental Reporting Recommendations, etc., but there is no legal document or unified legal framework. In 2015, for the first time, reporting guidelines were issued in Circular 155/TT-BTC, requiring listed companies to disclose environmental and social information related to sustainable development. After Circular 155/TT-BTC took effect in 2016, the publication of the Corporate Social Responsibility Report is no longer uncommon in the business community in Vietnam

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