CSR Performance and the Readability of CSR Reports: Too Good to be True?

Abstract

AbstractUsing a manually collected sample of 331 corporate social responsibility (CSR) reports issued by US public companies, we examine the relationship between the CSR performance and the readability of CSR reports. We adopt three indices – Fog, Kincaid, and Flesch – to measure the readability of CSR reports and draw upon two databases – ESG and KLD – to measure CSR performance from both environmental and social perspectives. The results show a significant positive relationship between CSR performance and the readability of CSR reports, indicating that companies with stronger CSR performance are more likely to have CSR reports with higher readability. Further, the association of the readability of CSR reports with social performance is stronger than with environmental performance. This study helps investors more comprehensively evaluate the CSR information disclosed on CSR reports. Our results also point to the importance of regulating the narrative disclosure of CSR information, especially social performance. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment