Does stock price crash risk affect corporate social responsibility disclosure?

Abstract

ABSTRACT Does crash risk affect companies to improve contents of corporate social responsibility (CSR) disclosure, or harm the corporate willingness to disclose in future? Using a sample of 1,361 listing companies in the Chinese stock market over the period of 2006–2021, we create a new indicator to assess the content diversity of CSR disclosure, and examine the causal effects of crash risk on it. We find that the increase of crash risk has a negative effect on companies’ future CSR disclosure. Furthermore, we employ a difference-in-differences research design and find that the negative effect of crash risk on CSR disclosure is stronger for companies with voluntary disclosure than those with mandatory disclosure. Our findings indicate that the emergence of crash risk will not motivate companies to release more information in future as a compensation of the previous information opacity.