Abstract
AbstractThis paper investigates the impact of corporate social responsibility (CSR) disclosure quantity, quality, and external validation concerning assurance on capital constraints. We examine if these disclosure characteristics matter to the investors in the financial market, then they should be positively evaluated by financial market participants. More specifically, we study the effects of disclosure quantity, quality, and assurance on the access to financial resources for reporting firms. Analysis of data of an international sample for the period of 2007–2016 significantly supports the value relevance idea of CSR disclosure quality. We document that availability of more information about the firm's CSR initiatives eases the financial access. Furthermore, the quality and external assurance of CSR disclosure further strengthen the relationship between disclosure and access to finance. Our paper not only provides support for buying assurance but also argue for better assurance quality.
Highlights
Contemporary debate on sustainable corporate development among academics, consultants, and corporate executive has resulted in greater corporate social responsibility (CSR) awareness
For a sample of international firms from 2007 to 2016, our findings reveal the following: First, we document that CSR information eases the financial access for reporting companies
The quality of CSR disclosure and its external assurance further strengthen the relationship between disclosure and access to finance
Summary
Contemporary debate on sustainable corporate development among academics, consultants, and corporate executive has resulted in greater corporate social responsibility (CSR) awareness. Existing evidence supports that ensuring a higher quality of information could even result in a better investorsvaluation of CSR disclosure (Hooks & van Staden, 2011) These pieces of evidence from various literature strands, very little has been researched about the value relevance of CSR assurance. Our research hypotheses contend that CSR disclosure can ease the financial access for firms This positive relationship can be reinforced if this CSR disclosure is accompanied by better quality and external assurance. The goal of this research is to examine how the CSR disclosure, its quality, and reliability are value relevant for investors by affecting reporting company's access to finances To achieve this goal, we utilized various regressions models following a sequential logic attending to sample 1 (for hypotheses 1 to 3) and sample 2 (for hypothesis 4).
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