Is a Picture Worth a Thousand Words? Image Usage in CSR Reports

Abstract

Prior research identifies images as a tool for corporate impression management. We collect a novel dataset on widescale image usage in Corporate Social Responsibility (CSR) reports using automated methods. We examine (1) associations between CSR report image usage and motivations for impression management, (2) changes in CSR report image usage after controversial events, and (3) market valuation of firms using excessive images. We hypothesize and find that socially problematic industries exhibit higher image usage than others. Firms who voluntarily commit to higher disclosure standards tend to use fewer images, while firms with less extensive textual disclosures in their CSR reports tend to use more images. Tellingly, firms with poorer ratings of CSR performance use more images in CSR reports, and firms increase image usage (albeit weakly) after controversial events. We find no evidence that investors overvalue firms with excessive image usage. Overall, the evidence is consistent with companies using images in CSR reports strategically to enhance stakeholder perception of CSR engagement and performance; such strategic usage does not impact equity valuation.