Lobbying and Political Risk Disclosure: Do Socially Responsible Firms Voluntarily Disclose More?

PurposeThis study aims to examine whether socially responsible firms have well-funded employee pension programs and whether corporate social responsibility (CSR) performance is associated with management discretionary choice of pension accounting assumptions.Design/methodology/approachThe current study examines the impact of CSR performance on two measures of pension funding and two pension accounting assumptions using regression analysis. This study uses a panel data of 13,099 firms-years across 1,428 US firms from 1992 to 2015.FindingsFirms with higher CSR scores report higher pension net assets and are less likely to have underfunded pension than their counterparts. These firms also adopt more responsible (conservative) pension accounting assumptions (i.e. lower discount rate and a higher rate of compensation increase) to estimate pension benefit obligations. Results are stronger for firms that operate in the materials and industrial sectors and for the post-2000 period when underfunded pension has become more prevalent. Firms with higher CSR scores are also less likely to have a pension freeze.Originality/valueThis study examines the signaling role of CSR by using the signaling theory to explain how senders view the signaling process as a channel to build their reputation and the correspondent inference theory to explain how receivers process and assess the signal. It provides evidence that the signal provided by CSR score is reliable in assessing firms’ commitment to non-investing stakeholders, such as employees, providing valuable information for potential employees making career decisions and for managers considering employee pension as part of corporate strategies to attract high quality workforce. This study provides inputs for public accountants providing assurance services that CSR performance has a significant impact on management reporting choices. This study also provides evidence that CSR could be considered a private provision of public goods that internalize the negative externality of the prevalent underfunded pension phenomenon.

Purpose – This paper aims to investigate how corporate social responsibility (CSR) performance (i.e. to the environment, society and stakeholders) and perceived brand quality influence brand preference. The mediating effect of perceived brand quality on the relationship between CSR performance and brand preference is also studied. Design/methodology/approach – In 2011, 243 valid responses to questionnaire surveys were collected from a convenience sample in China. Regression analyses were used to test the hypotheses. Findings – Customers’ brand preference can be enhanced by CSR performance. Performance in each of the three CSR domains (i.e. environment, society and stakeholders) positively impacts brand preference, although to different degrees. The impact of CSR on stakeholders has the strongest influence on Chinese customers’ brand preference among the three CSR domains. Perceived brand quality was found to be a mediator of the relationship between CSR performance and brand preference. Research limitations/implications – This research studies the relationship between CSR performance and brand preference. Results show CSR performance is not the strongest predictor of branding outcomes, its explanatory power is comparatively weaker than that of perceived brand quality. Additionally, we found a mediating effect of perceived brand quality on the relationship between CSR performance and brand preference. Practical implications – Brands can be more attractive to Chinese consumers when brands take appropriate investments in CSR activities. A socially responsible brand is not guaranteed to yield a competitive advantage. Instead a competitive advantage will more likely result through the employment of the appropriate CSR strategies, with a focus on stakeholders’ interests. Originality/value – The current research contributes to the literature by finding that not all CSR activities are equally effective. Customers in emerging markets still appear to be focused more on the quality of brands and, to some extent, stakeholder CSR practice, as these provide direct benefits to customers. Findings of this study also support the notion that Chinese consumers are beginning to use CSR information to evaluate brands.

Prior studies show that higher corporate social responsibility (CSR) performance lowers firms’ cost of debt and equity financing. Using a sample of 16,463 U.S. firm-year observations that represent more than 2455 individual firms over the 1996–2016 period, we investigate the relation between all aspects of CSR and trade credit. We provide strong and robust evidence that higher overall CSR scores are related to a higher level of trade credit. A further examination reveals positive associations between trade credit and the four CSR individual components (i.e., the environment, employee relations, community, and diversity). Taken together, our results highlight the important signaling role that CSR plays in increasing the suppliers’ willingness to extend trade credit. Our study also has an important supply chain implication that emphasizes the role of CSR in designing contracts between buyers and suppliers and the level of trade credit for buyer firms with CSR investments.

Managing disclosure of political risk: The case of socially responsible firms

The Oil Palm Companies is one of the highest contributions towards Indonesia economic development. However, the company performance in the oil palm companies is far from expectation which is related to how they responsible on their shareholders as well as stakeholders. Thus, the study purpose is to examine the relations between corporate governance mechanisms, corporate social responsibility and board equity ownership on performance in Indonesia’s Oil Palm Companies. The findings highlight a positive relationship between board equity ownership, corporate social responsibility and company performance. Furthermore, the moderating role of board equity ownership has a significant positive on the relationship between independence director and company performance as well as corporate social responsibility. The relationship between female director and company performance shows the same result with the interaction of board equity ownership. Currently studies have found that corporate governance mechanisms, corporate social responsibility have significant effect on company performance. Nevertheless, this evidence showed that direct relationship between corporate governance, social responsibility and company performance have mix results. Admittedly, the indirect relationship revealed that board equity ownership contributes significant effect on the relations between corporate governance, social responsibility and company performance particularly in Indonesia’s oil palm companies. Based on the author knowledge, a few studies have been done in oil palm companies which it provides a prominent issue in corporate governance mechanism particularly on board equity ownership which majority is held by family member ownership.
 Keywords Corporate governance, social responsibility, board equity ownership, company performance

The Impact of Corporate Social Responsibility Disclosure and Performance on the Cost of Corporate Bonds

PurposeThe purpose of this paper is to investigate whether and how corporate social responsibility (CSR) performance contributes to shape firms’ payout policy. In particular, it examines the influence of CSR performance on payout level and payout channel choice (dividend payment or share repurchases). Additionally, it examines the moderating role of CSR performance in the relationship between dividends and share repurchases.Design/methodology/approachUsing 397 European companies listed in the STOXX Europe 600 over the period from 2009 to 2014, the authors employ regression analysis to explore the link between CSR performance and payout policy.FindingsThe first result shows that firms with high CSR performance engage more in payout policy. Second, when choosing between paying dividends and repurchasing stocks, firms with high CSR performance tend to prefer share repurchases. Finally, CSR performance plays an important role in determining the relationship between dividends and repurchases. Specifically, dividends and share repurchases seem to be more substitutable among socially responsible firms.Practical implicationsFirms that are able to develop successful CSR strategies can generate tangible benefits for their shareholders in the form of high payout levels. An increase in CSR expenditure does not lead to cut or minimize the cash flow paid out to shareholders. In addition, government and regulators have to oblige or at least encourage socially responsible firms to use executive stock option that are dividend protected, in order to reduce distortions in dividend policy.Originality/valueThis is the first attempt to investigate the association between CSR performance and share repurchase activities.

PurposeThe purpose of this paper is to investigate the relationship between corporate social responsibility and earnings quality, specifically in family firms.Design/methodology/approachBased on a sample of French-listed firms from the period 2005 to 2016, the authors use the instrumental variable approach based on a two-stage least-squares (2SLS) estimator.FindingsThe results show that Corporate Social Responsibility (CSR) performance is positively associated with the relevance and faithful representation of earnings. This means that companies that commit to CSR activities are more likely to provide high earnings quality. The results also show that the positive association between CSR performance and earnings quality is more prevalent in family firms suggesting that socially responsible family firms are willing to preserve their socio-emotional wealth by disclosing high quality earnings.Research limitations/implicationsThe results suggest that French firms commit to CSR to satisfy the interests of their stakeholders by disclosing high-quality information supporting the conflict resolution view of CSR. The findings also support the socio-emotional wealth perspective and suggest that family firms that engage in CSR activities provide a rich informational environment through high earnings quality.Practical implicationsThis study’s findings can be thus useful to investors for their portfolio management decisions by enabling them to identify the profile of companies with high earnings quality. These results may also help standard-setters and capital-market regulators improve market transparency by introducing new requirements to encourage investing in CSR.Originality/valueThis study extends the research on the relationship between CSR and earnings quality by focusing on two fundamental characteristics including relevance and faithful representation. This paper focuses on the effect of CSR on earnings quality in the specific context of family firms. This study offers then a better understanding of whether socially responsible family firms communicate stronger or weaker earnings quality than non-family firms based on the agency and socio-emotional wealth perspectives.

CSR performance and firm performance in the tourism, healthcare, and financial sectors: Do metrics and CSR committees matter?

Taking 2013-2015 Chinese a-share Listed Companies as the research object, this paper studies the impact of media attention and executive reputation on the performance of corporate social responsibility. The results show that: media attention is positively correlated with performance of corporate social responsibility, the higher the media attention, the better corporate social responsibility is;The same goes to The relation between executive reputation and performance of social responsibility. Compared with non-state-owned enterprises, executive reputation has more influence on the performance of social responsibility of state-owned enterprises. Further research found that: there is a complementary effect between media attention and executive reputation to the impact of corporate social responsibility, In other words, the higher the executive reputation is, the role of the media supervision easier to play, the stronger the media attention to the promotion of corporate social responsibility.

Purpose This study aims to investigate the association between corporate social responsibility (CSR) performance and the cost of debt financing (CODF) in Malaysia. It further explores whether the potential impact of CSR performance on debt pricing is moderated by the females’ representation on board and female directors’ foreign experience. Design/methodology/approach The authors use a sample of 845 firm-year observations from 2017 to 2021 and apply various regression techniques, including the pooled ordinary least squares (POLS), the Heckman two-stage self-selection model, propensity score matching (PSM) and quantile regression, to test the study’s hypotheses. Findings The results show that socially responsible firms incur lower costs of debt. Similarly, female directors and female directors with foreign exposure are negatively associated with CODF. However, their impact becomes positive when these two variables are interacted with CSR performance. The study findings are robust across alternative measures of board gender diversity, different model specifications and approaches addressing the endogeneity problem. In additional analyses, we find that the positive implication of CSR on CODF is more pronounced for firms with higher CSR performance and less financial constraint. Nevertheless, the results reveal that only firms with lower CSR performance but a high proportion of female directors and female directors with foreign experience exhibit lower CODF. This underscores the likelihood that female directors and their foreign exposure may substitute CSR practices in mitigating the cost of debt. Originality/value Existing literature generally emphasises the importance of CSR performance to corporate financing decisions, often neglecting the role of female directors and their attributes in financial institutions’ creditworthiness evaluation. This study is among the first to address this gap by examining the moderating effect of female directors and their characteristics on CSR–CODF relationship within an emerging economy context. The findings contribute to the literature on CSR and board gender diversity, indicating that CSR performance and board gender diversity function more as substitutes than complements. Despite the unexpected consequences of interacting with female directors and their foreign experience with CSR, the study affirms the significance of CSR practices and board gender diversity in shaping borrowers’ financial decisions.

Taking 2012-2015 Chinese A-Share listed companies as the research object, this paper studies the impact of executive influence and poverty experience on the performance of corporate social responsibility. The results show that: executive influence is positively correlated with performance of corporate social responsibility, the higher the executive influence, the better corporate social responsibility is; compared with non-state-owned enterprises, executive influence has more influence on the performance of social responsibility of state-owned enterprises. poverty experience is positively correlated with performance of corporate social responsibility, the higher the poverty experience, the better corporate social responsibility is. Further research found that: executive poverty experience helps to strengthen the positive correlation between executive influence and corporate social responsibility, we should pay attention to the role of executive influence, at the same time cannot be ignored the effect of executive poverty on promoting the performance of corporate social responsibility.

This article studies how financial investors respond to firms’ corporate social responsibility (CSR) performance in terms of their investing behaviors, and how such behaviors change contingent on an event that provokes their attention and concerns to CSR. Using the melamine contamination incident in China as a natural experiment, it is found that neither the individual investors’ nor the institutional investors’ behaviors are influenced by firms’ CSR performance before the incident. Nevertheless, in the post-event period, institutional investors’ behaviors are significantly influenced by firms’ CSR performance that exceeds a certain threshold. Furthermore, such an effect diminishes for a better CSR performance. In comparison, the authors do not find any effects of CSR performance on individual investors, either before the event or after the event. Finally, firms’ performance and investors’ behaviors jointly affect firms’ stock returns after the event but not before the event. This article reconciles the mixed findings in the literature on the effect of firms’ CSR performance on their financial performance by showing that such an effect exists in a contingent manner. Furthermore, the authors show that a too low or a too high CSR performance could lead to undesirable responses from investors. Therefore, managers should pay attention to optimizing firms’ CSR activities.

With increasing stakeholders' demand for information on corporate social responsibility (CSR) performance and a growing number of firms issuing standalone CSR reports, this study examines the relation between CSR performance and the quantity and quality of CSR disclosures. Drawing on signaling and political legitimacy theories of information disclosure and using a US sample of 2774 standalone CSR reports from 2003 to 2015, we find better CSR performing firms issue longer CSR reports and provide incremental information in their CSR reports relative to their annual financial reports. Furthermore, the textual content in their CSR reports is less focused on short‐term issues, reflecting higher disclosure quality. In contrast, poor CSR performing firms tend exhibit lower disclosure quality as their CSR reports use more uncertain words. Our study contributes to the understanding of how CSR performance affect stakeholder engagement through the characteristics of textual content in standalone CSR reports.

본 논문은 기업의 사회적 책임이 재무성과에 영향을 미치는지를 고찰하였다. 선행연구들은 지금까지 일관적이지 않은 결과를 보여주었으며, 본 연구는 기업의 사회책임이 기업의 재무성과에 긍정적인 영향을 미친다는 것을 발견하였다. 모건스탠리에서 발간되는 한국기업의 사회적 책임 성과평가 자료를 분석한 결과, 기업의 사회적 책임과 자본시장에서의 재무성과 간에 양의 상관관계가 있음을 발견하였다. 구체적으로 회귀분석의 결과 기업의 사회책임 평가가 한 단계 높으면 주가수익률이 평균 3.4% 정도 높은 것으로 나타났다. 본 연구의 결과는 다른 나라의 자료를 토대로 하는 선행연구의 결과를 지지하며, 한국기업의 사회적 책임에 대한 체계적이고 분석적인 평가 결과를 제공하였다는 데에 의의가 있다. This study investigates how the Corporate Social Responsibility (CSR) performance of a firm is associated with its financial performance in the stock market. Prior studies provide mixed evidence on the relation between CSR and financial performance. This study sheds some lights on the positive effect of CSR on firms' financial performance. Using a unique set of data on CSR performance of Korean firms provided by Morgan Stanley Capital International (MCSI), we find that firms' CSR performance is positively associated with their contemporaneous stock returns and Tobin's Q in the Korean market. This finding suggests that stock market participants value firms' CSR activities. This is the first study that provides empirical evidence on the existence of the positive association between the CSR performance of Korean firms and their financial performance using MCSI data which is considered more reliable than the data used in the prior CSR studies in Korea.