Mandatory CSR disclosure and stock liquidity: Evidence from Chinese listed firms

Abstract

This paper examines how and when mandatory corporate social responsibility (CSR) disclosure impacts stock liquidity by using a quasi-natural experiment in China. We find that mandatory CSR disclosure significantly increases stock liquidity compared to voluntary CSR disclosure. Furthermore, the positive effect is stronger for firms with better corporate governance, higher profitability, and more QFII ownership. Our paper is a supplementary argument to information asymmetry theory and social capital theory.