Relevance of voluntary environmental and social reporting in the French context: Does CSR assurance matter?

Amira Lajmi,Gilles Paché

doi:10.21511/ee.11(1).2020.05

Amira Lajmi, Gilles Paché

Open Access

https://doi.org/10.21511/ee.11(1).2020.05

Copy DOI

Abstract

Corporate social responsibility (CSR) reporting is of high importance for firms that wish to communicate their environmental and social actions to stakeholders and society at large. Of course, the credibility of CSR reporting affects considerably the market reaction to the information provided. Although research on environmental and social reporting is important, empirical evidence regarding the relevance of environmental and social disclosure to firms’ market values is scarce. This paper specifically analyzes the moderating role of external CSR assurance on the relationship between voluntary environmental and social reporting and firm market value. A content analysis index is then developed based on disclosure items specified in the Global Reporting Initiative guidelines. Using hand-collected data on a sample of French companies, the authors find that CSR assurance has a negative moderating effect on the relationship between high environmental and social reporting and firms’ market value, raising questions about the role of external assurance in assessing CSR reporting credibility. AcknowledgmentThe authors sincerely thank three anonymous reviewers of Environmental Economics for their insightful comments on a previous version of the paper.

Highlights

The managerial and theoretical literature on corporate social responsibility (CSR) reporting has greatly expanded with the development of environmental and social practices (Perrini, 2005), especially after the Enron scandal in 2001
This paper examined whether CSR assurance is associated with greater relevance of voluntary environmental and social reporting to firms’ market values
The study’s main finding is that the adoption of environmental and social reporting is significantly and negatively associated with firm market value; this result presents a severe challenge to the salience of CSR disclosures, and raises the main question of why should firms be forced by the regulators to engage in costly CSR activities if such activities are punished by the market?

Summary

Introduction

The managerial and theoretical literature on corporate social responsibility (CSR) reporting has greatly expanded with the development of environmental and social practices (Perrini, 2005), especially after the Enron scandal in 2001. CSR reporting, and especially environmental and social reporting, has been widely criticized for not providing meaningful information, for being partial and, in most cases, for being relatively trivial. Such communications cannot provide reliable measures for readers of the organization’s CSR performance (Cho, Michelon, Patten, & Roberts, 2014). Among the several categories of stakeholders, shareholders are those most concerned with the environmental and social disclosure strategy because they bear the full costs of communication, monitoring, and any managerial misbehavior. Research on CSR practices has been growing since the 2000s, there is little empirical evidence that this is specific to environmental and social disclosure

Results

Discussion

Conclusion