The effects of amended sustainability reporting requirements on corporate social responsibility reporting and firm value: the moderating role of assurance

Abstract

Purpose To assist Malaysian public-listed companies (PLCs) in preparing corporate social responsibility (CSR) reports, Bursa Malaysia Berhad (BMB) launched the second edition of the Sustainability Reporting Guide (SRG) in 2018. This new SRG edition has several additional requirements for CSR reporting (CSRR), the most important of which is a chapter on assurance which provides detailed guidance on how it may be carried out. This study aims to determine whether the new SRG edition influences the extent of CSRR, and whether such effect is moderated by the provision of assurance on CSRR. It also aims to identify whether amending CSRR regulations and providing assurance on such reporting indirectly influences firm value through the possible improvement in the extent of CSRR. Design/methodology/approach This study performed a content analysis of the CSRR of a sample of Malaysian PLCs that maintained their positions among the top 100 companies by market capitalization between 2017 and 2020 to determine the extent of CSRR for the two years before and two years after the implementation of the new edition of SRG. This study conducted different statistical analyses to indicate whether the implementation of the second edition of SRG has an effect on enhancing the extent of CSRR, and whether the provision of assurance on such reporting moderates such an effect. This study then used instrumental variable regressions to examine the influence of the predicted extent of CSRR on firms’ value measured by Tobin’s Q. Findings This study found that the implementation of the second edition of SRG has a positive and significant influence on the extent of CSRR. This effect is strengthened by the provision of assurance on CSRR. Instrumental variable regressions also indicate that enhancing the extent of CSRR affected by the second edition of SRG is linked to higher firm value. Originality/value To the best of the authors’ knowledge, this study is one of the first to assess the determinants and implications of CSRR among Malaysian companies after adopting the second edition of SRG.