The Influence of Directive 2014/95/EU on the CSR Reporting of Stock-Listed European Companies

Abstract

Purpose – Even though CSR reporting has recently received considerable scholarly attention, far too little consideration has been paid to the contextual factors affecting reporting quality. This paper, therefore, aims to investigate how Directive 2014/95/EU influences the CSR reporting behavior of large, stock-listed European companies, especially concerning CSR reporting credibility and comparability. Design/methodology/approach – We use two different panel data models on variables derived by computer-aided textual analysis and human coding to uncover the effects of Directive 2014/95/EU on the credibility and comparability of CSR reports. Our analysis is based on a sample of 2,650 CSR reports from stock-listed European companies published between 2010 -2019. Findings – The findings indicate that the introduction of Directive 2014/95/EU had a mixed influence on the credibility of CSR reporting as it reduced the analytic sentiment in CSR reports and led to a more distanced and less positive presentation of CSR engagement, but at the same time also to a more confident reporting language. In addition, we find a negative effect of the Directive on the comparability of CSR reports. Originality/value - This study contributes to the literature on CSR by investigating CSR reporting behavior beyond the firm level and within wider institutional settings. By examining the influence of the institutional environment on the credibility and comparability of CSR reports in a European setting, this paper provides new input for the scholarly and practical debate regarding further CSR reporting regulations.