Standalone CSR Reports Research Articles

The Complementarity and Substitution Effects of CSR‐Focused Governance Mechanisms on CSR Decoupling

ABSTRACTResearch Question/IssueThe study examines whether CSR‐focused governance mechanisms (CSR committees, standalone CSR reports, and CSR contracting) operate as complements or substitutes for each other in mitigating CSR decoupling.Research Findings/InsightsThe study finds that CSR‐focused governance mechanisms diminish CSR decoupling and enhance CSR credibility in UK firms. In addition, the simultaneous presence of CSR committees and standalone CSR reports has a complementary effect in mitigating CSR decoupling. Conversely, the combinations of CSR committees and CSR contracting as well as standalone CSR reports and CSR contracting exhibit a substitute relationship. These impacts remain consistent when categorizing CSR decoupling into underreporting and overreporting. During the financial crisis of 2008–2009, the complementary relationship between CSR committees and CSR reports remained consistent, although the substitution between CSR committees and CSR contracting, and CSR reports and CSR contracting, is only observed after the crisis.Theoretical/Academic ImplicationsThe study innovatively contributes to the agency theory literature by adopting a bundle corporate governance approach while focusing on specific CSR governance mechanisms to address agency issues. It empirically shows that complementary combinations of CSR‐focused governance mechanisms signify a marginal benefit in reducing CSR decoupling, leading to a reduction in agency costs.Practitioner/Policy ImplicationsThe study offers several implications. First, it helps firms create ideal combinations of different CSR‐focused governance mechanisms that provide superior marginal benefits. Second, firms' stakeholders, especially the investors, could identify the usefulness of adopting CSR‐focused governance mechanisms in CSR reporting. Finally, it could also attract regulators' attention toward the weaker aspects of the existing corporate governance code regarding CSR.

Circular economy to the rescue? The U.S. corporate disclosure response to the plastic crisis

ABSTRACT Media attention to the world’s growing plastic crisis exploded in 2018, almost certainly increasing social exposures for companies heavily involved in the material’s manufacture or use. Relying on arguments from media agenda setting theory (Brown & Deegan, 1998), we explore how a sample of large U.S. plastic manufacturers and users responded to the crisis in their standalone CSR reports, with particular emphasis on their use of circular economy terminology to frame that response. Circular economy ideas have been gaining traction with governmental units, non-governmental organisations, and academic researchers, and like the plastic crisis, are seeing substantially increased coverage in media outlets. The concern we address in our investigation is whether the exposed companies use the circular economy terminology in an attempt to identify with symbols of legitimacy. As expected, we find significantly more extensive disclosure of plastics-related issues in our sample companies’ 2018 CSR reports than had been the case for reports covering the prior three-year period, and we show increased reliance on the use of circular economy terms within those disclosures. We further document that the circular economy-related plastics disclosure is significantly weighted toward symbolic as opposed to substantive disclosure and is far more commonly related to disclosures of goals and initiatives than to the provision of actual data. We thus argue that rather than reflecting an underlying shift in the sample companies’ operating processes, the increased use of the circular economy terminology may be an attempt at legitimation.

Do different dimensions of corporate social responsibility disclosure have different economic consequence: multi-approaches for profitability examination

PurposeThis study examines the impact of Corporate Social Responsibility Disclosure (hereafter CSRD) on the Corporate Economic Performance (hereafter CEP) of a group of public shareholding companies in Jordan.Design/methodology/approachThis study uses different proxies to examine the impact of CSRD on companies’ financial and economic value. The data were collected from a sample of 94 companies listed on the Amman Stock Exchange from 2010 to 2016. Based on a checklist of 41 indicators, this study employed the manual content analysis technique to collect and analyse CSRD data. A statistical analysis technique was also used to examine the hypothesized relationships between collected data on CSRD and profitability.FindingsThe findings indicate that CSRD is value-relevant. It is positively and statistically associated with firm value proxied by Tobin’s Q. In addition, it is positively and statistically associated with firm financial performance proxied by ROE and ROA.Research limitations/implicationsThis study contributes to the research debate on the relationship between CSRD and CEP, particularly in developing nations. The study draws attention to the need for information on different dimensions of CSR, including human resource, environmental, product responsibility, and community participation, as disclosure on such dimensions is positively associated with profitability.Practical implicationsThe findings provide important implications for Jordanian corporate managers to maintain CSRD in their best interest. With more emphasis on disclosing stand-alone CSR reports, corporate managers can present more information on different dimensions of CSR, attracting the attention of stakeholders such as investors, the government, media, and humanitarian activists and enhancing overall corporate goodwill.Originality/valueCSRD activities reflect a positive impact on CEP. Due to the dearth of relevant research conducted in developing countries, this study provides empirical evidence on the positive relationship between CSRD and CEP in an emerging economy, with more emphasis on specific dimensions of CSR, including human resources, environmental, product responsibility, and community participation. Since multiple proxies exist to measure profitability, this study uses multi-approaches for profitability examination proxied by Tobin’s Q, ROE, and ROA. Moreover, the issue of CSR is original and interesting to be examined in the Jordanian context, where the listed firms have reported a homogeneous perception of CSR.

Corporate Social Responsibility Reporting in the Casino Industry: A Content Analysis

The purpose of this study is to provide preliminary exploration of how corporate social responsibility issues are currently reported and communicated by US major casino companies. Empirical evidence is drawn from standalone CSR reports and websites of the 30 largest casino companies in the US, which is explored through content analysis methodology. This paper finds that there are substantial variations in the reporting and communication of CSR issues by casino companies. While casino companies mainly rely on websites to communicate CSR issues, 23% of the sample companies use standalone CSR reports. Whereas websites tend to provide relatively limited information about CSR activities, standalone CSR reports have a tendency to cover comprehensive CSR themes in a detailed manner. In addition, the content analysis based on website reveals that while most casino companies tend to be passive about responsible gaming, some are trying to behave more actively and responsibly about this issue.

Prevalence of CSR reporting in Arab countries: exploratory study and causal analysis

This study explores the prevalence of CSR reporting practice in the Arab region (Arab countries in the Middle East) and highlights the possible causes that affect companies to commit to this practice. The study includes thirteen countries in the region. It identifies the listed companies that publish stand-alone CSR reports, analyses the companies’ characteristics, and the effect of four independent variables on the commitment to CSR reporting, measured by continuity in publishing these reports. The four independent variables include: being a large company, having a global presence, belonging to an environmentally sensitive industry, and belonging to a highly visible industry. The Qualitative Comparative Analysis method is used for causal analysis. Theoretical analysis is informed by institutional theory. Findings show that CSR reporting is still at its early stages in the region. CSR reporting is driven by linkages and openness to the global economy or by high public visibility (because of size and belonging to visible industries) while belonging to environmentally sensitive industries seems not to affect CSR reporting. These findings support the view that CSR reporting is a global practice adopted by companies in developing countries either to respond to global stakeholders or to imitate a global trend.

How to Regulate Corporate Social Responsibility Reporting - International Evidence on the Impact of Different Regulatory Approaches

This paper examines how differences in CSR reporting regulations influence their impact on information asymmetry for both the firms affected and their non-affected peers. Using an international sample of firms based in 24 countries, of which 12 countries have adopted CSR regulations, we find that the decrease in bid-ask spreads after CSR mandates is stronger for mandates issued by governments than for those issued by stock exchanges and stronger for mandates requiring standalone CSR reports than for those requiring other formats. We document that CSR mandates also mitigate the information asymmetry of non-affected firms due to comparability externalities. In cross-sectional analyses, we find that the effect on information asymmetry associated with mandates is greater for firms that use well-established reporting guidelines, such as the Global Reporting Initiative (GRI). We control for firms’ CSR performance in sensitivity analyses and find that the decrease in information asymmetry is attributable to increased disclosure rather than to a change in CSR activity.

Corporate climate change disclosure during the Trump administration: evidence from standalone CSR reports

ABSTRACT In support of legitimacy theory arguments for corporate social responsibility disclosure, a variety of prior studies document that either increases or decreases in social and regulatory cost exposures appear to lead to corresponding changes in the level of information provided. However, none of these studies investigates a situation where social and regulatory cost exposure changes are not in sync; a situation we argue taking place with respect to the Trump presidency in the United States, and none considers the role that political polarization might play in company responses. Based on a sample of 170 large U.S. firms, we find that the extent of climate change disclosure in standalone CSR reports did not appear to change, on average, from the Pre-Trump (2014–2015) to the Trump (2017–2018) eras. However, cross sectional analysis indicates more negative changes in disclosure for companies headquartered in states strongly supporting Trump in the 2016 election relative to other firms and more positive changes for companies in carbon intensive industries. Where firms are subject to both factors, we provide evidence that, at least with respect to space allocated to climate change disclosure in the reports, the increased social concerns appear to dominate reduced regulatory exposures. Our results support legitimacy theory arguments, but illustrate the importance of disentangling potentially competing effects, and suggest attention needs to be paid to potential differing political climates in the locales of organizations’ headquarters.

The impact of labor unionization on CSR reporting

PurposeCorporate social responsibility (CSR) reporting has been theorized as a key communication device and an integral part of a broader stakeholder integration management strategy. This paper aims to examine the relationship between CSR disclosures and organized labor, an important internal stakeholder, whose institutional role in dynamically advancing employee interests creates opportunities and challenges for strategic management and firm sustainability.Design/methodology/approachBy using a sample of 2,526 US firm-year observations for the period 2002–2015, the authors demonstrate that managers in unionized contexts are more likely to issue CSR reports than managers in firms, where labor is not organized.FindingsThe authors demonstrate that managers in unionized contexts are more likely to issue CSR reports than managers in firms where labor is not organized. Considering stakeholder theory, they argue that, in unionized contexts, managers more intensively resort to CSR disclosures to form an alignment of interests, develop collaborative bonds with unions and smoothen relationships with external financial stakeholders. This effect is more prominent in areas where corporate spatial clustering and the prevailing political ideology facilitate the role of unions.Research limitations/implicationsFirst, the data refer to USA, which may limit the generalization of the results. Hence, researchers could use cross-country datasets to overcome this limitation. Second, it would be important to know what benefits are enjoyed by the unionized companies that issue CSR reports. Third, they acknowledge that there is useful qualitative information they do not analyze. This analysis could potentially relate specific CSR information to unions’ needs and demands. Further, there are alternative channels through which companies disclose relevant information such as 10-K filings, annual reports, firm websites, media, public announcements, etc. These are not captured by the data.Practical implicationsManagers could benefit from the empirical analysis, which suggests that through the initiation of CSR reports a dialogue with unions is greatly facilitated. Managers should consider that CSR reports reduce information asymmetries and may attract the interest of investors. Unionists should be aware that CSR reports constitute an opportunity to identify mutual interests and align goals. Business analysts, investors and shareholders should be aware that standalone CSR reports are used by managers to reduce information asymmetries and disparities with unions and to communicate an investment-friendly context. So, market participants should factor such policies by unionized firms into their investment analyses.Social implicationsThe authors offer implications for managers, labor unionists and market participants.Originality/valueThis paper examines the relationship between CSR disclosures and organized labor, an important internal stakeholder, whose institutional role in dynamically advancing employee interests creates opportunities and challenges for strategic management and firm sustainability.

Causes and consequences of voluntary assurance of CSR reports

PurposeThe purpose of this paper is twofold. First, the authors investigate a firm’s decision to provide a CSR report, and if so, whether to have the report assured and to seek higher quality assurance as reflected through the choices of the scope of the assurance and type of assurer, Big 4 accounting firm vs specialist consultant. Second, the authors investigate the impact of voluntary assurance of CSR reports, assurance scope and type of assurer on the likelihood of inclusion in the DJSI and on market valuation.Design/methodology/approachThe study’s sample consists of 17,050 firm-year observations from 40 countries with CSR reports available from Corporate Register and ESG metrics available from ASSET4 over the period 2009–2015. The study first empirically examines the associations between CSR commitment and each of CSR report provision, CSR report assurance, assurance scope and type of assurer. It then examines that association between both inclusion in the DJSI and market valuation with each of CSR report assurance, assurance scope and type of assurer, using inclusion in the DJSI as an objective measure of a firm’s reputation for sustainability given its recognition as a leading indicator for corporate sustainability and market valuation as a reflection of the broader set of capital market participants.FindingsThe authors establish two key findings consistent with the predictions of signaling theory. First, we show that high CSR commitment firms are more likely to: provide standalone CSR reports; obtain assurance; obtain assurance from a Big 4 accounting firm; and, adopt higher assurance scope. Second, the authors find that both CSR report assurance and assurance scope increase the likelihood of inclusion in the DJSI, but that the type of assurance provider does not. Alternatively, the authors find that capital market participants appear to value the provision of a CSR report only when it is assured by a Big 4 accounting firm.Originality/valueThe results in the existing literature exploring the capital market benefits to CSR Assurance have been mixed. Firms that voluntarily obtain CSR Assurance incur a cost in doing so and must perceive a net benefit from obtaining such assurance. Despite the limited guidance currently provided by existing CSR standards, we establish the existence of benefits to obtaining CSR Assurance in terms of enhanced likelihood of DJSI inclusion and, more generally, enhanced market valuation. The discussions with DJSI analysts indicate that CSR assurance does enhance the perceived reliability of CSR data, thus improving user confidence.

Strategies for Social and Environmental Disclosure: The Case of Multinational Gambling Companies

This study investigates how firms in the gambling industry manage their corporate social disclosures (CSDs) about controversial issues. We performed thematic content analysis of CSDs about responsible gambling, money laundering prevention and environmental protection in the annual reports and stand-alone CSR reports (2009–2016) of four USA-based multinational gambling firms and their four Macao counterparts. This study draws on impression management theory, camouflage theory and corporate integrity theory to examine the gambling firms’ CSDs. We infer that the CSD strategies of gambling firms in Macao and the USA did not serve as vehicles for reflexivity about social responsibility or social responsiveness. Instead, the firms camouflaged legitimacy gaps about sensitive topics by adopting assertive or defensive facades, disclaiming ethical responsibility, curtailing disclosure, or offering zero disclosure. Differences between CSD strategies according to topic, location, time, and reporting channel appear to reflect four factors: pressure to report, availability of good news, whether a firm was assuming ethical responsibility for addressing the topic, and the prospective readership. This study extends our understanding of the contextual and topic-specific factors affecting the quantity and character of CSDs by firms in a contested industry.

REPORTING CSR DATA – THE BENEFITS AND BARRIERS TO INVOLVEMENT IN THE IDEA OF CORPORATE SOCIAL RESPONSIBILITY

Purpose: The purpose of this paper is to provide insight into the issue of benefits and barriers related to reporting CSR data as standalone reports. This work attempts to examine whether the benefits resulting from the fact that companies are perceived as socially responsible are more impactful for entities that issue standalone CSR reports, as well as whether a standalone report can be a better tool for communicating with internal and external stakeholders. In addition, the study seeks to find out whether there is any difference in the perception of the barriers related to obtaining and publishing non-financial data between companies that are developing standalone reports and those that present this type of data in a different way. Methodology: The study employed the subject literature critical review method and a questionnaire survey. The survey was conducted among companies from the RESPECT index portfolio of the Warsaw Stock Exchange as well as among entities listed in various rankings of socially responsible companies. Findings: The respondents belonging to both groups (issuing and not issuing standalone CSR reports) generally pointed to a similar hierarchy of importance of specific benefits resulting from following CSR policies by the business. However, within the group of entities issuing standalone CSR reports, most of the benefits received a high evaluation. Most of the barriers studied received high indications in the group of companies without standalone reports. The results obtained may indicate that companies that are seen as socially responsible but do not publish a standalone report gain fewer benefits resulting from communication with stakeholders. Research limitation: The work may be affected by the inherent weaknesses associated with survey research which examines rather opinions and views than 'hard data'. Originality: The issue of reporting data in a form of standalone reports and the resulting benefits as well as the barriers faced by companies over the course of preparing CSR reporting is very significant, however, it is still insufficiently researched with regard to the emerging markets. The results obtained can be used for comparative studies of the Polish market and other financial markets since the benefits and barriers to reporting non-financial data as standalone reports are also being identified in other countries.

Standalone CSR Reports: A Canadian Analysis

This research examines whether firms who issue these reports are really more socially responsible or if they are merely trying to convince stakeholders that they are. We use the CSID index as an independent evaluation of firms’ level of CSR and find that firms that issue standalone CSR reports every year do have significantly higher Total CSR, CSR Strengths and CSR Weaknesses than firms that never issue these reports. Additionally, we find that firms that issue standalone CSR reports in some years have higher Total CSR and CSR Strengths scores than firms that never issue standalone CSR reports. Our results provide support for the explanation that firms who issue standalone CSR reports do so as a signal of their superior commitment to social responsibility actions. We found minimal support for the argument that firms who issue standalone CSR reports are more profitable.

Survey of Sustainability Reporting Integrated into Annual Reports of Estonian Companies for the years 2007-2010: Based on Companies Listed on Tallinn Stock Exchange as of October 2011

Recent years have seen rapidly growing demand for transparency in companies’ reporting. This trend has led to increased popularity of Corporate Sustainability Reporting - a tool regarded by many as means for companies to create additional value by implementing such aspects as social and environmental performance. This study examines social and environmental accounting disclosures in the annual reports of companies listed at Tallinn Stock Exchange in order to determine the current trend in CSR reporting. The survey was conducted among 15 companies representing various industry sectors. Authors have analyzed English web-published annual reports for years 2007-2010. In the course of the survey the authors have discovered that during the research period many companies included separate sections in their annual reports covering corporate sustainability reporting, but this information was also included in the “Letter from Member of the Management Board”, “Brief Introduction of the Company” or in any other section. The study demonstrated continuous uptrend in the number of social and environmental accounting disclosures, and a fairly low number of issued standalone CSR reports. In author's opinion, this demonstrates that Estonian companies show strong intention to integrate sustainability reporting into their annual reports. These findings emphasize the fact, that sustainability reporting is not a “stranger in the night” for Estonian companies but a “friend, one would like to spend more time with”. It also seems obvious that more efforts should be made in Estonia to provide all possible support to companies with regards to sustainability reporting. This support may include: distribution of latest CSR publications, participation in worldwide conferences and seminars on the CSR, training and guidance in preparing social and environmental reports in accordance with modern corporate accountability standards.

The Relevance of Environmental Disclosures for Investors and Other Stakeholder Groups: Are Such Disclosures Incrementally Informative?

This study examines the impact of voluntary environmental disclosure on the cost of equity capital and firm value, and on the public perception about a firm’s environmental performance. A salient feature of the study is that our analysis controls for corporate environmental performance using actual toxic emissions data and for firms’ general disclosure propensity. We measure voluntary environmental disclosures in standalone environmental reports, CSR reports, and corporate web sites using a disclosure index consistent with the Global Reporting Initiative disclosure framework. Using a sample of firms from the five most polluting industries in the U.S., we find that voluntary environmental disclosures are incrementally informative for investors over current toxic emissions data in our firm valuation analyses. We also find that investors appear to use toxic emissions data to assess the firm risks and unbooked future environmental liabilities. In addition, we find that voluntary environmental disclosure is positively associated with the Janis-Fadner coefficient, consistent with voluntary environmental disclosure enhancing non-investor stakeholder perception about firms’ environmental performance. However, we do not find evidence that voluntary environmental disclosures affects firm’s cost of equity capital.