Journal of Accounting and Economics· 2017Q1
The effect of mandatory CSR disclosure on firm profitability and social externalities: Evidence from China
- 1,426citations
- Q1SCImago
- 2017year
Short summary
China's 2008 mandatory CSR disclosure requirement led to decreased firm profitability but also reduced industrial wastewater and SO2 emissions in affected cities.
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Key points
- Mandatory CSR disclosure in China led to a decrease in firm profitability.
- Affected cities saw reductions in industrial wastewater and SO2 emissions following the disclosure mandate.
- The study used a difference-in-differences approach to analyze the impact of the 2008 mandate.
- Mandatory disclosure altered firm behavior, creating positive externalities at the expense of shareholders.
AI-generated from the title and abstract; the full text is not read.
Abstract
We examine how mandatory disclosure of corporate social responsibility (CSR) impacts firm performance and social externalities. Our analysis exploits China's 2008 mandate requiring firms to disclose CSR activities, using a difference-in-differences design. Although the mandate does not require firms to spend on CSR, we find that mandatory CSR reporting firms experience a decrease in profitability subsequent to the mandate. In addition, the cities most impacted by the disclosure mandate experience a decrease in their industrial wastewater and SO2 emission levels. These findings suggest that mandatory CSR disclosure alters firm behavior and generates positive externalities at the expense of shareholders.
The authors' abstract, as published at the source. Journal of Accounting and Economics, 2017 · DOI ↗
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Field: Strategy and Management
Strategy and ManagementBusiness, Management and Accounting