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Can CSR mechanisms spur GRI adoption and restore its lost value relevance?

Monomita Nandy (Brunel University London, London, UK)
Cemil Kuzey (Department of Computer Science and Information Systems, Arthur J. Bauernfeind College of Business, Murray State University, Murray, Kentucky, USA)
Ali Uyar (Excelia Business School, Excelia Group, La Rochelle, France)
Suman Lodh (Kingston University London, London, UK)
Abdullah S. Karaman (College of Engineering and Technology, American University of the Middle East, Egaila, Kuwait)

Journal of Applied Accounting Research

ISSN: 0967-5426

Article publication date: 6 December 2022




This paper focuses exclusively on the drivers and consequences of Global Reporting Initiative (GRI) adoption in sustainability reports with a particular focus on corporate social responsibility (CSR) mechanisms.


The sample includes 63 countries with 4,625 unique firms in these countries and 29,054 firm-year observations between 2002 and 2019. The empirical methodology is logistic and linear regression analyses with country and year fixed effects.


The findings show that CSR committees and executive CSR compensation stimulate firms' GRI adoption. Furthermore, while GRI adoption enhanced firm value in the earlier period of 2002–2010, it weakened firm value in the later period between 2011 and 2019 implying a loss of value relevance. However, the moderating effect of CSR committees and executive CSR compensation on GRI adoption has led to higher firm value in recent times. A more in-depth investigation of polluting versus non-polluting sectors and weak and strong institutional environments reveals both convergence and divergence respectively among these sub-samples. The results are robust to alternative samplings, alternative methodology and endogeneity concerns.

Research limitations/implications

The main limitations of the study are the binary nature of key variables, such as CSR committee, executive CSR compensation and GRI adoption, due to the availability of binary data but not continuous data.

Practical implications

Firms allocate substantial funds for SR and following GRI guidelines; hence, the findings guide them on how to ensure the return on this investment.

Social implications

Shareholders who particularly pursue socially responsible investment can shape their investment portfolios in firms that engage with sustainability reporting (SR) and GRI adoption practices.


It is not clear in the literature if CSR committees will adopt the GRI for SR because of any incentive. Thus, we examine if the CSR committee and executive CSR compensation can play a direct role in GRI adoption and play a moderating role between GRI adoption and firm value. Moreover, whether GRI adoption and its value relevance might change across periods, sectors (polluting versus non-polluting) and varying institutional environments (investor protection) are addressed in this study.



Nandy, M., Kuzey, C., Uyar, A., Lodh, S. and Karaman, A.S. (2022), "Can CSR mechanisms spur GRI adoption and restore its lost value relevance?", Journal of Applied Accounting Research, Vol. ahead-of-print No. ahead-of-print.



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