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This study aims to analyze whether corporate social responsibility (CSR) report characteristics, including disclosure level and external assurance, and reporting firms’ CSR performance, explain variation in cost of equity capital among CSR disclosers.

The study uses a propensity score matched sample of CSR reports prepared according to the Global Reporting Initiative’s (GRI) G3/G3.1 Reporting Guidelines.

Overall, there does not appear to be a difference in cost of equity capital among CSR disclosers based on GRI disclosure level. The exception is for poor CSR performers reporting at the highest GRI disclosure levels, but not obtaining assurance. These firms may be suspected of greenwash and therefore have higher cost of equity capital than the reference group. Poor CSR performers, especially those reporting at the highest GRI disclosure levels, obtain the greatest cost of equity capital benefit associated with external assurance.

This study contributes to the literature by showing that the cost of equity capital benefits associated with CSR disclosure and assurance do not accrue equally to all CSR disclosers. Specifically, this study is the first to provide empirical evidence of the cost of equity capital consequences of suspected greenwashing and empirically demonstrate the role of external assurance in mitigating greenwashing concerns among poor performers.

The purpose of this paper is to investigate the relationship between hard, negative corporate social responsibility (CSR) information disclosure and corporate social performance.

This study uses a generalised least squares panel data analysis based on a sample of firms ranked in the Fortune Global 500 for the period 2013–2016. Robustness check tests were conducted to limit endogeneity concerns.

The results show that in line with strategic legitimacy theory, agency theory and organisational stigma theory, poor sustainability performers disclose a low quality of hard, negative CSR information.

This paper provides guidance for stakeholders to identify good and poor CSR performers by better understanding whether corporate CSR reports are more likely to be symbolic or substantive when considering the amount of hard, negative content in their CSR stand-alone reports.

The research highlights the opportunistic behaviour of CSR reporting, which is used more as a legitimation device than as an accountability mechanism. Thi

Although numerous studies have investigated the association between the level of corporate social disclosure (CSD) and corporate social performance, no research has focussed on hard, negative CSD. Also, an index that captures the disclosure quality rather than the quantity of negative CSR information was constructed.

The purpose of this paper is to examine whether narrative corporate social responsibility (CSR) disclosures (the provision of textual information on companies’ environmental and social performance to external stakeholders) are associated with firm value in Germany.

Based on the global reporting initiative guidelines, the paper uses content analysis to assess the value relevance of CSR disclosures of 130 German companies over four years.

The results show that CSR information is value-relevant, but the value relevance of CSR information differs among CSR categories. Specifically, the disclosure of social information is positively associated with firm value yet environmental disclosures are not.

The results confirm that management should be aware of the potential capital market effects of voluntary CSR disclosures, even though such disclosures may be directed at other stakeholders.

Germany is an interesting setting as CSR disclosures are voluntarily, even though the institutional environment appears sensitive to CSR disclosures. Despite this, little research has focussed upon the value-relevance of CSR-disclosures in Germany. In addition, the results confirm that management should be aware of the potential capital market effects of voluntary CSR disclosures, even though they are not directed at shareholders as such.

Globally, corporate social responsibility (CSR) has been a voluntary practice, but faced serious limitations in its institutionalization. Resultantly, India, through the Companies Act, 2013, mandates corporates to change voluntary and ad hoc CSR practices into strategic and systematic projects. This paper aims to explore the changes brought in CSR practices by corporates under the influence of CSR law. The goal is to fill the literature gap on qualitative changes brought in CSR practices by the mandate.

This qualitative study used purposive sampling and conducted in-depth interviews of corporate officials, nongovernmental organization (NGO) officials and academicians. The findings are discussed with the theoretical framework of institutional isomorphism.

This paper presents changes in CSR practices in six themes: ad hoc to project-mode program designing and planning, stricter due diligence of NGOs, multi-stakeholder implementation of impact-driven projects, strict monitoring mechanisms, higher funding and rigorous reporting. These changes contribute to an understanding of the shift from voluntary to mandatory CSR in India, institutionalized through a mix of normative, coercive and mimetic pressures.

Indian corporates can adopt the systematic practices in their CSR programmatic cycle, as presented in this study. NGOs would gain insights into newer requirements of corporates to design effective collaborations. Future studies can be conducted to describe the extent of institutionalization of CSR practices in India.

This paper creates knowledge for multiple stakeholders of CSR in India and other developing countries by presenting changes brought in CSR practices by a legal mandate in comparison to voluntary CSR.

Corporate social responsibility (CSR) actions are expected to reduce information asymmetries and increase legitimacy among the stakeholders of the company, which consequently should have a positive impact on the financial conditions of the firm. Hence, the objective of this paper is to find empirical evidence on the negative relationship between sustainable behavior and the cost of equity, in the specific context of Latin America. To address this issue, some proxies and moderating variables for sustainability are used in our study.

The regression model considers a sample with 252 publicly trading firms and 2,772 firm-year observations, from 2008 to 2018. The generalized method of moments is used to avoid endogeneity problems.

The study finds evidence that firms with higher environmental, social and governance activities disclosed by sustainability reports and assured by external providers decrease their cost of equity, especially if they are in an integrated market as MILA. This finding confirms that agency conflicts between firm's management and stakeholders diminish with higher CSR transparency, leading to a lower cost of capital.

Our research is unique and valuable as, to our knowledge, it is the first study to analyze the impact of sustainable behavior and the cost of equity from companies operating in Latin America.

Las actividades de Responsabilidad Social Empresarial permiten disminuir asimetrías de información e incrementar la legitimidad ante los stakeholders de una empresa, generando impactos positivos financieros para la misma. De hecho, el objetivo del artículo es medir la relación entre el comportamiento sostenible y el Costo de Capital en el contexto empresarial latinoamericano. Para ello, consideramos algunas variables proxy y moderadoras sustentables en nuestro estudio.

El modelo considera una muestra de 252 empresas cotizadas y 2772 observaciones que abarcan el período de 2008 a 2018. Se implementa el Modelo Generalizado de Momentos para evitar problemas de endogeneidad.

Los autores evidencian que empresas con altos niveles de divulgación ambiental, social y gobernanza corporativa a través de reportes de sostenibilidad y asegurados por proveedores externos disminuyen el Costo de Capital, especialmente si cotizan en un mercado integrado como el MILA. Estos hallazgos confirman que se reduce la asimetría de información entre la gerencia y los stakeholders, dado que incrementa la transparencia mediante la Responsabilidad Social Corporativa y ello conduce a un menor Costo de Capital.

Nuestro estudio es único dado que, hasta la fecha, es el primer estudio que analiza el impacto de la divulgación voluntaria de RSE y Costo de Capital de empresas que operan en Latinoamérica.

The goal of this article was to look into the direct and indirect links between corporate social responsibility (CSR) activities and the cost of equity, using real earnings management (REM) as a mediator.

To test the hypotheses, the authors applied linear regressions with panel data using the Thomson Reuters ASSET4 and I/B/E/S database on a sample of 540 European companies selected from the environmental, social and governance (ESG) index over the period 2011–2019.

The results show that REM partially mediates the relationship between CSR practices and the cost of equity in European firms belonging to the ESG index.

Instead of beautifying their business, companies should make efficient managerial and organizational improvements to meet their social duty. Regulators in Europe must strive for tighter enforcement while also attempting to raise public awareness of CSR. CSR can be profitable and helpful for primary stakeholders, according to the research.

Although previous literature has investigated the direct correlation between CSR practices and the cost of equity, the present work focuses on considering the direct and indirect association between CSR and cost of equity through the mediating effect of REM, which has not been widely used in CSR studies so far.

This study aims to explore the set of corporate social responsibility (CSR) committee attributes that may enhance CSR performance and CSR strategy formation and reduce CSR controversies.[AQ1] Towards this end, the study also explores the differences between companies with and without CSR committees in terms of these three CSR performance facets.

The study uses a sample of financial times stock exchange (FTSE) 100 non-financial companies in 2015–2017. Kruskal-Wallis test is conducted to test the differences in CSR performance in firms with CSR board-level committee, CSR management committee and no committees. Additionally, a regression model is used to explore the attributes of CSR committees that lead to better/less CSR performance and CSR strategy/CSR controversies. A two-stage least squares regression model was used as a robustness check.

Firms with board CSR committee have better CSR performance and CSR strategy and lower CSR controversies than both firms with no CSR committees and firms with a CSR management committee. Regression results show that CSR committees that are predominantly consisting of independent board members, chaired by a female director and setting more meetings have better CSR performance. Additionally, CSR committees were found to have lower CSR controversies when having more independent directors and a chair with CSR expertise. CSR strategy was better with the CSR committee represented by a larger group of members.

This study makes several contributions to the sustainability governance literature and regulatory/guidance interfaces. There is extant literature examining audit committee attributes and their effects on various firm outcomes. The same can be said on the regulations of the audit committee. CSR committees’ composition and benefits are, by far, less regulated and largely under-researched. Hence, this paper is considered an early attempt to explore the CSR performance improvements a CSR committee may bring and the composition that would bring better CSR performance.

In this study, the authors investigate if analysts, as knowledgeable information intermediaries, can correctly identify bank corporate social responsibility (CSR) activities and can reliably transmit that information to investors. Hence, the authors specifically explore if analysts perceive and behave differentially in the presence of genuine bank CSR activities (strengths). The authors also analyze if financial markets differentially assess bank CSR strengths. The authors further explore the viability of focusing on analyst and financial markets to validate genuine bank CSR strengths.

The authors use COMPUSTAT and CRSP for firm and financial data, I/B/E/S for analyst reporting data and MCSI Research KLD for CSR data. The sample consists of 329 distinct banks and 2,525 bank-year observations from 2003 to 2016. The primary CSR score is the total number of CSR strengths less the total number of CSR concerns, across six of the seven dimensions for each firm in each year of the sample (Adjusted CSR Score). In addition, the authors estimate all the analyses with dis-aggregated measures of total CSR strengths and total CSR concerns (Adjusted Total Strength Score).

The authors find that analysts correctly distinguish and construe bank CSR strengths from CSR concerns. Specifically, bank CSR strengths increase analyst following and forecast accuracy, while decreasing analyst forecast dispersion. The authors further find that bank CSR strengths increase bank market returns. These results are reversed for bank CSR concerns. Additionally, the authors demonstrate that this method using knowledgeable intermediaries can help validate bank CSR strengths.

The sample is limited to US banks and financial markets. The regulatory and information environment is likely to be different from global or emerging markets. However, since banks in many countries aspire to emulate the US banks, these results would be a precursor of banking sectors conditions in emerging markets. Additionally, the availability of data limits the sample to a period that ends in 2016. To the extent that the importance of ESG and CSR concerns has increased in the intervening time, the results may not accurately reflect the current state of the market.

This investigation benefits researchers, customers, banking executives, regulators and activist groups. First, the authors show that in addition to customers, analysts and the financial markets appreciate bank CSR strengths. Second, despite sophisticated financial reporting by banks, analysts correctly distinguish and construe bank CSR strengths. Third, the authors demonstrate a method for bank marketing researchers to validate genuine bank CSR activity, as well as provide additional support for customer related bank CSR outcomes. Fourth, the findings highlight the importance for banks to have high-quality CSR reporting. This might be especially helpful to a bank rebuilding its reputation after a CSR failure. Finally, this investigation using US banks could serve as a precursor for future bank CSR research and help develop CSR reporting guidelines for banks in emerging economies.

This investigation benefits researchers, customers, banking executives, regulators and activist groups.

This investigation benefits researchers, customers, banking executives, regulators and activist groups. First, the authors show that in addition to customers, analysts and the financial market appreciates bank CSR strengths. Second, despite sophisticated financial reporting by banks, analysts correctly distinguish and construe bank CSR strengths. Third, the authors demonstrate a method for bank marketing researchers to validate genuine bank CSR activity, as well as provide additional support for customer related bank CSR outcomes. Fourth, the findings highlight the importance for banks to have high-quality CSR reporting. This might be especially helpful to a bank rebuilding its reputation after a CSR failure. Finally, this investigation using US banks could serve as a precursor for future bank CSR research and help develop CSR reporting guidelines for banks in emerging economies.

The purpose of this paper is to address the corporate governance implications of the US terror‐free investment screens, instituted both legislatively and voluntarily, on the operations of non‐US multinational corporations (MNCs) concerning international trade and foreign direct investment with nations designated as “State Sponsors of Terrorism.”

After a brief introduction to the issue of “terror‐free lists” and investment indexes and divestment screens, the paper summarizes the US Federal and State Laws pertaining to state sponsors of terrorism and their direct impact on international trade and investment transactions. The third section evaluates the success of environmental, social, and governance (ESG) indexes and investment screens compared to standard market investment indexes. The fourth section discusses the potential effects of terror‐free stock indexes and divestment (“social”) screens on corporate governance of non‐US corporations. In the final section, the paper offers business policy recommendations concerning international trade and foreign direct investment decisions and the listing of equity stock on the US financial market exchanges, and offer scholarly research questions addressing this issue.

Non‐US MNC managers should recognize, first, the importance of global corporate citizenship and reputation; second, the expansion of terror‐free investing criterion in ESG investment indexes and divestment screens; and third, the growth in the number of state government prohibitions on investing funds with foreign MNCs complicit with terror‐sponsoring states.

Exploratory in nature, this seminal paper evaluates an issue of emerging importance to non‐US MNC managers and directors concerned with potential political and economic repercussions of their international trade and foreign direct investment decisions.

This study aims to examine whether good carbon performers disclose more carbon information overall than poor performers, and if yes, how firms select different types of carbon information to signal their genuine superior carbon performance.

The level of disclosure is measured based on content analysis of Carbon Disclosure Project (CDP) reports. The study sample consists of 487 US companies that voluntarily participated in the CDP survey from 2011 to 2012. The authors use the t-test and multiple regression models for analyses.

The results consistently indicate that firms with better carbon performance disclose a greater amount of overall carbon information, supporting the signalling theory. In addition, in contrast to previous studies that merely consider the overall disclosure level, the authors also investigate disclosure of each major aspect of carbon activities. The results show that good carbon performers disclose more key carbon items, such as goods and services that avoid greenhouse gas (GHG) emissions, external verification and carbon accounting, to signal their true type.

This study has some limitations. The authors rely on CDP reports for analysis and focus on the largest companies in the USA. Caution should be exercised when generalising the results to other countries, smaller firms or voluntary carbon information disclosed in other communications channels.

Because carbon disclosure has already been moving from a voluntary to mandatory requirement in many jurisdictions, the format and content of CDP reports might be considered for a formal standalone GHG statement. Based on the results, the authors believe that there should be industry-specific disclosure guidelines, and more disclosure should be made at the project level.

In the context of climate change, this study provides support for the signalling theory by utilising the relationship between voluntary carbon disclosure and performance. The study also provides empirical evidence on how companies may use different types of carbon information to signal their underlying carbon performance.