The effect of mandatory CSR disclosure on firm profitability and social externalities: Evidence from China

Yi-Chun Chen; Mingyi Hung; Yongxiang Wang

doi:10.1016/j.jacceco.2017.11.009

The effect of mandatory CSR disclosure on firm profitability and social externalities: Evidence from China

Yi-Chun Chen, Mingyi Hung^*, Yongxiang Wang

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

559 Citations (Scopus)

81 Downloads (Pure)

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 SO ₂ emission levels. These findings suggest that mandatory CSR disclosure alters firm behavior and generates positive externalities at the expense of shareholders.

Original language	English
Pages (from-to)	169-190
Number of pages	22
Journal	Journal of Accounting and Economics
Volume	65
Issue number	1
DOIs	https://doi.org/10.1016/j.jacceco.2017.11.009
Publication status	Published - Feb 2018
Externally published	Yes

Bibliographical note

Copyright © 2017 The Authors. Published by Elsevier B.V.. Version archived for private and non-commercial use with the permission of the author/s and according to publisher conditions. For further rights please contact the publisher.

Keywords

China
Firm performance
Mandatory CSR disclosure
Social externalities

Access to Document

10.1016/j.jacceco.2017.11.009Licence: CC BY-NC-ND

Publisher version (open access)Final published version, 589 KBLicence: CC BY-NC-ND

Cite this

@article{7e9c166876214ea9aeb52548e99b1060,

title = "The effect of mandatory CSR disclosure on firm profitability and social externalities: Evidence from China",

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 SO 2 emission levels. These findings suggest that mandatory CSR disclosure alters firm behavior and generates positive externalities at the expense of shareholders. ",

keywords = "China, Firm performance, Mandatory CSR disclosure, Social externalities",

author = "Yi-Chun Chen and Mingyi Hung and Yongxiang Wang",

note = "Copyright {\textcopyright} 2017 The Authors. Published by Elsevier B.V.. Version archived for private and non-commercial use with the permission of the author/s and according to publisher conditions. For further rights please contact the publisher.",

year = "2018",

month = feb,

doi = "10.1016/j.jacceco.2017.11.009",

language = "English",

volume = "65",

pages = "169--190",

journal = "Journal of Accounting and Economics",

issn = "0165-4101",

publisher = "Elsevier",

number = "1",

}

TY - JOUR

T1 - The effect of mandatory CSR disclosure on firm profitability and social externalities

T2 - Evidence from China

AU - Chen, Yi-Chun

AU - Hung, Mingyi

AU - Wang, Yongxiang

N1 - Copyright © 2017 The Authors. Published by Elsevier B.V.. Version archived for private and non-commercial use with the permission of the author/s and according to publisher conditions. For further rights please contact the publisher.

PY - 2018/2

Y1 - 2018/2

N2 - 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 SO 2 emission levels. These findings suggest that mandatory CSR disclosure alters firm behavior and generates positive externalities at the expense of shareholders.

AB - 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 SO 2 emission levels. These findings suggest that mandatory CSR disclosure alters firm behavior and generates positive externalities at the expense of shareholders.

KW - China

KW - Firm performance

KW - Mandatory CSR disclosure

KW - Social externalities

UR - http://www.scopus.com/inward/record.url?scp=85035240470&partnerID=8YFLogxK

U2 - 10.1016/j.jacceco.2017.11.009

DO - 10.1016/j.jacceco.2017.11.009

M3 - Article

SN - 0165-4101

VL - 65

SP - 169

EP - 190

JO - Journal of Accounting and Economics

JF - Journal of Accounting and Economics

IS - 1

ER -

The effect of mandatory CSR disclosure on firm profitability and social externalities: Evidence from China

Abstract

Bibliographical note

Keywords

Access to Document

Other files and links

Fingerprint

Cite this