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

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178 Citations (Scopus)
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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 languageEnglish
Pages (from-to)169-190
Number of pages22
JournalJournal of Accounting and Economics
Issue number1
Publication statusPublished - Feb 2018
Externally publishedYes

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.


  • China
  • Firm performance
  • Mandatory CSR disclosure
  • Social externalities

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