Journal
JOURNAL OF ACCOUNTING & ECONOMICS
Volume 65, Issue 1, Pages 169-190Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/j.jacceco.2017.11.009
Keywords
Mandatory CSR disclosure; Firm performance; Social externalities; China
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Funding
- Research Grants Council of the Hong Kong Special Administrative Region, China [G4925]
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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 SO2 emission levels. These findings suggest that mandatory CSR disclosure alters firm behavior and generates positive externalities at the expense of shareholders. (C) 2017 The Authors. Published by Elsevier B.V.
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