Assurance of corporate social responsibility reports: Does it reduce decoupling practices?

Recent research shows the existence of a selective corporate social responsibility (CSR) disclosure strategy that creates a gap between CSR disclosure and actual performance. These CSR decoupling practices compromise the credibility of CSR reports and have triggered a demand for the adoption of credibility enhancement mechanisms, such as adherence to the global reporting initiative (GRI) reporting guidelines, and the external assurance of CSR reports. The effectiveness of such mechanisms is not clear, however. This paper draws on legitimacy theory and addresses the issue of symbolic versus substantive use of assurance, and compliance with GRI reporting standards, by analysing their effect on CSR decoupling using an international sample of 1,939 companies (15,219 observations from 2002 to 2017). Analysis of a sub-sample of 708 firms (3,730 observations from 2011 to 2017) also shows that the application of GRI guidelines and the specific characteristics of the assurance provider—accountant, experience and specialisation—reduce CSR decoupling practices. The results provide researchers, managers, assurance providers, investors, stakeholders and regulators with additional insight into the value of the external assurance of sustainability reports and have important managerial and policy implications.     

Corporate Governance Quality and CSR Disclosures

Given the increasing importance attached to both corporate social responsibility (CSR) and corporate governance, this study investigates the association between these two complimentary mechanisms used by companies to enhance relations with stakeholders. Consistent with both legitimacy and stakeholder theory and controlling for industry profile, firm size, stockholder power/dispersion, creditor power/leverage, and economic performance, our analysis of the annual reports for a sample of 222 listed companies suggests that firms providing more CSR information: have better corporate governance ratings; are larger; belong to higher profile industries; and are more highly leveraged. Our findings support the limited prior research suggesting a link between corporate governance quality and CSR disclosure in company annual reports and suggest that, rather than mandating specific disclosures, regulators might be better served focussing on corporate governance quality as a way of increasing CSR disclosures.     

Sustainability assurance and cost of capital: Does assurance impact on credibility of corporate social responsibility information?

This paper aims to examine the credibility value of sustainability assurance and the type of assurance provider on cost of capital. A large sample of international companies from the period 2007–2014 was used to develop our models of analysis. We find a greater decrease in cost of capital for companies that publish and assure their social and environmental reports. Thus, voluntary sustainability disclosures decrease the cost of capital. However, companies also have the opportunity to reinforce this decrease by providing an assurance statement, so increasing the credibility of corporate social responsibility information. In addition, the decrease in the cost of capital is significantly higher when such assurance is provided by a top‐tier accountancy firm instead of by engineering or consultancy firms; this result supports also the reputational capital of accountancy firms.     

Corporate social responsibility and bank risk profile: evidence from Europe

This study analyzes the impact of risk profile on sustainability reporting and its quality in European banks. Financial institutions (FI) play a social role in the financial inclusion process and incorporate environmental considerations into credit risk assessment, making corporate social responsibility (CSR)-related issues vital for risk management systems. FI with lower capital risk, higher liquidity risk, higher profitability in banking, and higher sensitivity to market risk tend to issue CSR reports. The findings suggest that FI with lower profitability in banking disclose higher quality CSR financial services sector (FSS)-specific information, whereas FI not submitting CSR reports for external assurance or having their CSR reports assured by certain auditors issue lower quality CSR/FSS-specific information.     

The hunt for international legitimacy: Examining the relationship between internationalization,state ownership,location and CSR reporting of Russian firms

This paper explores the relationship between internationalization and corporate social responsibility (CSR) communication in Russian firms. Our baseline argument is that internationalization positively affects CSR reporting, as it is expected to enhance the legitimacy of Russian firms abroad. We examine the role of state ownership, and Commonwealth of Independent States (CIS) vs. non-CIS location, as two boundary conditions on the relationship between internationalization and CSR reporting. We test our hypotheses on panel data of 223 large Russian firms for the period 2012–2017, collected from company annual reports, databases, and official company websites. Our data include financial and non-financial indicators, and firm-level organizational characteristics. The results reveal the context specificity of CSR reporting. We find that state ownership moderates the relationship between internationalization and CSR reporting in CIS and non-CIS markets differently, and the positive effect is stronger for non-CIS locations. Our study goes beyond the traditional approach, treating CSR reporting as a unidimensional construct. We show that the effect of internationalization, both direct and moderated, differs for the different types of CSR activity.     

The Evolution of Whistleblowing Studies: A Critical Review and Research Agenda

This study investigates the variations in the quality and comprehensiveness of 104 corporate social responsibility (CSR) reports published by the world’s largest financial institutions in 2012. Using a novel measure of CSR report quality, we examine the impact of certain national, legal, and firm-level factors that might explain differences in the overall quality and extent of coverage of various issues in these reports. Our findings show that legal factors and CSR environment in a firm’s country of headquarters play an important role in firms’ CSR reporting quality. Common law countries exhibit systematically higher overall CSR reporting quality than code law countries. Countries with higher CSR standards, policies, and regulations in place also produce significantly higher quality CSR reports. Firm size, on the other hand, has no major impact on the overall quality of CSR reports. In further analysis of the individual aspects of CSR disclosures, namely environment, philanthropy, bribery and corruption, and integrity assurance, we document that larger firms report at a higher quality on philanthropy and bribery and corruption. Bribery and corruption is reported at a higher quality in countries with common law tradition, high-quality legal regimes, and high CSR standards and regulations in place. We also observe higher quality integrity assurance in common law countries. CSR-minded countries and countries with low-quality legal environment also report on philanthropy at a higher quality. Finally, we offer guidelines for companies toward improving the quality of their reports, and suggestions for scholars and researchers for further avenues of research.     

The use of corporate social disclosures in the management of reputation and legitimacy: a cross sectoral analysis of UK Top 100 Companies

Recent years have witnessed an escalation in corporate social reporting (CSR) by UK companies (Gray, Kouhy and Lavers 1995). Whilst some elements of CSR reporting are required by law, much of it represents voluntary reporting. By investigating the non‐mandatory reporting of two aspects of social responsibility, corporate community involvement (CCI) and environmental impact, this paper seeks to explore why companies choose to make such disclosures. It specifically asks whether companies are primarily motivated by the strategic need to manage their reputation and legitimacy rather than by the recognition of their ethical accountability, which is the stated purpose of reports produced by cutting edge companies (Clarke 1998).     

The value relevance of SAM's corporate sustainability ranking and GRI sustainability reporting in the European stock markets

This paper investigates whether relative corporate sustainability as measured by the SAM sustainability ranking and sustainability reporting in terms of Global Reporting Initiative (GRI) application levels are associated with a higher market valuation. We conduct a value relevance study for the 600 largest European companies with the Feltham and Ohlson valuation model as a reference point. Our results indicate that for the observation period 2001 to 2011, the association between corporate sustainability and market value is positive. The empirical evidence of a positive relationship between GRI reporting and market value is statistically significant in some but not all of the model specifications. We find no evidence of interaction between the value relevance of corporate sustainability and sustainability reporting, nor do we find any positive effect of external assurance on the capital market perception of GRI application levels. Our results support the notion that conducting business in accordance with ethical norms is also a shareholder value‐increasing business strategy. However, it is not possible to verify the information given in sustainability reports through external assurance.     

Multinational Enterprise Subsidiaries and their CSR: A Conceptual Framework of the Management of CSR in Smaller Emerging Economies

There is a lack of theoretical consensus on how multinational enterprises (MNEs) should implement corporate social responsibility (CSR) to build legitimacy, particularly those operating in the smaller Asian emerging market context, where current growth in the global economy is being felt more acutely than elsewhere. This paper argues for theoretical integration of business ethics (BE) and international business (IB) research to address this concern. Hence, we explore the management of CSR strategies by MNE subsidiaries with specific interest on their proactive adoption of strategic CSR to obtain legitimacy in a foreign host country. Drawing on the recent CSR literature and related theories, including stakeholder theory and institutional theory, propositions and a conceptual framework are developed and presented. The framework integrates BE and IB concepts on the different dimensions of CSR and provides a theoretical derived explanation of the process for strategic adoption of global through to more local CSR strategies by MNE subsidiaries to build legitimacy in an emerging market context. In addition, the framework provides valuable insights into the adoption of different ethical approaches or CSR strategies based on the level of ethical pressure in a host country and the degree of CSR ingrainedness in the parent company.     

SMEs and the fallacy of formalising CSR

There exists increasing pressure for small and medium‐sized enterprises (SMEs) to engage in corporate social responsibility (CSR) practices, including social reporting. Curiously in this promotional programme of CSR reporting, the only group whose ideas are not sought in this debate are the SME leaders themselves. The present ethnographic field analysis, based on discussions within entrepreneurs' circles, tends to suggest that the argument for expanding formalisation of CSR to SMEs rests upon several fallacies. It implicitly assumes that an apparent solution for large multinationals can be transposed to SMEs, and it underestimates the drawbacks of bureaucracy. Moreover, many SMEs experience inconsistency between the idealistic CSR communication of some large companies and their actions, especially in the supply chain. The author concludes that reports do not constitute the validation for real CSR, nor the proof of superior ethical behaviour. Formalisation can even be counterproductive. Conversely, the absence of social reporting does not imply that SMEs do not behave responsible. CSR in SMEs needs a specific approach, adapted to the informal nature and entrepreneurial character of the small business. The essence of CSR lies in the implementation of responsible business practices. It lies in the right attitudes, in the corporate culture, not in formalisation.     

CSR-Based Political Legitimacy Strategy: Managing the State by Doing Good in China and Russia

The state is a key driver of corporate social responsibility across developed and developing countries. But the existing research provides comparatively little knowledge about: (1) how companies strategically manage the relationship with the state through corporate social responsibility (CSR); (2) how this strategy takes shape under the influence of political institutions. Understanding these questions captures a realistic picture of how a company applies CSR to interacting with the state, particularly in countries where the state relationship is critical to the business operation. This article draws on political legitimacy as a useful concept to directly address both strategic and politically embedded natures of CSR. This work extends the currently under-specified political implication of the strategic view of CSR and provides fresh insights to the political legitimacy research by specifying a typology of CSR-based legitimacy strategies and its contextual variation. China and Russia are the focal settings. A qualitative analysis of business?Cstate interaction cases is done using a database that contains the majority of CSR reports published in Chinese and Russian as the end of 2009. As a result, this paper identifies four qualitatively different types of CSR-based political legitimacy strategies and reveals how the adoption of these strategies differs across Chinese companies, Russian companies, and multinational corporations.     

Striving for Legitimacy Through Corporate Social Responsibility: Insights from Oil Companies

Being a controversial industry, oil companies turn to corporate social responsibility (CSR) as a means to obtain legitimacy. Adopting a case study methodology, this research examines the characteristics of CSR strategies and CSR communication tactics of six oil companies by analyzing their 2011–2012 web site content. We found that all six companies engaged in CSR activities addressing the needs of various stakeholders and had cross-sector partnerships. CSR information on these companies’ web sites was easily accessible, often involving the use of multimedia technologies and sometimes social media platforms. Furthermore, to boost the credibility of their CSR messages, these companies utilized a variety of tactics, such as factual arguments and two-sided messages. In sum, this research unveils the interconnectedness among business strategy, CSR practices, and CSR communication in oil companies’ attempt to gain legitimacy in an environment of controversy. The article ends with a discussion of the theoretical and practical implications of the research findings.     

The role of the audit committee in enhancing the credibility of CSR disclosure: Evidence from STOXX Europe 600 members

This study examines the influence of audit committee attributes, namely financial expertise, independence, meeting frequency and size, on the adoption of CSR assurance. The study also offers insight into the effect of audit committee attributes on the scope and level of CSR assurance and the selection of CSR assurance providers. Contextually, this is achieved using a sample of European companies listed on the STOXX 600 index over the period 2012–2018. The findings show that attributes related to audit committee financial expertise, audit committee independence and audit committee meeting frequency and the existence of a CSR committee, are positively linked with the adoption of CSR assurance. Moreover, our empirical analysis further highlights the critical role of audit committee financial expert members in enhancing the scope and level of CSR assurance. Furthermore, audit committee with more frequent meetings lead to higher assurance scopes. Our findings offer significant and multidimensional insights for regulators, policymakers and professionals, regarding the revision and establishment of regulations concerning the audit committee structure.     

Trends and Drivers in CSR Disclosure: A Focus on Reporting Practices in the Automotive Industry

This work focuses on corporate social responsibility (CSR) disclosure practices of multinational corporations. Based on a longitudinal study of CSR reports of companies operating in the automotive industry, the paper offers a detailed study of how disclosure practices are changing and which principles and approaches influence and drive the development of such disclosure. Based on a four-year report-based study, the findings enable us to identify three main trends in the CSR disclosure strategy of automotive firms. First, in line with the mainstream CSR literature, the present study confirms the trend towards the increasing environmental and social accountability. Second, it adds evidence to the emerging debate regarding the harmonization and standardization of reporting and discusses this aspect by mentioning the standards as exerting some normative pressures within the sector. Finally, it provides evidence on specific links emerging between issues and actors. The implications of this evidence contribute to opening up the debate on CSR disclosure to the possibility of combining the institutional lens with a strategic approach that captures the materiality considerations of CSR disclosure.     

To trust or not to trust? The interplay between labor-related CSR claim type and prior CSR reputation of apparel retailers

Prevalent human rights violations in supply chains have tarnished apparel retailers' reputations, heightening skepticism toward CSR communication. We examine the effect of labor-related CSR claim type (associative vs. substantive) on message credibility, skepticism, and retailer trust. Moreover, to determine whether CSR reputation plays a role in vulnerability to criticism, we investigate how a retailer's prior CSR reputation moderates the effect of CSR claim type on consumer evaluations. Applying the framework of decoupling and cognitive dissonance theory, we propose hypotheses and test them with an online experiment. We reveal that associative CSR claims, which communicate image-oriented rather than concrete information, significantly diminish message credibility and retailer trust, while triggering skepticism. A significant interaction effect further demonstrates that when a retailer's prior CSR reputation is negative, associative claims exacerbate message credibility. Our findings also indicate that positive CSR reputations do not always create a buffering halo effect. We discuss implications to develop optimal CSR communication strategies for apparel retailers.     

CSR： New Engine of Economic Recovery

Nowadays, China has more and more focused Corporate Social Responsibility （CSR）. From October 2009, more than 600 Chinese companies have released CSR reports. According to statistics from China WTO Tribune, in 2009 China issued a total of 631 CSR reports, 3.73 times more than that released in 2008. On June 5, 2010, at the Fifth International CSR Forum, the ＂2009 GoldenBee CSR China Honor Roll＂ was held in Beijing. The Forum also released the ＂2009 China CSR Practice Benchmark Report＂,     

Governing Corporate Social Responsibility: An Assessment of the Contribution of the UN Global Compact to CSR Strategies in the Telecommunications Industry

CSR has become an important element in the business strategy of a growing number of companies worldwide. A large number of initiatives have been developed that aim to support companies in developing, implementing, and communicating about CSR. The Global Compact (GC), initiated by the United Nations, stands out. Since its launch in 2000, it has grown to about 2900 companies and 3800 members in total. The GC combines several mechanisms to support CSR strategies: normative principles, networks for learning and co-operation, and communication and transparency about CSR activities. However, up to now only a few empirical evaluations of the contribution of the GC to CSR strategies have been conducted that however have not differentiated between different types of companies (regarding type of industry or regarding the maturity of CSR). This paper aims to partly fill this knowledge gap by a case study examination of three frontrunner companies in the telecommunications industry. The results show that the GC is only one of the many initiatives that these companies employ in shaping, implementing, and reporting about their CSR strategies, and that its role is at most modest. There are two important reasons. One is that many of the CSR issues that these companies deal with are industry specific and are hence addressed in specific networks. The second reason is that the GC principles are perceived as minimum requirements that do not provide many incentives to the three case study companies to perform better. A differentiation of norms for GC members is expected to enhance the contribution of the GC to CSR strategy employment, not only for frontrunner companies but as well for other categories of companies.     

Employer branding and CSR communication in online recruitment advertising

While multiple studies have discussed the importance of corporate social responsibility (CSR) in recruiting, two important but unaddressed questions constrain the understanding and practice of presenting firms’ socially conscious efforts to their prospective employees. First, are companies engaged in CSR communicating their CSR practices effectively in online recruitment advertising? And second, what CSR information should companies include in online job advertisements to improve their employer attractiveness to prospective candidates? The findings of this study show that CSR communication in recruitment advertising is often limited, an ad-hoc practice, and mostly focused on company practices concerning employee participation and development. Even companies with a great CSR reputation take surprisingly little advantage of their CSR image when it comes to attracting job candidates. To improve employer attractiveness, we recommend that human resources managers consider (1) optimizing the structure of online job advertisements by including a company overview section in which CSR information can be presented easily, (2) expanding the scope of CSR dimensions in job advertisements to include environmental performance and community relations, (3) offering information about opportunities for employee engagement with CSR, and (4) adopting a strategic approach to the inclusion of CSR content in online job advertisements.