Corporate social responsibility orientation and textual features of financial disclosures |
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| Affiliation: | 1. Telfer School of Management, University of Ottawa, Canada;1. Business School, Sichuan University, Chengdu, China;2. School of Economics and Management, Southwest Jiaotong University, Chengdu, China;1. School of Economics and Management, North China Electric Power University, Beijing, China;2. School of Economics, Beijing Technology and Business University, Beijing, China;1. College of Management and Economics, Tianjin University, China;2. Faculty of Business Administration, Bilkent University, Ankara, Turkey;3. Adnan Kassar School of Business, Lebanese American University, Beirut, Lebanon;4. College of Business, University of Akron, Akron, OH 44325, USA;5. Macquarie Business School, Macquarie University, Australia;1. School of Humanities and Social Science, Beihang University, Beijing, PR China;2. College of Business, University of Texas at San Antonio, TX, United States;1. Central University of Finance and Economics, China;2. School of Business, University of Wollongong, Australia;1. School of Finance and Accounting, Fuzhou University of International Studies and Trade, China;2. DeGroote School of Business, McMaster University, Canada;3. Xiamen National Accounting Institute, China;4. School of Management, Xiamen University, China |
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| Abstract: | This paper examines the relationship between corporate social responsibility (CSR) orientation and textual attributes of financial disclosures. Using a large U.S. sample from 1999 to 2017, we find that firms with high CSR orientation provide more readable disclosures and use a less ambiguous tone in their annual reports. These findings are consistent with the notion that managers in CSR-conscious firms adhere to high ethical standards and commit to improving the transparency of their firms' financial disclosures. Our results are robust to alternative measures of readability and CSR performance, potential endogeneity, and sampling methods. Moreover, in a cross-sectional analysis, we show that the impact of CSR on corporate readability/tone ambiguity is more pronounced for firms with weak corporate governance. Overall, the results suggest that CSR serves as a substitute for traditional corporate governance mechanisms to ensure transparent disclosure. |
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