The effect of mandatory CSR disclosure on firm profitability and social externalities: Evidence from China |
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Authors: | Yi-Chun Chen Mingyi Hung Yongxiang Wang |
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Institution: | 1. The Hong Kong University of Science and Technology;2. University of Southern California |
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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 SO2 emission levels. These findings suggest that mandatory CSR disclosure alters firm behavior and generates positive externalities at the expense of shareholders. |
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Keywords: | K20 M14 M4 Mandatory CSR disclosure Firm performance Social externalities China |
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