How does financial reporting quality relate to corporate social responsibility expenditures? An international analysis

Jui-Chia Lin, Chen-Yu Wang, Che-Hui Cheng

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

In this study, we examine whether financial reporting quality improves corporate social responsibility (CSR) decisions. By using a sample of 3,502 observations from 18 countries, our findings show that financial reporting quality is positively (negatively) associated with CSR activities for firms that are more prone to under-invest (over-invest) in CSR. These results suggest that financial reporting quality mitigates managerial discretion in CSR activities and leads to an improvement in CSR decisions. Further, we decompose CSR into environmental and social dimensions and find that the effects of financial report quality on CSR initiatives are more pronounced for firms with a tendency to under-invest in environmental CSR.
Original languageEnglish
Article number2150023
Pages (from-to)1-24
JournalReview of Pacific Basin Financial Markets and Policies
Volume24
Issue number3
DOIs
StatePublished - Sep 2021

Keywords

  • Financial reporting quality
  • corporate social responsibility
  • agency problem

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