CSR disclosure and information asymmetry: the role of financial reporting quality
Pages 47 to 58
Cite this article
- VIVIANI, Jean-Laurent,
- TOUCHAIS, Lionel
- and LAN PHUONG, Nguyen,
- Viviani, Jean-Laurent.,
- et al.
- Viviani, J.-L.,
- Touchais, L.
- and Lan Phuong, N.
https://doi.org/10.54695/bmi.168.4634
Cite this article
- Viviani, J.-L.,
- Touchais, L.
- and Lan Phuong, N.
- Viviani, Jean-Laurent.,
- et al.
- VIVIANI, Jean-Laurent,
- TOUCHAIS, Lionel
- and LAN PHUONG, Nguyen,
https://doi.org/10.54695/bmi.168.4634
Notes
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[1]
The use of an international sample does not aim to isolate the effect of individual country attributes, it is rather to insure the robustness of the relationship in spite of the various country-level institutions and features. However, even if we introduce country fixed effects, the results may be impacted by countries’ heterogeneity.
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[2]
The authors are aware that the choice of a single provider of ESG data might give a biased view since correlation between providers is low.
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[3]
We winsorize extreme (1st and 99th) percentiles of dependent variable and continuous control variables to prevent the effect of outliers.
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[4]
In model 3, the measures of FRQ variables need to be centered to get a revised sample mean of zero so that we can eliminate the multicollinearity effect occurred by using the interaction terms.
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[5]
According to the Breusch and Pagan Lagrangian test and the Hausman test, fixed effects method seems to be the more appropriate.
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[6]
We also conduct a robustness check by using a sample of companies in “dirty” industries. The specific characteristics of polluting industries regarding CSR activities does not modify the conclusions obtained from the global sample.
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[7]
The two measures (FERROR and Dispersion) are transformed into logarithm to induce the symmetry and normality in such data.
Based on firm-level data from 39 countries, over a nine-year period, this study analyzes whether financial reporting quality and CSR disclosure are related to each other in improving the quality of corporate information. The findings show that firms disclosing a greater amount of CSR information have a lower degree of information asymmetry (bid-ask spread). This relationship is less pronounced in firms with high financial reporting quality. It suggests a substitution association between financial reporting and CSR disclosure in reducing information asymmetry. Financial transparency is therefore an important factor to explain the informativeness of CSRD. With a high financial transparency, CSRD provides less incremental information content to the investors. However, the robustness tests show that CSRD decreases the quality of financial analysts’ forecasts. This seemingly contradictory result might be explained by firms engaging in differentiated information disclosure to cope with contradictory social and institutional pressures (investors versus financial analysts).
JEL Classification: M14, M41, G32.
Keywords :
- CSR disclosure
- financial reporting quality
- information asymmetry
Publisher keywords: CSR disclosure, financial reporting quality, information asymmetry
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