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The effect of mandatory CSR disclosure on stock liquidity

Author

Listed:
  • Li, Zhiyuan
  • Lin, Wenlian
  • Zhou, Sili

Abstract

This study examines the effect of mandatory CSR disclosure on stock liquidity in the China's stock market. Using a difference-in-differences method, we find supportive and robust evidence that mandatory CSR disclosure significantly reduces stock liquidity by diminishing informational advantages for certain traders, causing them to exit the stock market. Our study highlights unintended liquidity effects of mandatory CSR disclosure, suggesting that policymakers need to consider reactions of the information-advantaged traders, especially in emerging markets with high information asymmetry.

Suggested Citation

  • Li, Zhiyuan & Lin, Wenlian & Zhou, Sili, 2024. "The effect of mandatory CSR disclosure on stock liquidity," China Economic Review, Elsevier, vol. 87(C).
    • Handle: RePEc:eee:chieco:v:87:y:2024:i:c:s1043951x24001214
    DOI: 10.1016/j.chieco.2024.102232
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    More about this item

    Keywords

    Mandatory CSR disclosure; Stock liquidity; Information asymmetry;
    All these keywords.

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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