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The value relevance of social reporting: evidence from listed Italian companies

Author

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  • Paola Cardamone
  • Concetta Carnevale
  • Francesco Giunta

Abstract

Purpose - This paper aims to test whether the publication of a social report provides information about the firm's market value. Its intention is to understand if investors believe the social report has a role equal to that traditionally attributed to accounting variables, i.e., whether the social report is value‐relevant in assessing a firm's market value. Design/methodology/approach - This paper is deductive. It tests two main hypotheses: first, the social report is value relevant because it explains firm value; second, the social report influences the value‐relevance of accounting variables. The study applies the value‐relevance analysis on a sample of 178 Italian companies listed on the Milan Stock Exchange. Findings - The estimates show a significant negative correlation between the publication of a social report and the stock price. Furthermore, book value per share accounting information is more relevant for the companies that publish a social report, whereas the relevance of earnings per share does not change for these companies. Originality/value - This paper increases the understanding of the value that markets assign to the social report. It contributes to enriching the literature on the value‐relevance analysis applied to non‐financial variables and to social report in particular.

Suggested Citation

  • Paola Cardamone & Concetta Carnevale & Francesco Giunta, 2012. "The value relevance of social reporting: evidence from listed Italian companies," Journal of Applied Accounting Research, Emerald Group Publishing Limited, vol. 13(3), pages 255-269, November.
    • Handle: RePEc:eme:jaarpp:v:13:y:2012:i:3:p:255-269
    DOI: 10.1108/09675421211281326
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    Citations

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    Cited by:

    1. Carmelo Reverte, 2016. "Corporate social responsibility disclosure and market valuation: evidence from Spanish listed firms," Review of Managerial Science, Springer, vol. 10(2), pages 411-435, March.
    2. Imran Abbas Jadoon & Akhter Ali & Usman Ayub & Muhammad Tahir & Raheel Mumtaz, 2021. "The impact of sustainability reporting quality on the value relevance of corporate sustainability performance," Sustainable Development, John Wiley & Sons, Ltd., vol. 29(1), pages 155-175, January.
    3. María Mar Miralles-Quirós & José Luis Miralles-Quirós & Luis Miguel Valente Gonçalves, 2018. "The Value Relevance of Environmental, Social, and Governance Performance: The Brazilian Case," Sustainability, MDPI, vol. 10(3), pages 1-15, February.
    4. repec:mth:ijafr8:v:9:y:2019:i:1:p:122-134 is not listed on IDEAS
    5. Mashiur Rahman & Siti Zaleha Abdul Rasid, 2021. "Does Managers Opportunistic Motive Moderate the Relationship Between CSR Disclosure and Firms Market Value of Equity? Study on the Listed Banking Companies in the Dhaka Stock Exchange," Journal of Asian Business Strategy, Asian Economic and Social Society, vol. 11(1), pages 33-45, June.
    6. Lorenzo Dal Maso & Giovanni Liberatore & Francesco Mazzi, 2017. "Value Relevance of Stakeholder Engagement: The Influence of National Culture," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 24(1), pages 44-56, January.
    7. María Mar Miralles‐Quirós & José Luis Miralles‐Quirós & Jesús Redondo‐Hernández, 2019. "The impact of environmental, social, and governance performance on stock prices: Evidence from the banking industry," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(6), pages 1446-1456, November.
    8. Selena Aureli & Sabrina Gigli & Renato Medei & Enrico Supino, 2020. "The value relevance of environmental, social, and governance disclosure: Evidence from Dow Jones Sustainability World Index listed companies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(1), pages 43-52, January.
    9. Renato Camodeca & Alex Almici & Umberto Sagliaschi, 2018. "Sustainability Disclosure in Integrated Reporting: Does It Matter to Investors? A Cheap Talk Approach," Sustainability, MDPI, vol. 10(12), pages 1-34, November.
    10. Max Goettsche & Tobias Steindl & Simon Gietl, 2016. "Do Customers Affect the Value Relevance of Sustainability Reporting? Empirical Evidence on Stakeholder Interdependence," Business Strategy and the Environment, Wiley Blackwell, vol. 25(3), pages 149-164, March.
    11. Maria del Mar Miralles‐Quiros & Jose Luis Miralles‐Quiros & Irene Guia Arraiano, 2017. "Sustainable Development, Sustainability Leadership and Firm Valuation: Differences across Europe," Business Strategy and the Environment, Wiley Blackwell, vol. 26(7), pages 1014-1028, November.
    12. Maria del Mar Miralles‐Quiros & Jose Luis Miralles‐Quiros & Irene Guia Arraiano, 2017. "Are Firms that Contribute to Sustainable Development Valued by Investors?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 24(1), pages 71-84, January.
    13. Laura Mervelskemper & Daniel Streit, 2017. "Enhancing Market Valuation of ESG Performance: Is Integrated Reporting Keeping its Promise?," Business Strategy and the Environment, Wiley Blackwell, vol. 26(4), pages 536-549, May.
    14. Piotr Bolibok, 2021. "The Impact of Social Responsibility Performance on the Value Relevance of Financial Data in the Banking Sector: Evidence from Poland," Sustainability, MDPI, vol. 13(21), pages 1-19, October.
    15. Lorenzo Simoni & Laura Bini & Francesco Giunta, 2019. "The effects of business model regulation on the value relevance of traditional performance measures. Some evidence from UK companies," FINANCIAL REPORTING, FrancoAngeli Editore, vol. 2019(1), pages 83-111.
    16. Silvana Secinaro & Maha Radwan & Davide Calandra & Paolo Biancone, 2021. "Halal certification impact on firms' corporate social responsibility disclosure: Evidence from the food & beverage sector in Italy," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(4), pages 1376-1385, July.
    17. Jennifer Martínez‐Ferrero & Michele Guidi & Emma García‐Meca, 2023. "Sustainability restatements, firm risk and controversial industries: Analysing the signals based on revision type," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(1), pages 473-485, January.
    18. Isabel Gallego‐Álvarez & María Consuelo Pucheta‐Martínez, 2022. "The moderating effects of corporate social responsibility assurance in the relationship between corporate social responsibility disclosure and corporate performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(3), pages 535-548, May.
    19. Lúcia Lima Rodrigues & Francisca Tejedo-Romero & Russell Craig, 2017. "Corporate governance and intellectual capital reporting in a period of financial crisis: Evidence from Portugal," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 14(1), pages 1-29, February.
    20. Matteo Pozzoli & Marcello Raffaele, 2022. "Non-financial information and company market value," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2022(2 Suppl.), pages 167-187.
    21. Lorenzo Simoni & Stefan Schaper & Christian Nielsen, 2022. "Business Model Disclosures, Market Values, and Earnings Persistence: Evidence From the UK," Abacus, Accounting Foundation, University of Sydney, vol. 58(1), pages 142-173, March.
    22. Luca Fornaciari & Caterina Pesci, 2018. "Global financial crisis and relevance of GRI disclosure in Italy. Insights from the stakeholder theory and the legitimacy theory," FINANCIAL REPORTING, FrancoAngeli Editore, vol. 2018(1), pages 67-102.
    23. Paula Gomes dos Santos & Fábio Albuquerque & Maria Albertina Barreiro Rodrigues & Ana Isabel Morais, 2022. "The Views of Stakeholders on Mandatory or Voluntary Use of a Simplified Standard on Non-Financial Information for SMEs in the European Union," Sustainability, MDPI, vol. 14(5), pages 1-22, February.
    24. Michela Cordazzo & Laura Bini & Giuseppe Marzo, 2020. "Does the EU Directive on non‐financial information influence the value relevance of ESG disclosure? Italian evidence," Business Strategy and the Environment, Wiley Blackwell, vol. 29(8), pages 3470-3483, December.

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