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Corporate social responsibility and annual report reading difficulty

Author

Listed:
  • Akhilesh Bajaj

    (The University of Tulsa)

  • Lori N. K. Leonard

    (The University of Tulsa)

  • Li Sun

    (The University of Tulsa)

  • Zhenze Xing

    (Illinois Institute of Technology)

Abstract

We use more than 21,000 firm-year observations for 2534 U.S. companies between 1993 and 2018 to investigate the relationship between corporate social responsibility performance and the reading difficulty of annual reports. We find a significant negative relationship, suggesting that the annual reports of socially responsible firms are more readable (i.e., easier to read and understand). Overall, our results suggest that socially responsible firms are more ethical and transparent, which is consistent with the stakeholder view.

Suggested Citation

  • Akhilesh Bajaj & Lori N. K. Leonard & Li Sun & Zhenze Xing, 2023. "Corporate social responsibility and annual report reading difficulty," Review of Quantitative Finance and Accounting, Springer, vol. 60(4), pages 1393-1428, May.
    • Handle: RePEc:kap:rqfnac:v:60:y:2023:i:4:d:10.1007_s11156-023-01132-9
    DOI: 10.1007/s11156-023-01132-9
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    1. Li, Hong-Quan & Yang, Yang & Xue, Feng-Wan & Liu, Zhi-Yi, 2024. "Annual report readability and trade credit financing: Evidence from China," Research in International Business and Finance, Elsevier, vol. 69(C).
    2. Li, Hong-Quan & Yang, Yang, 2024. "Can the readability of an annual report forecast negative earnings surprises?," Finance Research Letters, Elsevier, vol. 62(PA).

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    More about this item

    Keywords

    Corporate social responsibility; Readability; Reading difficulty; Annual reports;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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