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Corporate social responsibility and unverifiable net assets ratio

Author

Listed:
  • Svetlana Orlova

    (Collins College of Business, The University of Tulsa)

  • Li Sun

    (Collins College of Business, The University of Tulsa)

Abstract

The move of the Financial Accounting Standards Board to expand the use of fair value instruments results in an increase in unverifiable assets and liabilities, which do not have actively traded market prices. Prior research suggests that managers may use discretion in estimating fair values of such assets and liabilities for their self-serving interests, leading to more agency conflicts. We examine the association between a firm’s corporate social responsibility (CSR) performance and the unverifiable net assets ratio, used to capture the level of unverifiable assets and liabilities. We find a significant negative relation between CSR and the unverifiable net assets ratio, suggesting that socially responsible firms use a low level of unverifiable assets and liabilities.

Suggested Citation

  • Svetlana Orlova & Li Sun, 2022. "Corporate social responsibility and unverifiable net assets ratio," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 19(1), pages 31-48, March.
    • Handle: RePEc:pal:ijodag:v:19:y:2022:i:1:d:10.1057_s41310-021-00126-0
    DOI: 10.1057/s41310-021-00126-0
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    References listed on IDEAS

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    More about this item

    Keywords

    Corporate social responsibility; Fair value accounting; Unverifiable assets; Unverifiable liabilities;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M49 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Other

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