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Corporate Social Responsibility and Information Asymmetry

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  • Lu
  • Chia-Wu
  • Chueh
  • Ting-Shu

Abstract

This research investigates the connection between Corporate Social Responsibility (CSR) and the issue of information asymmetry. Our CSR sample comes from the DJSI (Dow Jones Sustainability North America Index), and the sample consists from 764 firm-year observations during 2002 to 2010. Our empirical work find there is a significantly negative relationship between CSR and information asymmetry proxy, which means that market responds CSR with smaller gap between bid-ask spreads. CSR also reduces the excess returns when higher degree of information asymmetry exists, which compensate less excess returns to investor than non-CSR firms. Furthermore, CSR firms have less degree of overreaction than matching firms when the book-to-market effect and intangible information are considered.

Suggested Citation

  • Lu & Chia-Wu & Chueh & Ting-Shu, 2015. "Corporate Social Responsibility and Information Asymmetry," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 5(3), pages 1-8.
    • Handle: RePEc:spt:apfiba:v:5:y:2015:i:3:f:5_3_8
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    Citations

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    Cited by:

    1. Fangjun Wang & Luying Xu & Fei Guo & Junrui Zhang, 2020. "Loan Guarantees, Corporate Social Responsibility Disclosure and Audit Fees: Evidence from China," Journal of Business Ethics, Springer, vol. 166(2), pages 293-309, October.
    2. Astrid Rudyanto, 2017. "State Ownership, Family Ownership, and Sustainability Report Quality, The Moderating Role of Board Effectiveness," GATR Journals afr129, Global Academy of Training and Research (GATR) Enterprise.
    3. Nooraisah Katmon & Zam Zuriyati Mohamad & Norlia Mat Norwani & Omar Al Farooque, 2019. "Comprehensive Board Diversity and Quality of Corporate Social Responsibility Disclosure: Evidence from an Emerging Market," Journal of Business Ethics, Springer, vol. 157(2), pages 447-481, June.
    4. Sr. Mary Fernando & Kennedy D Gunawardana & Y K Banda, 2018. "Assisted Christian Schools Governance, Practices, Boards Commitments and Performance Measures in Sri Lanka," International Business Research, Canadian Center of Science and Education, vol. 11(8), pages 97-109, August.
    5. La Rosa, Fabio & Liberatore, Giovanni & Mazzi, Francesco & Terzani, Simone, 2018. "The impact of corporate social performance on the cost of debt and access to debt financing for listed European non-financial firms," European Management Journal, Elsevier, vol. 36(4), pages 519-529.
    6. Subramaniam, Mohan & Iyer, Bala & Venkatraman, Venkat, 2019. "Competing in digital ecosystems," Business Horizons, Elsevier, vol. 62(1), pages 83-94.
    7. Juniarti, 2019. "The Information Asymmetry and Corporate Social Responsibility Disclosure," Eurasian Journal of Business and Management, Eurasian Publications, vol. 7(1), pages 1-10.
    8. Haifeng Zhang & Zhuo Zhang & Ekaterina Steklova, 2020. "Do Companies Need Financial Flexibility for Sustainable Development?," Sustainability, MDPI, vol. 12(5), pages 1-14, February.
    9. María Consuelo Pucheta‐Martínez & Inmaculada Bel‐Oms & Lúcia Lima Rodrigues, 2019. "The engagement of auditors in the reporting of corporate social responsibility information," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(1), pages 46-56, January.
    10. Hong Zhou & Guoping Li & Wanfa Lin, 2016. "Corporate Social Responsibility and Credit Spreads: An Empirical Study in Chinese Context," Annals of Economics and Finance, Society for AEF, vol. 17(1), pages 79-103, May.
    11. Cao Thi Mien Thuy & Trinh Quoc Trung & Nguyen Vinh Khuong & Nguyen Thanh Liem, 2021. "From Corporate Social Responsibility to Stock Price Crash Risk: Modelling the Mediating Role of Firm Performance in an Emerging Market," Sustainability, MDPI, vol. 13(22), pages 1-17, November.
    12. I. M. García‐Sánchez & J. Martínez‐Ferrero, 2017. "Independent Directors and CSR Disclosures: The moderating effects of proprietary costs," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 24(1), pages 28-43, January.
    13. Syeda Khiraza Naqvi & Faisal Shahzad & Ijaz Ur Rehman & Fiza Qureshi & Usama Laique, 2021. "Corporate social responsibility performance and information asymmetry: The moderating role of analyst coverage," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(6), pages 1549-1563, November.
    14. Samet, Marwa & Jarboui, Anis, 2017. "How does corporate social responsibility contribute to investment efficiency?," Journal of Multinational Financial Management, Elsevier, vol. 40(C), pages 33-46.
    15. María D. Odriozola & Elisa Baraibar‐Diez, 2017. "Is Corporate Reputation Associated with Quality of CSR Reporting? Evidence from Spain," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 24(2), pages 121-132, March.

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