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The information content of corporate social responsibility disclosure in Europe: an institutional perspective

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  • Stéphanie Mittelbach-Hörmanseder
  • Katrin Hummel
  • Margarethe Rammerstorfer

Abstract

This study examines how firm value (measured via stock prices) is related to corporate social responsibility (CSR) disclosure and how the institutional environment influences this relationship. To test our hypotheses, we apply textual analysis to our data on firms listed in the STOXX Europe 600 for the period 2008–2016. Our investigation of topic-specific CSR disclosure indicates that when firms shifted from voluntary to mandatory reporting, following the announcement of Directive 2014/95/EU, the association between their share price and CSR disclosure became significantly negative. For the period before the announcement, this relationship is either positive or statistically insignificant. We also show that the institutional environment can impact this relationship in four distinct ways: the level of CSR awareness, the level of employee protection, the degree of enforcement and the strength of the legal environment. We find that the first two have a negative impact on the incremental value relevance of specific CSR disclosure, whereas the last two have a positive impact. Lastly, our results also indicate that the magnitude of (a) the relationship between a firm’s CSR disclosure and its value and (b) the impact that the firm’s institutional environment has on this relationship depends on the specific CSR topics.

Suggested Citation

  • Stéphanie Mittelbach-Hörmanseder & Katrin Hummel & Margarethe Rammerstorfer, 2021. "The information content of corporate social responsibility disclosure in Europe: an institutional perspective," European Accounting Review, Taylor & Francis Journals, vol. 30(2), pages 309-348, March.
    • Handle: RePEc:taf:euract:v:30:y:2021:i:2:p:309-348
    DOI: 10.1080/09638180.2020.1763818
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    Cited by:

    1. Kentaro Azuma & Akira Higashida, 2024. "Climate change disclosure and evolving institutional investor salience: Roles of the Principles for Responsible Investment," Business Strategy and the Environment, Wiley Blackwell, vol. 33(4), pages 3669-3686, May.
    2. Ali Uyar & Simone Pizzi & Fabio Caputo & Cemil Kuzey & Abdullah S. Karaman, 2022. "Do shareholders reward or punish risky firms due to CSR reporting and assurance?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(5), pages 1596-1620, July.
    3. Xie, Tao & Li, Yanan, 2023. "Political connections, institutional environment and informativeness of stock price," Finance Research Letters, Elsevier, vol. 55(PA).
    4. Ries Breijer & René P. Orij, 2022. "The Comparability of Non-Financial Information: An Exploration of the Impact of the Non-Financial Reporting Directive (NFRD, 2014/95/EU)," Accounting in Europe, Taylor & Francis Journals, vol. 19(2), pages 332-361, May.
    5. Krivogorsky, Victoria & Mintchik, Natalia & Alon, Anna, 2023. "Accounting research in former Soviet bloc countries: Past trends and current and future developments," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 50(C).
    6. Tobias Gerwing & Peter Kajüter & Maximilian Wirth, 2022. "The role of sustainable corporate governance in mandatory sustainability reporting quality," Journal of Business Economics, Springer, vol. 92(3), pages 517-555, April.
    7. Guo, Chunying & Yang, Baochen & Fan, Ying, 2022. "Does mandatory CSR disclosure improve stock price informativeness? Evidence from China," Research in International Business and Finance, Elsevier, vol. 62(C).
    8. Nejla Ould Daoud Ellili & Cemil Kuzey & Ali Uyar & Abdullah S. Karaman, 2024. "Moderating role of internal factors in corporate social responsibility reporting persistence and corporate market value," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(4), pages 2878-2899, July.
    9. Garanina, Tatiana & Kim, Oksana, 2023. "The relationship between CSR disclosure and accounting conservatism: The role of state ownership," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 50(C).
    10. Frank Hubers & Thomas Thijssens, 2023. "Protect, respect, remedy, and report? Development of human rights reporting in the context of formal institutional settings," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(6), pages 2783-2798, November.

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