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The Influence of Corporate Social Responsibility Measures on Investors' Judgments When Integrated in a Financial Report Versus Presented in a Separate Report

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  • Anthony C. Bucaro
  • Kevin E. Jackson
  • Jeremy B. Lill

Abstract

This study examines the effect on investors' judgments of corporate social responsibility (CSR) measures when integrated with financial information in a single report versus when presented in a separate CSR report. Advocates for integrated reports argue that CSR information will be perceived as more relevant and have a greater impact on users when observed in an integrated report. However, we provide experimental evidence that CSR measures have greater influence on investors' judgments when investors observe the CSR information and financial information depicted in separate reports. We also provide evidence that this greater influence of CSR measures is caused by investors' evaluations taking on a “multidimensional perspective” that includes both a social responsibility and a financial dimension, which is triggered by observing the separate CSR report. Activating a social responsibility dimension elevates the perceived relevance of CSR measures, increasing their influence on investors' judgments. Our study contributes to practice by highlighting a potential unintended consequence of issuing integrated versus separate CSR reports: that investors incorporate CSR information less when it is integrated with financial information versus separately reported. Comparaison de l’influence des mesures de responsabilité sociale des entreprises sur le jugement des investisseurs selon que ces mesures sont intégrées dans un rapport financier ou présentées dans un rapport distinct La présente étude examine l'effet des mesures de responsabilité sociale des entreprises (RSE) sur le jugement des investisseurs selon que ces mesures sont intégrées dans un rapport financier ou présentées dans un rapport distinct. Les partisans des rapports intégrés soutiennent que l'information sur la RSE est perçue comme plus pertinente et a un plus grand impact sur les utilisateurs lorsqu'elle est présentée dans un rapport intégré. Cependant, nous fournissons des preuves expérimentales que les mesures de RSE influencent davantage le jugement des investisseurs lorsque l'information sur la RSE et l'information financière sont présentées dans deux rapports distincts. Nous présentons également des éléments de preuve indiquant que cette influence accrue est attribuable à la « perspective multidimensionnelle » des évaluations effectuées par les investisseurs comportant une dimension de responsabilité sociale et une dimension financière, perspective qui émerge lors de la consultation d'un rapport distinct sur la RSE. L'activation d'une dimension de responsabilité sociale accroît la pertinence perçue des mesures de RSE, ce qui accentue leur influence sur le jugement des investisseurs. Notre étude contribue à la pratique comptable en mettant en lumière une conséquence involontaire possible de la présentation d'un rapport financier intégrant la RSE comparativement à un rapport sur la RSE distinct, soit le fait que les investisseurs assimilent moins bien l'information sur la RSE lorsqu'elle est intégrée à l'information financière que lorsqu'elle est présentée dans un document distinct.

Suggested Citation

  • Anthony C. Bucaro & Kevin E. Jackson & Jeremy B. Lill, 2020. "The Influence of Corporate Social Responsibility Measures on Investors' Judgments When Integrated in a Financial Report Versus Presented in a Separate Report," Contemporary Accounting Research, John Wiley & Sons, vol. 37(2), pages 665-695, June.
    • Handle: RePEc:wly:coacre:v:37:y:2020:i:2:p:665-695
    DOI: 10.1111/1911-3846.12542
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    1. Abdifatah Ahmed Haji & Paul Coram & Indrit Troshani, 2021. "Effects of integrating CSR information in financial reports on investors’ firm value estimates," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(2), pages 3605-3647, June.
    2. Tsang, Albert & Frost, Tracie & Cao, Huijuan, 2023. "Environmental, Social, and Governance (ESG) disclosure: A literature review," The British Accounting Review, Elsevier, vol. 55(1).
    3. Hien Hoang & Robyn Moroney & Soon‐Yeow Phang & Xinning Xiao, 2023. "Investor reactions to key audit matters: Financial and non‐financial contexts," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(3), pages 3325-3349, September.
    4. Hans B. Christensen & Luzi Hail & Christian Leuz, 2021. "Mandatory CSR and sustainability reporting: economic analysis and literature review," Review of Accounting Studies, Springer, vol. 26(3), pages 1176-1248, September.
    5. Boyle, Erik S. & Mintchik, Natalia & Warne, Rick C., 2023. "When it pays to be a friend: Investigating nonprofessional investors' judgments toward CSR companies following an accounting restatement," Advances in accounting, Elsevier, vol. 60(C).
    6. Altendorfer, Andreas, 2024. "Evidence on the incremental information content of concurrent financial and non-financial corporate disclosures," Finance Research Letters, Elsevier, vol. 60(C).
    7. Yanina Rashkova & Ludovica Moi & Francesca Cabiddu, 2024. "Addressing the Societal Challenges in Organizations: The Conceptualization of Mindfulness Capability for Social Justice," Journal of Business Ethics, Springer, vol. 189(2), pages 249-268, January.
    8. Kerry A. Humphreys & Ken T. Trotman, 2022. "Judgment and decision making research on CSR reporting in the COVID‐19 pandemic environment," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(1), pages 739-765, March.
    9. Maria Misiuda & Maik Lachmann, 2022. "Investors’ Perceptions of Sustainability Reporting—A Review of the Experimental Literature," Sustainability, MDPI, vol. 14(24), pages 1-24, December.
    10. Tahniyath Fatima & Said Elbanna, 2023. "Corporate Social Responsibility (CSR) Implementation: A Review and a Research Agenda Towards an Integrative Framework," Journal of Business Ethics, Springer, vol. 183(1), pages 105-121, February.
    11. Peng Wan & Mengjiao Xu & Yu Yang & Xiangyu Chen, 2024. "CSR decoupling and stock price crash risk: Evidence from China," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-12, December.

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