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Do Socially Responsible Firms Disclosure to Signal?

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  • Mari Sakudo

Abstract

An increasing number of investors incorporate companies' CSR information into their financial decisions. This study empirically examines the signaling theory in the context of CSR disclosures using rich information on firms' CSR activities and climate-related costs of large Japanese firms by a machine learning method. According to the results, Japanese firms disclose their sustainability information to signal their superior performance rather than greenwashing. While many investors and policy makers focus more on climate risks following the COVID-19 pandemic, this empirical evidence remains the same before and after the crisis.

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  • Mari Sakudo, 2024. "Do Socially Responsible Firms Disclosure to Signal?," Working Papers e204, Tokyo Center for Economic Research.
    • Handle: RePEc:tcr:wpaper:e204
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    References listed on IDEAS

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    1. Cho, Charles H. & Patten, Dennis M., 2007. "The role of environmental disclosures as tools of legitimacy: A research note," Accounting, Organizations and Society, Elsevier, vol. 32(7-8), pages 639-647.
    2. Florian Berg & Julian F Kölbel & Roberto Rigobon, 2022. "Aggregate Confusion: The Divergence of ESG Ratings [Corporate social responsibility and firm risk: theory and empirical evidence]," Review of Finance, European Finance Association, vol. 26(6), pages 1315-1344.
    3. Mahoney, Lois S. & Thorne, Linda & Cecil, Lianna & LaGore, William, 2013. "A research note on standalone corporate social responsibility reports: Signaling or greenwashing?," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 24(4), pages 350-359.
    4. Clarkson, Peter M. & Li, Yue & Richardson, Gordon D. & Vasvari, Florin P., 2008. "Revisiting the relation between environmental performance and environmental disclosure: An empirical analysis," Accounting, Organizations and Society, Elsevier, vol. 33(4-5), pages 303-327.
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