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

Publication: Scientific journalJournal articlepeer-review


This study examines how firm value (measured via stock prices) is related to corporate socialresponsibility (CSR) disclosure and how the institutional environment influences this relationship. To testour hypotheses, we apply textual analysis to our data on firms listed in the STOXX Europe 600 for theperiod 2008–2016. Our investigation of topic-specific CSR disclosure indicates that when firms shiftedfrom voluntary to mandatory reporting, following the announcement of Directive 2014/95/EU, the associ-ation between their share price and CSR disclosure became significantly negative. For the period beforethe announcement, this relationship is either positive or statistically insignificant. We also show that theinstitutional 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. Wefind 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) therelationship between a firm’s CSR disclosure and its value and (b) the impact that the firm’s institutionalenvironment has on this relationship depends on the specific CSR topics.
Original languageEnglish
JournalEuropean Accounting Review
Publication statusPublished - 2020

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