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Sustainability 2018, 10(2), 522; https://doi.org/10.3390/su10020522

CSR Performance, Financial Reporting, and Investors’ Perception on Financial Reporting

Department of Business Administration at Ajou University, Suwon 16499, Korea
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Received: 7 January 2018 / Revised: 11 February 2018 / Accepted: 14 February 2018 / Published: 15 February 2018
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Abstract

This study examines whether socially responsible firms behave differently from other firms in their financial reporting. Specifically, we question whether firms that are better in their corporate social responsibility (CSR) performance also behave in a responsible manner to maintain their financial reporting quality and whether the market rewards such responsible behaviors. Using data from S&P 500 US companies, we find that socially responsible firms are less likely to manage their earnings. However, we fail to find significant relationships between CSR and investors’ perceptions on earnings, measured by stock returns and earnings response coefficient. We interpret the results as investors not fully reflecting the benefits from CSR performance. Our findings are consistent with the notion that CSR activities are motivated by managers’ ethical incentives to serve the interests of stakeholders. View Full-Text
Keywords: corporate social responsibility; financial reporting quality; investors’ perception on financial reporting corporate social responsibility; financial reporting quality; investors’ perception on financial reporting
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).
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Timbate, L.; Park, C.K. CSR Performance, Financial Reporting, and Investors’ Perception on Financial Reporting. Sustainability 2018, 10, 522.

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