Disclosure for whom? Government involvement, CSR disclosure and firm value

• Published in: Emerging markets review Vol. 44; p. 100717
• Main Authors: Xu, Shen, Chen, Xia, Li, Antai, Xia, Xinping
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 01-09-2020
• Subjects: CSR disclosure; Firm value; Insurance effect; Mandatory disclosure; CSR disclosure; Mandatory disclosure; Firm value; Insurance effect
• ISSN: 1566-0141; 1873-6173
• DOI: 10.1016/j.ememar.2020.100717

This paper investigates the roles of market and government in an emerging economy. By examining 2906 CSR reports from Chinese listed firms, we find that CSR disclosure adds incremental value to firms, especially for Private-Owned Enterprises (POE). We also find that the disclosure saves Central Government Controlled State-Owned Enterprises, which mandatorily disclose CSR information, from negative news report and litigation risks. This insurance effect is significant in POEs only when they suffer from economic losses. We find that POEs are market-oriented; although government would compensate for other mandatory disclosure firms when they suffer from reputational shock.
•CSR disclosure adds value to firms, especially for private-owned enterprises.•CSR disclosure adds value to private firms when they suffer from economic loss.•CSR disclosure adds value to central government-controlled firms when they suffer from reputational loss.•Government plays a significant role to compensate firms that mandatorily disclose CSR information.