Signaling through corporate accountability reporting

Thomas Lys, James P. Naughton*, Clare Wang

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

220 Scopus citations

Abstract

We document that corporate social responsibility ("CSR") expenditures are not a form of corporate charity nor do they improve future financial performance. Rather, firms undertake CSR expenditures in the current period when they anticipate stronger future financial performance. We show that the causality of the positive association between CSR expenditures and future firm performance differs from what is claimed in the vast majority of the literature and that corporate accountability reporting is another channel through which outsiders may infer insiders' private information about firms' future financial prospects.

Original languageEnglish (US)
Pages (from-to)56-72
Number of pages17
JournalJournal of Accounting and Economics
Volume60
Issue number1
DOIs
StatePublished - Aug 1 2015

Keywords

  • Corporate accountability reporting
  • Corporate social responsibility
  • Signaling
  • Voluntary disclosure

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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