This study aims to examine the relationship between the corporate social responsibility performance and the readability of annual report
2019
Key concepts
Scholarcy highlights
- The shareholder theory suggests that corporate social responsibility firms will provide more transparent disclosures because this reflects a socially and environmentally responsible behavior and a firm’s commitment to high ethical standards
- Based on a sample of 100 listed firms on the French CACAll-shares index over the period from 2013 to 2016, the authors use a panel regression analysis and run other estimation methods and simultaneous equation model to address the endogeneity issues. They assess the readability of annual reports using the Gunning-Fog Index and the Flesch Index derived from the computational linguistics literature
- The results show a significant positive relationship between CSR performance and the readability of annual report
- Firms engaging in CSR practices are more likely to provide transparent disclosures with higher readability because this reflects a socially responsible behavior and a firm’s commitment to high ethical standards
- This study extends previous research on the potential impact of CSR on information quality measured by annual report readability in the French context
- Unlike prior studies on the impact of corporate social responsibility on information quality, that focus exclusively on earnings management and adopt qualitative approaches to assess the SCR score, the authors use simultaneously the Gunning–Fog Index and the Flesch Index to assess the information quality and extract the CSR score from the CSRHub database of companies’ social, environmental and governance performance
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