Giovanna Michelon

CSR disclosure: the more things change…?

Purpose - – Corporate social responsibility (CSR) disclosure is receiving increased attention from the mainstream accounting research community. In general, this recently published research has failed to engage significantly with prior CSR-themed studies. The purpose of this paper is threefold. First, it examines whether more recent CSR reporting differs from that of the 1970s. Second, it investigates whether one of the major findings of prior CSR research – that disclosure appears to be largely a function of exposure to legitimacy factors – continues to hold in more recent reporting. Third, it examines whether, as argued within the more recent CSR-themed studies, disclosure is valued by market participants. Design/methodology/approach - – Using Fortune 500 data from the late 1970s (from Ernst & Ernst, 1978) and a more recent sample (2010), the authors identify differences in CSR disclosure by computing adequate measures in terms of disclosure breadth and comparing them for any potential changes in the influence of legitimacy factors between 1977 and 2010. In the second stage of the analysis, the authors use a standard valuation model to compare the association between CSR and firm value between the two time periods. Findings - – The authors first find that the breadth of CSR disclosure increased significantly, with respect to both environmental and social information provision. Second, the authors find that the relationship among legitimacy factors and CSR disclosure does not differ across the two time periods. However, the analysis focusing on environmental disclosure provides evidence that industry membership is less powerfully related to differences in reporting, but only for the weighted disclosure score. Finally, the results indicate that CSR disclosure, in apparent contrast to the arguments of the more recent mainstream investigations, is not positively valued by investors. Research limitations/implications - – The authors explore changes in CSR disclosure only for industrial firms and as such the authors cannot generalize findings to companies in other industries. Similarly, the authors focus only on companies in the USA while different relationships may hold in other countries. Further, the disclosure metrics are limited by the availability of firm-specific information provided by Ernst & Ernst. Limitations aside, however, the findings appear to suggest that the failure of the new wave of CSR research in the mainstream accounting community to acknowledge and consider prior research into social and environmental accounting is potentially troublesome. Specifically, recent CSR disclosure research published in mainstream journals often lends credence to voluntary disclosure arguments that ignore previous contradictory findings and well-established alternative explanations for observed empirical relationships. Practical implications - – This paper provides supporting evidence that the unquestioned acceptance by the new wave of CSR researchers that the disclosure is about informing investors as opposed to being a tool of legitimation and image enhancement makes it less likely that such disclosure will ever move meaningfully toward transparent accountability. Originality/value - – The study suggests that CSR disclosure, while used more extensively today than three decades ago, may still largely be driven by concerns with corporate legitimacy, and still fails to provide information that is relevant for assessing firm value. As such, the failure of the mainstream accounting community to acknowledge this possibility can only hinder the ultimate development of better accountability for all of the impacts of business.

Board reputation attributes and corporate social performance: an empirical investigation of the US Best Corporate Citizens

The aim of the paper is to investigate the relationship between board reputation and corporate social performance. Specifically, we claim that corporate social performance may be a function of board attributes and we investigate the association between board reputation – in terms of board composition, competence, diversity, leadership, structure and links with the external environment – and the social performance of firms, after controlling for other company-specific characteristics. In order to explore such a relationship, we analyse the association between corporate social performance and board reputation of the Business Ethics 100 Best Corporate Citizens over the period 2005–2007. Data on corporate social responsibility are collected from the KLDs SOCRATES database, which is derived from multiple sources and is not dependent upon corporate self-reporting. Data on board reputation are hand-collected from corporate reports and proxy statements. Our empirical evidence shows that the proportions of independent, community influential and female directors are positively associated with corporate social performance, while the presence of a corporate social responsibility (CSR) committee is positively associated with community performance. In contrast, we find that CEO duality and community influential directors with multiple directorships have a negative effect on corporate social performance.

CSR report assurance in the USA: an empirical investigation of determinants and effects

Purpose – The authors aims to examine, first, what factors appear to lead those US companies that do obtain assurance on their CSR reports to do so, and second, whether this assurance appears to be valued by market participants. Design/methodology/approach – The authors use logistic regression analysis to determine what factors explain the choice to seek assurance. For the second stage of the analysis, the authors rely on Aboody et al.s market valuation model to examine the association between CSR report assurance and firm value. Findings – The authors find that industry membership and disclosure extensiveness both appear to influence the choice to attain third-party assurance on CSR reports in the USA. However, the results also indicate that the assurance is not associated with higher market value for report-issuing companies. Research limitations/implications – The authors examine only large firms and limit the investigation to a single year. Further, the authors do not examine market valuation effects...

Enhancement and obfuscation through the use of graphs in sustainability reports: An international comparison

Purpose – The purpose of this paper is to investigate the use of graphs in corporate sustainability reports and attempt to determine, first, whether the use of graphs appears to be associated with attempts at impression management, and second, whether differences across three levels of reporting regulatory structure are associated with differences in the level of impression management.Design/methodology/approach – Based on a sample of 120 sustainability reports issued by firms from six different countries, the authors empirically test for differences in presentation of favourable, as opposed to unfavourable, items (enhancement) and for differences in the direction of materially distorted graphs (obfuscation).Findings – For the overall sample, substantial evidence was found of both enhancement and obfuscation in the graph displays. Also, more limited evidence was found that impression management differs across companies facing different regulatory structures.Research limitations/implications – The authors ...

Does assurance on CSR reporting enhance environmental reputation? An examination in the U.S. context

The issuance of standalone corporate social responsibility (CSR) reports11 The reports are issued under a variety of differing names including, for example, citizenship, social responsibility, and ...

Behind camouflaging: traditional and innovative theoretical perspectives in social and environmental accounting research

Purpose – The purpose of this paper is threefold. First, it examines nuances that specific camouflaging perspectives provide to enhance traditional and widely adopted theories in social and environmental accounting. Second, within research on camouflaging, the paper stimulates multidisciplinarity and cross-fertilization by presenting recent developments in organizational theory that hold promise for enhancing our understanding of camouflaging. Finally, it discusses how the research contributions published in this special issue help advance the notion of corporate camouflaging. Design/methodology/approach – The paper makes use of an extensive literature review and discusses research implications related with the choice of theoretical framework. Findings – The idea of camouflaging may provide narrower and more refined perspective(s) that can help researchers delve deeper into their topic of interest and thereby support potentially substantive contributions to the field. Originality/value – The paper offers ...

Performance measurement in academic departments: the strategy map approach

This article describes the implementation of the balanced scorecard (BSC) strategy map in a university department. The department is a good example of a complex public sector service organization—therefore the article has relevance beyond universities. The strategy map was found to be an extremely good way of measuring performance. In addition, the BSC/strategy map helps in monitoring and building departmental mission and goals and the authors recommend wider use.

Board monitoring and internal control system disclosure in different regulatory environments

Purpose – The purpose of this paper is to investigate two research questions. Is internal control system (ICS) disclosure, as a monitoring mechanism, associated with the characteristics of the board of directors, particularly the audit committee as the main board committee devoted to the effectiveness of ICS? Does the regulatory environment, particularly the regulation on ICS disclosure as an external governance/monitoring mechanism play a role in shaping the relationship between board monitoring and ICS disclosure and, if so, how? Design/methodology/approach – The authors study the ICS disclosure of 149 companies listed in four European financial markets (London, Paris, Frankfurt and Milan), each with its own regulations about ICS disclosure, during a six-year period (2003-2008). Findings – The findings support an inverse association between the extent of ICS disclosure and the proxies for board monitoring. The authors also find a statistically significant negative relationship between board monitoring a...

Disclosure on Internal Control Systems as Substitute of Alternative Governance Mechanisms

The study addresses the issue of disclosure on internal control system (ICS) recommended by best practices in corporate governance in the light of the agency theory perspective. We posit that reporting on the characteristics of internal control systems is an alternative governance mechanism that management provide to investors when the other devices are not in place.Analyzing the disclosure on internal control systems of 160 European firms listed in four different stock exchanges (London, Paris, Frankfurt and Milan) over a three-year period (2003 - 2005), we find empirical evidence that ICS disclosure is a substitute for the monitoring role played by the ownership structure, institutional ownership, the proportion of independent directors sitting on the board and the proportion of accounting expert members of the audit committee.This study provides empirical support for Williamsons (1983) substitute hypothesis among different governance mechanisms and it offers insights to firms and practitioners on the relevance of disclosure on internal control systems as a monitoring mechanism for investors.

Big egos can be green: A study of CEO hubris and environmental innovation

This paper examines whether and to what extent CEO personal traits (hubris, in particular) affect firm environmental innovation. Using the overarching theoretical framework of upper-echelons theory, the paper builds on the insights from the corporate strategy, innovation, and corporate social responsibility literatures. We also examine the moderating role of firm-specific features (e.g. organizational slack) and the external environment (e.g. market uncertainty) in this context. Based on a sample of UK companies operating in sensitive industries, we find that CEO hubris facilitates the engagement in green innovative projects. We also find that CEO hubris does not have a uniform effect: its effect on environmental innovation increases with the organizational slack, but weakens with the extent of environmental uncertainty. Our findings suggest that availability of resources per se is not enough to produce environmental innovation. Instead, it requires a stable external environment that enables the CEO with a hubristic personality to make a correct use of them.