Corporate social responsibility disclosure and the cost of equity capital: The roles of stakeholder orientation and financial transparency

We examine the benefits associated with corporate social responsibility (CSR) disclosure in an international setting covering 31 countries. Using variables such as the legal status of labor protection, CSR disclosure requirements, and public awareness of and attitudes toward CSR issues, we divide co...

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Bibliographic Details
Published in:Journal of accounting and public policy 2014-07, Vol.33 (4), p.328-355
Main Authors: Dhaliwal, Dan, Li, Oliver Zhen, Tsang, Albert, Yang, Yong George
Format: Article
Language:English
Subjects:
Accountability
Associations
Benefits
Capital
Corporate social responsibility
Cost
Cost of capital
Countries
Disclosure
Equality
Equity capital
Labor
Legal status
Legal status, laws, etc
Social consciousness
Social responsibility
Social responsibility of business
Stakeholders
Studies
Transparency
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Summary:We examine the benefits associated with corporate social responsibility (CSR) disclosure in an international setting covering 31 countries. Using variables such as the legal status of labor protection, CSR disclosure requirements, and public awareness of and attitudes toward CSR issues, we divide countries into more and less stakeholder-oriented groups. We find a negative association between CSR disclosure and the cost of equity capital; this relationship is more pronounced in stakeholder-oriented countries. We also find evidence that financial and CSR disclosures act as substitutes for each other in reducing the cost of equity capital. This study furthers our understanding of CSR disclosure and its consequences.
ISSN:0278-4254
1873-2070
DOI:10.1016/j.jaccpubpol.2014.04.006