Does corporate social responsibility reduce information asymmetry?: Empirical evidence from Australia

This study examines whether corporate social responsibility (CSR) reduces information asymmetry (IA). Using a firm-level CSR dataset of Australian publicly listed firms from 2004 to 2014, we estimate IA models using a fixed-effects panel estimator. We find that CSR performance is negatively associat...

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Bibliographic Details
Published in:Australian journal of management 2019-05, Vol.44 (2), p.188-211
Main Authors: Nguyen, Van Ha, Agbola, Frank W, Choi, Bobae
Format: Article
Language:English
Subjects:
Economic aspects
Economic models
Information asymmetry
Marketing
Social aspects
Social responsibility
Social responsibility of business
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Summary:This study examines whether corporate social responsibility (CSR) reduces information asymmetry (IA). Using a firm-level CSR dataset of Australian publicly listed firms from 2004 to 2014, we estimate IA models using a fixed-effects panel estimator. We find that CSR performance is negatively associated with IA. Moreover, this negative relationship is stronger for larger firms and firms with stronger market power. We also find that the negative association between CSR and IA decreases for firms with a high level of equity risk. Our results are robust to alternative measures of CSR and IA, model specifications and endogeneity controls.
ISSN:0312-8962
1327-2020
DOI:10.1177/0312896218797163