The Influence of CSR Measures on Investors’ Judgments when Integrated in a Financial Report versus Presented in a Separate Report

• In Event: Corporate Social Responsibilty, Sustainability, and Stewardship

Abstract

This study examines the effect of providing integrated versus stand-alone corporate social responsibility (CSR) and financial information on potential investors. Advocates for integrating this information argue that CSR information will be perceived as more relevant and have a greater impact on users of the information in integrated versus stand-alone reports. We provide theory-consistent, experimental evidence that low (high) CSR performance results in higher (lower) participant judgments of required return on investment for a target company; however, this only occurs when participants observe the CSR information and financial information depicted in separate reports, not when depicted within an integrated report. We also provide evidence that our results are not driven by an increase in salience or by management signaling associated with providing information in a stand-alone report. Our study contributes to practice by suggesting that potential investors provided CSR information within an integrated report are less influenced by CSR information than investors provided the same information in separate reports. Our study also extends the voluntary disclosure literature by examining how the decision to disclose information across multiple reports, as opposed to within a single report, can influence investors’ decisions.

Authors

• Anthony Bucaro, University of Illinois-Urbana-Champaign

• Kevin E. Jackson, University of Illinois-Urbana-Champaign

• Jeremy Lill, University of Illinois-Urbana-Champaign