Increasing the Relevance of Corporate Social Responsibility Reporting through Reporting Enhancements and Stakeholder-Centric Assurance

• In Event: Specialists

Abstract

Many investors are skeptical of corporate social responsibility (CSR) reporting and do not consider it relevant to their decision-making. In this paper, we demonstrate that companies can increase non-professional investor perceptions of the relevance of CSR reporting in two complementary ways. One, to address investor concerns with the value-relevance of CSR activities, companies can enhance CSR reporting by including the financial impact or strategic integration of CSR initiatives. Two, companies can obtain a relatively uncommon type of CSR assurance, stakeholder-centric assurance, where assurance is provided with respect to the company’s adherence to the predominant international CSR assurance standard’s principles of inclusivity, materiality, and responsiveness in stakeholder engagement. Conversely, we find that the predominant type of CSR assurance, which focuses on the material accuracy of reported information, does not affect relevance perceptions, and actually decreases reporting credibility. Although the latter result is contrary to prior research and the theoretical underpinnings of assurance, it is consistent with an expectations gap involving pervasive user misunderstanding of the limited level of assurance typically provided on CSR reporting.

Authors

• Jonathan H. Grenier, Miami University

• Brian J. Ballou, Miami University

• James Bierstaker, Villanova University

• Dan L. Heitger, Miami University