the Effect of Mandatory Quarterly Reporting on Corporate Social Performance

• In Event: 5.03. CSR/ESG Disclosure

Abstract

This study examines the effect of mandatory quarterly reporting on firms’ corporate social performance (CSP). Exploiting the introduction of mandatory quarterly re-porting in seven out of the EU-15 countries from 2007 to 2009 with a difference-in-differences analysis, I find that the increase in the reporting frequency is followed by a 10.6 percent decrease in firms’ CSP. This decrease is driven by firms under more capital market pressure or higher likelihood to conduct earnings management. Moreover, firms reduce their CSP complementary and not substitutionary with their financial investments. The results underline that mandatory quarterly reporting in-duces short-term decision-making and highlight another important consequence in which this short-termism can manifest. Thereby, the study provides novel evidence of spillover effects from financial reporting to firms’ sustainability behavior.

Author

• Arne Lessenich, University of Münster