Working Paper: NBER ID: w26169
Authors: Hans B. Christensen; Luzi Hail; Christian Leuz
Abstract: This study collates potential economic effects of mandated disclosure and reporting standards for corporate social responsibility (CSR) and sustainability topics. We first outline key features of CSR reporting. Next, we draw on relevant academic literatures in accounting, finance, economics, and management to discuss and evaluate the potential economic consequences of a requirement for sustainability reporting for U.S. firms, including effects in capital markets, on stakeholders other than investors and on firm behavior. We also discuss issues related to the implementation and enforcement of CSR and sustainability reporting standards as well as two approaches to sustainability reporting that differ in their overarching goals and materiality standards. Our analysis yields a number of insights that are relevant for the current debate on mandatory CSR and sustainability reporting. It also points scholars to avenues for future research.
Keywords: CSR; sustainability; reporting; economic analysis; mandatory disclosure
JEL Codes: F30; G30; G38; K22; L21; M14; M41; M48
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| mandated CSR reporting (G38) | improved transparency and comparability of information available to investors (G38) |
| improved transparency and comparability of information available to investors (G38) | enhanced capital market efficiency (G14) |
| improved transparency and comparability of information available to investors (G38) | mitigate information asymmetries between firms and investors (G24) |
| mitigate information asymmetries between firms and investors (G24) | lower the cost of capital (G32) |
| mitigate information asymmetries between firms and investors (G24) | increase firm value (L21) |
| CSR reporting (M14) | drive firms to alter their behavior (L21) |
| drive firms to alter their behavior (L21) | changes in corporate behavior (G38) |
| CSR reporting (M14) | stakeholder perceptions (G38) |
| stakeholder perceptions (G38) | changes in corporate behavior (G38) |
| mandatory reporting (I18) | unintended consequences (D62) |