Timing effects of corporate social responsibility disclosure: an experimental study with investment professionals

(Co-authored with Markus Arnold, University of Bern, and Alexander Bassen, University of Hamburg, published 2018 in Journal of Sustainable Finance & Investment)

This paper reports about an experiment with investment professionals about stand-alone CSR as compared to integrated CSR – as in an integrated report.

ABSTRACT

Companies disclose increasingly more corporate social responsibility (CSR) related information. However, CSR information is not always treated entirely rationally by capital market participants. In an experiment using experienced investment professionals, we investigate how the timing of CSR disclosure influences firm valuations by professional investors. The results suggest that CSR disclosure in a stand-alone report, temporally disconnected to firm’s financial disclosure, may lead to asymmetric anchoring, whereby simultaneous disclosure of CSR and financial information in an integrated report prevents anchoring in investors’ judgement. Investors’ asymmetric anchoring is induced by differences in cognitive effort invested in CSR information processing, which depends on whether CSR information signals future profits or losses. Our results contribute to the debate on disclosure standards for CSR information and the use of CSR information by professional investors.

https://www.tandfonline.com/doi/abs/10.1080/20430795.2017.1368229?journalCode=tsfi20

Reference: Arnold, M., Bassen, A., & Frank, R. (2018). Timing effects of corporate social responsibility disclosure: an experimental study with investment professionals. Journal of sustainable finance & investment, 8(1), 45-71.