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Do socially responsible firms provide more readable disclosures in annual reports?
Author(s) -
BenAmar Walid,
Belgacem Ines
Publication year - 2018
Publication title -
corporate social responsibility and environmental management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.519
H-Index - 73
eISSN - 1535-3966
pISSN - 1535-3958
DOI - 10.1002/csr.1517
Subject(s) - corporate social responsibility , accounting , agency (philosophy) , perspective (graphical) , business , narrative , stakeholder , impression management , sample (material) , social responsibility , principal–agent problem , stock exchange , public relations , marketing , corporate governance , finance , psychology , sociology , political science , social psychology , social science , linguistics , philosophy , chemistry , chromatography , artificial intelligence , computer science
This paper examines the relationship between the adoption of corporate social responsibility (CSR) practices and the syntactic complexity of the management's discussion and analysis (MD&A) section of the annual report. Based on stakeholder and agency perspectives, we offer an empirical test of two competing hypotheses. First, we may expect socially responsible firms to provide transparent disclosures because this reflects a firm's commitment to high ethical standards. In contrast, the agency perspective predicts that managers engage in CSR for self‐interest purposes and that CSR‐oriented firms will be more likely to attempt to mislead stakeholders about the firm's actual performance through complex narrative disclosures. Based on a sample of large firms listed on the Toronto Stock Exchange, our results show a positive association between corporate social performance and the MD&A's textual complexity. Consistent with the agency perspective, our findings suggest that managers may engage in CSR opportunistically and use complex narrative disclosures in an impression management strategy.