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Mandatory CSR disclosure and firm investment behavior: Evidence from a quasi‐natural experiment in China
Author(s) -
Makosa Lewis,
Yang Jinkun,
Sitsha Lovemore,
Jachi Moses
Publication year - 2020
Publication title -
journal of corporate accounting and finance
Language(s) - English
Resource type - Journals
eISSN - 1097-0053
pISSN - 1044-8136
DOI - 10.1002/jcaf.22467
Subject(s) - corporate social responsibility , business , natural experiment , investment (military) , exploit , china , government (linguistics) , accounting , marketing , industrial organization , public relations , law , linguistics , statistics , philosophy , mathematics , computer security , politics , political science , computer science
In this article, we examine the effect of mandatory disclosure of corporate social responsibility on firm's investment behavior. Our analysis exploits China's 2008 mandatory requirement that firms disclose their corporate social responsibility activities. Using difference‐in‐difference design, the study finds that firms that were made to report their corporate social responsibility experience a decrease in the level of investment, but the firm investment efficiency improved, especially on alleviating over‐investments. These findings suggest that mandatory CSR disclosure alters firm investment behavior and the implementation of such a disclosure requirement may need the government support.