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Mandatory corporate social responsibility disclosure and dividend payouts: evidence from a quasi‐natural experiment
Author(s) -
Ni Xiaoran,
Zhang Huilin
Publication year - 2019
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12438
Subject(s) - corporate social responsibility , shareholder , corporate governance , dividend , business , natural experiment , accounting , power (physics) , finance , public relations , statistics , mathematics , political science , physics , quantum mechanics
Abstract Employing the enactment of a regulation that mandates a subset of firms to disclose their corporate social responsibility ( CSR ) activities as a quasi‐natural experiment, we find that mandatory CSR disclosure reduces firms’ dividend payouts significantly. Further analyses indicate that the negative relation is more pronounced for firms with weaker corporate governance mechanisms, where shareholders lack of effective tools to protect themselves against pressures from stakeholders, and a shift of relative power towards stakeholders is more likely to occur. Our paper provides a specific channel through which mandatory CSR disclosure benefits stakeholders at the expense of shareholders.