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Undervaluation and non‐financial information: Evidence from voluntary disclosure of CSR news
Author(s) -
Benlemlih Mohammed,
Ge Jingwen,
Zhao Sujiao
Publication year - 2021
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/jbfa.12505
Subject(s) - corporate social responsibility , information asymmetry , business , valuation (finance) , stock (firearms) , empirical evidence , stock price , stock market , stock exchange , monetary economics , voluntary disclosure , financial market , financial economics , accounting , finance , economics , public relations , mechanical engineering , paleontology , philosophy , epistemology , horse , series (stratigraphy) , political science , engineering , biology
In this paper, we examine whether stock market imperfection plays a role in a firm's decision to release non‐financial information and if so, what the underlying channels are. To address our questions, we web‐scraped corporate social responsibility (CSR) news to form a sample of publicly traded non‐financial US firms from CSRwire and explored exogeneous variation in stock valuation driven by institutional price pressure. Our empirical results show that firms facing stock market undervaluation are more likely than others to release CSR news. This effect is concentrated among firms exhibiting low levels of CSR commitment and low stock price informativeness. Finally, we provide evidence that the stock market reacts positively to CSR news released by undervalued firms and more so for undervalued firms with high information asymmetry.