Yan, Shan
A icle
Co po a e social esponsibili y and inancial in o ma ion
quali y
Jou nal o Business and Economic S udies (JBES)
P o ided in Coope a ion wi h:
No heas Business and Economics Associa ion (NBEA)
Sugges ed Ci a ion: Yan, Shan (2024) : Co po a e social esponsibili y and inancial in o ma ion
quali y, Jou nal o Business and Economic S udies (JBES), ISSN 2576-3458, No heas Business and
Economics Associa ion (NBEA), Po Je e son, NY, Vol. 28, Iss. 1, pp. 99-111
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Co po a e Social Responsibili y and Financial In o ma ion Quali y
99
Co po a e Social Responsibili y and Financial In o ma ion Quali y
Shan Yan
Depa men o Finance
School o Business Adminis a ion
S e son Uni e si y
con ac : [email p o ec ed]
Abs ac
Co po a e social esponsibili y has gained inc easing popula i y among manage s and
in es o s. Many i ms commi signi ican esou ces and conside CSR as a pa o hei long- e m
s a egic plan. Whe he co po a e social esponsibili y a ec s co po a e inancial in o ma ion
quali y has been an impo an ques ion. Using a big sample o co po a ions in he U.S., I s udy he
ela ionship be ween co po a e social esponsibili y (CSR) and co po a e inancial in o ma ion
quali y. I ind a signi ican and posi i e ela ionship be ween CSR and inancial in o ma ion
quali y. This ela ionship is obus o po en ial endogenei y conce ns. These indings ha e
impo an implica ions o inancial disclosu e, CSR, and co po a e s a egy.
Keywo ds: Co po a e Social Responsibili y; Financial Repo ing; In o ma ion Quali y
In oduc ion
In classical co po a e inance heo y, i m manage s a e esponsible o he alue o he
owne s and he maximiza ion o he sha eholde s’ weal h. Since he co po a ion is a join complex
o many s akeholde s beyond sha eholde s and manage s, in some cases, he e a e con lic s o
in e es be ween he sha eholde s and o he s akeholde s o he i m, such as deb holde s,
employees, cus ome s, supplie s, he communi y, and di e en le els o go e nmen . As
co po a ions play mo e impo an oles in business, communi y, and socie y, he o e all
esponsibili y o he co po a ions plays an impo an ole in decision-making inside and ou side
he i m.
In ecen decades, Co po a e social esponsibili y (CSR) has become an impo an pa o
US i ms' s a egy among many co po a e ope a ions. I can ind many i ms ha e inc eased hei
in es men in CSR ei he olun a ily o because o p essu e om sha eholde s. As in Ch is ensen,
Hail and Leuz (2021), many i ms also ac i ely publish annual CSR epo s ha p o ide de ailed
in o ma ion abou hei CSR ac i i ies and achie emen s o de o e la ge sec ions o hei annual
epo s o a desc ip ion o hei CSR ac i i ies, such as ExxonMobil, IBM, Disney, e c.
The essen ial idea o CSR is ha businesses should no ocus solely on maximizing p o i s
bu also conside hei o he impac , such as social and en i onmen al impac , Ca oll(1999).
Companies ha welcome CSR in eg a e social and en i onmen al conce ns in o hei business
ope a ions and s akeholde in e ac ions, which could come om di ec expec a ions om he
sha eholde s. Some would a gue ha CSR will bene i he i m by enhancing i s epu a ion and
b and, mi iga ing he isk and nega i e impac , a ac ing mo e alen , engagemen o employees
and consume p e e ences.
Co po a e Social Responsibili y and Financial In o ma ion Quali y
100
In his pape , I am in e es ed in he ela ionship be ween CSR and co po a e inancial
in o ma ion quali y. Co po a e inancial in o ma ion e e s o he cha ac e is ics and a ibu es o
inancial and non- inancial in o ma ion p oduced by a co po a e accoun ing sys em. High-quali y
inancial in o ma ion is eliable, accu a e, ele an , compa able, unde s andable, and consis en o
he s akeholde s o he company.
Unde he GAAP inancial ules and accoun ing p inciples, manage s ha e he disc e ion
o epo inancial in o ma ion. In ecen esea ch, we ha e e idence o di e en le els o
accoun ing in o ma ion quali y, which could ha e a di e en impac on he s akeholde s’ decision-
making and o e all wel a e. The quali y o co po a e inancial in o ma ion plays a signi ican ole
in many a eas o s akeholde s’ decision-making. Xing and Yan (2019) ind ha inancial
in o ma ion quali y is signi ican and nega i ely ela ed o sys ema ic isk. The e is also li e a u e
showing ha inancial in o ma ion quali y is associa ed wi h i m alua ion, in es o con idence,
ma ke e iciency, co po a e go e nance, and many impo an aspec s o co po a ions.
P e ious s udies ha e examined he iew o CSR on i m inancial in o ma ion quali y. As
in Kaya and Yazan (2019), he au ho s a gue om he concep ual pa ha a be e CSR co po a ion
would po en ially less manipula e he inancial s a emen s and ea ning managemen , leading o
be e inancial in o ma ion quali y.
In his s udy, I use a la ge sample o U.S. i ms by cons uc ing wo measu es o CSR and
wo measu es o inancial epo ing in o ma ion quali y. In ou main eg ession es ima ion, I ind
ha he e is a signi ican and posi i e ela ionship be ween CSR and inancial in o ma ion quali y.
As in many co po a e inance s udies, he e is a conce n abou he po en ial endogenei y p oblem
in CSR and inancial in o ma ion quali y. I apply wo-s age eg essions and adop he ins umen al
a iables o eligious anks and blue s a es o add ess he endogenei y conce ns. Ou main esul s
a e obus o po en ial endogenei y conce ns.
Ou s udy p o ides empi ical e idence o suppo ha highe co po a e social esponsibili y
is associa ed wi h be e inancial in o ma ion quali y. These indings ha e impo an implica ions
o inancial disclosu e, CSR, and co po a e s a egy.
The pape p oceeds as ollows. I i s e iew he ecen li e a u e on CSR and inancial
in o ma ion quali y. Following, I discuss he sample and he me hodology o he measu es o CSR
and he inancial in o ma ion quali y. Then, I discuss he empi ical esul s and obus ness check,
a e which I conclude he pape .
Li e a u e e iew
Acco ding o Ca oll (1999), he concep o co po a e social esponsibili y has exis ed in
he business communi y, as ea ly as 1930s and 1940s. Bowen (1953) gi es an ini ial de ini ion o
he social esponsibili y o businessmen, “I e e s o he obliga ions o businessmen o pu sue
hose policies, o make hose decisions, o o ollow hose lines o ac ion which a e desi able in
e ms o he objec i es and alues o ou socie y”. Da is (1960) a gued ha social esponsibili y
is a nebulous idea bu should be seen in a manage ial con ex . Johnson (1971) elabo a ed on he
opic by p esen ing se e al di e en de ini ions o iews o CSR and hen p oceeded o c i ique
and analyze hem. Ca oll (1979) and William F ede ick (2006) gi e se e al e sions o he
de ini ion o CSR.
In Ca oll’s ou -pa de ini ional amewo k o CSR, “Co po a e social esponsibili y
encompasses he economic, legal, e hical, and disc e iona y (philan h opic) expec a ions ha
Co po a e Social Responsibili y and Financial In o ma ion Quali y
101
socie y has o o ganiza ions a a gi en poin in ime” (Ca oll 1979, 1991). I could summa ize i
as Ca oll’s py amid o co po a e social esponsibili y. Mo e ecen ly, CSR has been connec ed
and s udied in many a eas o business, such as ma ke ing, business e hics, s a egy, accoun ing,
and inance. Cai, Pan and S a man (2016) and Liang and Renneboog (2017) show ha coun y
cha ac e is ics seem o be impo an in explaining i m’s CSR ac i i ies. Ilie and Ro h (2023)
s udied he in luence o boa ds on CSR. Bo ghesi, Hous on and Na anjo (2014) a gue ha U.S.
i ms wi h women as co po a e leade s ha e signi ican ly highe CSR sco es. McCa hy, Oli e
and Song (2017) a gue ha a nega i e ela ionship exis s be ween CSR and CEO con idence. Jian
and Lee (2015) a gue ha he e is a nega i e associa ion be ween CSR and CEO pay. In con as ,
Masulis and Reza (2015) ind no e idence ha CEOs a e lowe compensa ed o i ms wi h la ge
cha i able con ibu ions. Hong and Kacpe czyk (2009) show ha socially cons ained ins i u ions
dislike socially i esponsible s ocks.
Benabou and Ti ole (2010) a gue ha i ms wi h be e CSR could ha e di e en
sys ema ic isk exposu es du ing a c isis. Albuque que, Koshinen, and Zhang (2019) a gue s ong
CSR i ms could esul in lowe sys ema ic isk due o p oduc di e en ia ion s a egy. Ji apo n,
Ji apo n, Boep ase and Chang (2014) ind ha highe CSR ac i i ies a e ela ed o a o able bond
a ings. Sel ze , S a ks and Zhu (2022) a gue a i m’s bond a ing and yield sp ead a e ela ed o
en i onmen al and clima e isk. Cha a (2014) shows ha he cos o capi al is highe o i ms
wi h lowe en i onmen al p o iles. Flamme (2021) inds no di e ence in yield sp ead be ween a
i m’s g een bonds and o he bonds. Deng, Kang and Low (2013) a gue ha CSR imp o es i m
alue by he e en o he me ge announcemen s udy. Tang and Zhang (2020) and Flamme (2021)
ind issuing g een bonds is associa ed wi h posi i e s ock ma ke eac ions.
In o ma ion always plays a i al ole in inance as as e idenced by Fama (1960) in his
e icien ma ke hypo hesis. One impo an way o acqui e public in o ma ion is h ough co po a e
inancial disclosu es. Dechow and Diche (2002) sugges a measu e o he quali y o wo king
capi al acc uals and ea nings. Rajgopal and Venka achalam (2011) a gue ha in o ma ion quali y
is associa ed wi h highe idiosync a ic e u n ola ili y and isk. Kim and Zhang (2013) sugges
imp o ing inancial epo ing anspa ency is impo an o i ms and ma ke s o educe he ail
isks. Xing and Yan (2019) a gue ha inancial in o ma ion quali y is signi ican ly and nega i ely
ela ed o sys ema ic isk. Imp o ing inancial in o ma ion quali y could cause sys ema ic isk o
dec ease.
In his s udy, I am in e es ed o s udy he connec ion be ween co po a e social
esponsibili y and inancial in o ma ion quali y. Wi h he inc easing popula i y o CSR in
managemen and emphasis in i ms’ s a egy, how CSR in e ac s wi h he quali y o inancial
in o ma ion is an impo an ques ion. Will be e CSR lead o be e in o ma ion quali y, hence
in luence many o he aspec s o i ms’ decisions and alua ion? I is an impo an applica ion o
CSR and inancial in o ma ion quali y. Ou con ibu ion is o s udy whe he highe CSR ac i i y
i ms will epo highe quali y in inancial epo s o o he wise. Pa icula ly, I ake in o accoun
po en ial endogenei y p oblems and apply wo-s age eg essions o alle ia e he po en ial
endogenei y p oblem.
Da a and empi ical me hodology
I s a wi h all a ailable obse a ions join ly in CRSP and COMPUSTAT. To s udy he key
a iables in CSR measu es and inancial in o ma ion quali y measu es, I need o cons uc he CSR
Co po a e Social Responsibili y and Financial In o ma ion Quali y
102
a iables and inancial in o ma ion quali y a iables, in which I will discuss he me hodology o
key a iable cons uc ion. Ou inal sample is a join sample wi h non-missing key a iables om
he CSR measu es, inancial in o ma ion quali y measu es, and o he con ols om CRSP and
COMPUSTAT.
Co po a e social esponsibili y measu e
Following he ecen li e a u e, I would like o cons uc a sample o he CSR measu es.
As in Deng, Kang, and Low (2013), and p io CSR li e a u e, I ob ain he i m CSR measu e om
se en majo dimensions: communi y, co po a e go e nance, di e si y, employee ela ions,
en i onmen , human igh s, and p oduc quali y and sa e y.
Each dimension is e alua ed wi h posi i e, s eng h, o nega i e, conce ns. Following he
p io li e a u e, I code posi i e e alua ions as 1, and nega i e e alua ions as -1. The simple sco e,
CSR_ Di ec , is cons uc ed as a simple summa ion o all non-missing inpu s, whe e I conside all
dimensions wi hou any adjus men . The sample has i s limi a ions; he s eng h and weakness a e
no measu ed in he same dimensions ac oss all sample yea s. The sample is no cons uc ed
uni o mly ac oss all yea s. The e a e a ia ions o dimension ac oss each yea . An al e na i e way
o adjus he CSR measu e is o conside each dimension’s size and no malized by each dimension,
he adjus ed CSR sco e will o e come a ia ion ac oss each yea and assign equal weigh s o each
dimension. I ollow he me hodology as in Deng, Kang and Low (2013) o cons uc he weigh ed
CSR sco e based on weigh ed dimensions o each yea and each i m. To cons uc he adjus ed
measu es, I no malize each dimension and sum he o al no malized dimensions o each i m,
which I con ol he a ia ion ac oss di e en dimensions and minimize he sample di e ence
ac oss each yea . To compa e and con ol o he cons uc ion, I also epo he simple unweigh ed
CSR sco e o compa ison.
Financial in o ma ion quali y measu e
Fo he i m’s inancial in o ma ion quali y, I ollow he li e a u e, as in Rajgopal and
Venka achalam (2011), Dechow and Diche (2002) and Xing and Yan (2019). I use he
idiosync a ic ola ili y, which is ela ed o he ea nings quali y and in o ma ion disclosu e.
I i s model he ela ionship be ween acc uals and cash lows,
𝑇𝐶𝐴𝑖𝑡 = 𝛽0+ 𝛽1𝐶𝐹𝑂𝑖(𝑡−1)+ 𝛽2𝐶𝐹𝑂𝑖𝑡 + 𝛽3𝐶𝐹𝑂𝑖(𝑡+1)+ 𝑒𝑖𝑡
whe e i indexes i m and o he ime. TCA is o al cu en acc uals and CFO is cash low om
ope a ions. The e is a modi ied e sion o he abo e equa ion as in F ancis e al (2005),
𝑇𝐶𝐴𝑖𝑡 = 𝛽0+ 𝛽1𝐶𝐹𝑂𝑖(𝑡−1)+ 𝛽2𝐶𝐹𝑂𝑖𝑡 + 𝛽3𝐶𝐹𝑂𝑖(𝑡+1)+ 𝛽4∆𝑅𝐸𝑉𝑖𝑡 + 𝛽5𝑃𝑃𝐸𝑖𝑡 + 𝑒𝑖𝑡
whe e i indexes i m and o he ime. ∆𝑅𝐸𝑉𝑖𝑡 is he change in e enues and PPE is he g oss
alue o p ope y, plan and equipmen . I ollow he app oach in Xing and Yan (2019), o es ima e
he abo e equa ion in each o he 49 indus y g oups, whe e he e a e a leas 20 i ms in a yea . I
de ine he |DD| as he s anda d de ia ion o a i m’s esiduals o e 5 yea s as ou measu e o
inancial in o ma ion quali y. The highe he |DD|, he lowe he in o ma ion quali y is.
Co po a e Social Responsibili y and Financial In o ma ion Quali y
103
Also as in Xing and Yan (2019), Jones (1991), I ha e an al e na i e measu e o inancial
in o ma ion quali y.
𝑇𝐴𝑖𝑡 = 𝛽0+ 𝛽1(∆𝑅𝐸𝑉𝑖𝑡 − ∆𝐴𝑅𝑖𝑡)+ 𝛽2𝑃𝑃𝐸𝑖𝑡𝑖(𝑡−1)+ 𝛽3𝑅𝑂𝐴𝑖𝑡 + 𝑒𝑖𝑡
Whe e TA is he o al acc uals, and ∆𝐴𝑅𝑖𝑡 is he change in accoun ing ecei able. I de ine he
absolu e alue o he esidual om he abo e equa ion es ima ion as he abno mal acc uals,
|ABACC|. A high alue o abno mal acc ual means lowe inancial in o ma ion quali y.
Con ol a iables
Following he li e a u e and isola ing he e ec s o ou key a iables in CSR and inancial
in o ma ion quali y, I con ol o a iables ela ed o he CSR and in o ma ion quali y. I de ine he
a iables simila ly o he li e a u e. Size is he na u al loga i hm o o al asse s. Ma ke - o-book is
he a io o he ma ke alue o asse s di ided by he book alue o asse s. ROA is ne income
be o e ex ao dina y i ems di ided by o al asse s. Le e age is he a io o o al liabili ies o o al
asse s. R&D is R&D expendi u e scaled by o al asse s. Ne capi al expendi u es a e he di e ence
be ween capi al expendi u es and sales o p ope y, plan , and equipmen di ided by o al asse s.
Business segmen s is he numbe o business segmen s epo ed in he Compus a Segmen
Da abase. Sales He indahl is he sum o he squa ed a ios o segmen sales o o al sales.
Summa y s a is ics
Ou sample consis s o join ly a ailable da ase s om CRSP, COMPUSTAT, and CSR
da ase . I equi e he e a e no missing key a iables a e cons uc ing he measu es o weigh ed
and simple CSR, inancial in o ma ion quali y measu e o |DD| and |ABACC|.
In able 1, I p esen he summa y s a is ics o ou me ged sample. The a e age and median
o DD measu e is 0.15 and 0.06, which is in line wi h p e ious li e a u e. The a e age and median
o |ABACC| is 0.22 and 0.06. Fo he CSR measu e, I p esen he mean and median o di ec CSR
measu es as -0.32 and -1, which is in line wi h li e a u e. I also p esen he mean and median o
weigh ed CSR measu es as -0.19 and -0.2. Fo he con ol a iables, I epo he mean, median and
s anda d de ia ion o size, ma ke o book, e u n on asse s, le e age, esea ch and de elopmen
expenses, ne capi al expenses, numbe o segmen s and sales He indahl index.
Table 1 Summa y S a is ics
This able epo s summa y s a is ics o he gene al sample. Accoun ing in o ma ion quali y-DD
is calcula ed om he modi ied e sion o he Dechow and Diche (2002) model. Accoun ing
in o ma ion quali y-ABACC is he absolu e alue o abno mal acc uals based on he Jones (1991)
model. CSR Di ec is he aw sco e o he co po a e s eng h less he conce n. CSR Weigh ed is
he weigh ed co po a e sco e in each ca ego y. Size is he na u al loga i hm o o al asse s. Ma ke -
o-book is he a io o he ma ke alue o asse s di ided by he book alue o asse s. ROA is ne
income be o e ex ao dina y i ems di ided by o al asse s. Le e age is he a io o o al liabili ies
o o al asse s. R&D is R&D expendi u e scaled by o al asse s. Ne capi al expendi u es is he
di e ence be ween capi al expendi u es and sales o p ope y, plan , and equipmen di ided by
Co po a e Social Responsibili y and Financial In o ma ion Quali y
104
o al asse s. Business segmen s is he numbe o business segmen s epo ed in he Compus a
Segmen Da abase. Sales He indahl is he sum o he squa ed a ios o segmen sales o o al sales.
a iable
N
Mean
S anda d De ia ion
Median
DD
18082
0.15
0.26
0.06
ABACC
20770
0.22
0.45
0.06
CSR Di ec
20770
-0.32
2.41
-1.00
CSR Weigh ed
20770
-0.19
0.53
-0.20
Size
20770
7.09
1.65
6.93
Ma ke o Book
20770
2.13
1.43
1.65
ROA
20770
0.02
0.15
0.04
Le e age
20770
0.21
0.20
0.18
R&D
20770
0.05
0.09
0.00
NET CAPX
20770
-0.46
0.35
-0.36
Num Segmen s
20770
1.29
0.91
1.00
Sales He
20770
0.95
0.15
1.00
In able 2, I p esen he co ela ion coe icien be ween he key a iables. Ou inancial
in o ma ion quali y measu es, DD and ABACC ha e he co ela ion coe icien o 0.38, which is
simila o li e a u e. The coe icien be ween he CSR di ec measu e and CSR weigh ed measu e
is 0.93. Ou sample is simila o he ela ed li e a u e.
Table 2 Co ela ion able
This able epo s summa y s a is ics o he gene al sample. Accoun ing in o ma ion quali y-DD
is calcula ed om he modi ied e sion o he Dechow and Diche (2002) model. Accoun ing
in o ma ion quali y-ABACC is he absolu e alue o abno mal acc uals based on he Jones (1991)
model. CSR Di ec is he aw sco e o he co po a e s eng h less he conce n. CSR Weigh ed is
he weigh ed co po a e sco e in each ca ego y. Size is he na u al loga i hm o o al asse s. Ma ke -
o-book is he a io o he ma ke alue o asse s di ided by he book alue o asse s. ROA is ne
income be o e ex ao dina y i ems di ided by o al asse s. Le e age is he a io o o al liabili ies
o o al asse s. R&D is R&D expendi u es scaled by o al asse s. Ne capi al expendi u es is he
di e ence be ween capi al expendi u es and sales o p ope y, plan , and equipmen di ided by
o al asse s. Business segmen s is he numbe o business segmen s epo ed in he Compus a
Segmen Da abase. Sales He indahl is he sum o he squa ed a ios o segmen sales o o al sales.
DD
ABAC
C
CSR
Di ec
CSR
Weigh e
d
Size
Ma ke
o
Book
ROA
Le e ag
e
DD
1
ABACC
0.38
1
CSR
Di ec
-0.02
0.02
1
CSR
Weigh ed
-0.03
0.02
0.93
1
Co po a e Social Responsibili y and Financial In o ma ion Quali y
105
Size
-0.18
-0.09
0.21
0.15
1
Ma ke o
Book
0.18
0.1
0.06
0.04
-0.25
1
ROA
-0.15
-0.08
0.08
0.07
0.25
-0.02
1
Le e age
-0.09
-0.04
-0.03
-0.02
0.29
-0.17
-0.13
1
Empi ical esul s
Reg ession o In o ma ion quali y on CSR sco e
In able 3, I es ima e he ela ion be ween he inancial in o ma ion quali y and he
co po a e social esponsibili y. The dependen a iables a e he inancial in o ma ion quali y
measu es, DD and ABACC as p e iously de ined. The main explana o y a iables a e he CSR
di ec and weigh ed measu es.
I also es ima e a pa simonious model wi h main con ol a iables. I ha e simila esul s in
ou ex ended model and pa simonious model. In ou ables, I epo he esul s in he ex end model.
In speci ica ion 1 and 3, I use he di ec CSR measu e as ou key explana o y a iable; in
speci ica ion 2 and 4, I use he weigh ed CSR measu e as ou key explana o y a iable. In all
speci ica ions, I con ol he size, ma ke o book, ROA, R&D expense, Ne CAPX expenses,
numbe o segmen s, and sales He indahl index. In all scena ios, I ind a signi ican nega i e
ela ionship be ween CSR measu e and inancial in o ma ion quali y. Since he inancial
in o ma ion quali y measu es a e nega i ely ela ed o he in o ma ion quali y, he highe he CSR
measu e is associa ed wi h he be e inancial in o ma ion quali y. The impac o CSR sco es is
also economically meaning ul. Fo he weigh ed CSR sco e, he eg ession esul s sugges ha one
s anda d de ia ion in CSR measu e inc ease ABACC in o ma ion quali y by 7.7%, inc ease DD
in o ma ion quali y by 4.6%. Those eg ession esul s suppo he ela ionship ha highe CSR
sco ed company is associa ed wi h be e inancial in o ma ion quali y.
Table 3 Reg ession o CSR and in o ma ion quali y
In he able, I epo he eg ession o he accoun ing quali y measu e on he CSR measu es. The
dependen a iables a e he DD and ABACC. Accoun ing in o ma ion quali y-DD is calcula ed
om he modi ied e sion o he Dechow and Diche (2002) model. Accoun ing in o ma ion
quali y-ABACC is he absolu e alue o abno mal acc uals based on he Jones (1991) model. CSR
Di ec is he aw sco e o he co po a e s eng h less he conce n. CSR Weigh ed is he weigh ed
co po a e sco e in each ca ego y. Size is he na u al loga i hm o o al asse s. Ma ke - o-book is
he a io o he ma ke alue o asse s di ided by he book alue o asse s. ROA is ne income
be o e ex ao dina y i ems di ided by o al asse s. Le e age is he a io o o al liabili ies o o al
asse s. R&D is R&D expendi u e scaled by o al asse s. Ne capi al expendi u es is he di e ence
be ween capi al expendi u es and sales o p ope y, plan , and equipmen di ided by o al asse s.
Business segmen s is he numbe o business segmen s epo ed in he Compus a Segmen
Da abase. Sales He indahl is he sum o he squa ed a ios o segmen sales o o al sales.
(1)
(2)
(3)
(4)
DD
DD
ABACC
ABACC
Co po a e Social Responsibili y and Financial In o ma ion Quali y
106
CSR Di ec
-0.001*
-0.007***
(0.001)
(0.001)
CSR
Weigh ed
-0.013***
-0.032***
(0.003)
(0.006)
Size
-0.012***
-0.012***
0.001
-0.000
(0.001)
(0.001)
(0.002)
(0.002)
Ma ke o
Book
0.014***
0.014***
-0.007**
-0.007**
(0.002)
(0.002)
(0.003)
(0.003)
ROA
-0.069***
-0.068***
-0.195***
-0.196***
(0.022)
(0.022)
(0.032)
(0.032)
R&D
0.547***
0.549***
-0.177***
-0.183***
(0.043)
(0.043)
(0.062)
(0.062)
NET CAPX
0.088***
0.087***
0.036***
0.036***
(0.006)
(0.006)
(0.010)
(0.010)
Num
Segmen s
0.002
0.002
0.012
0.013
(0.006)
(0.006)
(0.010)
(0.009)
Sales He
-0.054
-0.055
0.117**
0.116**
(0.034)
(0.034)
(0.058)
(0.058)
Cons an
0.273***
0.270***
-0.142**
-0.140**
(0.040)
(0.040)
(0.069)
(0.069)
Obse a ions
18,082
18,082
20,770
20,770
R-squa ed
0.105
0.106
0.007
0.007
Robus s anda d e o s
*** p<0.01, ** p<0.05, *
<0.1
Two-s age eg ession
Following he li e a u e and con olling an ex ensi e se o con ol a iables, I could s ill
su e om he endogenei y bias om unobse able omi ed a iables. The e could be ac o s
ela ed o CSR and imp o e he in o ma ion quali y a he same ime o di e en di ec ion. To
add ess his po en ial endogenei y p oblem, I apply he 2SLS eg ession using an ins umen al
a iable, blue s a e, as in Deng Kang and Low (2013). The idea o he 2SLS eg ession is o ind
an ins umen al a iable, which is co ela ed wi h he explana o y a iable, a he han he
dependen a iable. I use he ins umen al a iable in he i s s age eg ession and use he p edic ed
eg ession esul s om he i s s age eg ession in he second s age o sol e he inconsis en and
biased eg ession es ima es.
I choose blue s a e as ou ins umen al a iable, which is a dummy a iable ha equals one
i a i m has headqua e in a Democ a ic s a e and Ze o o he wise. As in Rubin (2008), high CSR
sco e i ms end o choose he blue s a es as hei headqua e s. Howe e , I could no ela e he
