Abstract
Companies are increasingly taking into consideration the demands of their non-financial stakeholders (including customers, employees, communities, and civil society organizations). In addition to generating a financial return for its shareholders, the company also pays attention to the environmental, social, and governance impact of its operations. The increasing interest being paid to companies' operations by a wider range of stakeholders, has led to a significant increase in the demand for Corporate Social Responsibility (CSR) reporting. Some companies even choose to have their CSR reports assured by an independent, external auditor. In theory, CSR assurance should enhance the credibility of the companies’ CSR reporting.
Using a sample of 251 companies from the S&P 500 that have their CSR reports assured and a matched sample of companies that do not have their CSR reports assured, this study evaluates whether there is an association between the assurance of CSR reports, CSR elements disclosed, and the company’s financial and sustainability performance. The results suggest that there are differences between companies that assure their CSR reports and those that do not assure their CSR reports. Specifically, the results provide some support that the decision to assure and assurance quality are associated with the number of CSR elements disclosed as well as the companies’ sustainability and financial performance. In addition, the results also provide some support that size and leverage are associated with the CSR disclosures, the decision to assure, and assurance quality. Given the wide variety of disclosures, this study also gives some support to voluntary disclosure theory. Using voluntary disclosure theory, a company with superior performance will prepare a CSR report in order to communicate its superior performance to the stakeholders. The number of elements disclosed in the CSR report is higher for companies that assure their CSR reports.
This study contributes to research and business practice and informs organizations and regulators on some of the factors that are related to the company’s decision to disclose certain elements in their CSR reports, as well as the assurance of those reports.
Keywords: Corporate Social Responsibility (CSR), CSR assurance quality, CSR performance, signaling theory, voluntary disclosure theory