Towards mandatory international corporate social responsibility standards : a thesis presented in partial fulfilment of the requirements for the degree of Doctor of Philosophy in Accountancy at Massey University, Auckland, New Zealand

Abstract

This research examines the effect of multiple global corporate social responsibility (CSR) frameworks/standards/guidelines (hereafter, CSR pronouncements) on various consequences using data of EU firms. Understanding the effects of global CSR pronouncements is important for foreseeing the future of CSR reporting. This study is organised into three different research essays: (i) agency cost; (ii) harmonisation of CSR reporting; and (iii) market liquidity.

Essay One examines effects of using multiple CSR pronouncements on agency problems/agency costs. A sample of 2,605 firm-year observations that voluntarily use CSR pronouncements is drawn from across 24 European Union (EU) countries. Firms that apply more CSR pronouncements are found to be associated with lower levels of agency costs. These results are robust after testing for endogeneity arising from omitted variables and reverse causality. Findings suggest that use of multiple CSR pronouncements has a disciplining role for managers, and hence should be of interest to preparers and users of CSR reports, regulators, standard-setters, and academics. Essay Two examines whether use of multiple CSR pronouncements mitigates this i.e., promotes harmonisation of CSR reporting. A sample of 2,085 firm-year observations is drawn from 17 EU countries to test voluntary CSR reporters. These tests provide evidence that upward harmonisation in CSR reporting increases as firms apply more CSR pronouncements. The results suggest that use of multiple global CSR pronouncements reduces selective reporting and promotes harmonisation of CSR reports. These results are robust after controlling for endogeneity arising from omitted variables and reverse causality. These findings should be of interest to preparers and users of CSR reports, as well as to regulators, standard-setters, and academics.

Essay Three investigates the effects of CSR pronouncements on market information asymmetry for 2,200 firms from 14 EU countries for the years 2015-2019. The results suggest that usage of multiple CSR pronouncements is negatively associated with bid-ask spread. These results are robust after testing for endogeneity arising from omitted variables and reverse causality. The results support voluntary disclosure theory and suggest that use of multiple CSR pronouncements improves market liquidity. These findings should be of interest to preparers and users of CSR reports, regulators, standard-setters, and academics.