Corporate social responsibility disclosure and firm value: a signaling theory perspective

Purpose – This study investigates the impact of corporate social responsibility (CSR) disclosure on firm value and the moderating roles of largely under-examined contextual factors such as mandatory disclosure policy, industry profile and local institutional environment. Design/methodology/approach – Panel data techniques are used to investigate the association between CSR disclosure and firm value as well as the roles of such intervening factors. Findings – The study finds that CSR disclosure is positively related to firm value, indicating the financial benefit of CSR disclosure. Moreover, the positive relationship is more pronounced in the post-mandatory CSRD period, non-high-profile industries and more favorable institutional environment. Practical implications – The study provides corporate managers with more insight into the beneficial effects of CSR disclosure and the contingency factors influencing the CSR disclosure–firm value relationship. Originality/value – This study advances the extant knowledge of contingent effects on the market valuation of CSR reporting from a signaling theory perspective. Developing a theory to explain the relationship between CSR disclosure and firm value, this study adds arguments and empirical evidence to demonstrate that the effectiveness of CSR disclosure as a signal depends on the signaler, the receiver and the signaling environment.