The impact of introducing new regulations on the quality of CSR reporting: evidence from the UK

Ruba Subhi Hamed, Basiem Khalil Al-Shattarat, Wasim Al-Shattarat, Khaled Hussainey

Research output: Contribution to journalArticlepeer-review

Abstract

This study examines the adoption of mandatory corporate social responsibility (CSR) regulation in the United Kingdom (UK). Specifically, we investigate whether adopting new CSR regulations impacts the quality of firms’ CSR reporting and explore whether that quality depends on a firms’ characteristics. Our empirical results suggest that the UK’s mandatory CSR reporting regulation significantly enhances CSR reporting quality. We further find that firms’ characteristics, particularly corporate governance and firm size, improve mandatory CSR reporting quality. Our results are robust to the use of an alternative proxy of CSR quality assessment and testing for endogeneity. These findings suggest that committing to CSR can substantially benefit stakeholders, who will be better informed regarding the firms’ CSR performance through improved reporting quality. This factor can influence investors’ beliefs and market valuations, which may subsequently guide firms’ investment decisions.
Original languageEnglish
Article number100444
Number of pages19
JournalJournal of International Accounting, Auditing and Taxation
Volume46
Early online date25 Jan 2022
DOIs
Publication statusPublished - 1 Mar 2022

Keywords

  • mandatory CSR
  • firm characteristics
  • corporate governance
  • high and low CSR quality

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