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

Abstract:
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.