The Effect Of Mandatory Regulation On Corporate Social Responsibility Reporting Quality: Evidence From China

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Jianling Wang
Gaoliang Tian
Weiguo Fan
Dan Luo


Corporate Social Responsibility (CSR) Report, Reporting Quality, Government Regulation


Corporate Social Responsibility (CSR) disclosure has attracted attention from regulatory bodies and academics over the past few decades. Due to the unreliability resulted from CSR voluntary disclosure, an increasing number of researchers are calling for more government regulation on CSR disclosure. Based on 1830 standalone CSR reports disclosed by the Chinese-listed firms during 2009-2012, we examine the effect of mandatory regulation on CSR reporting quality. We further hypothesize and test for the moderating effect of firm size and other characteristics on the link between government regulation on CSR reporting quality. Our results suggest that government mandatory regulation leads to an overall improvement in CSR reporting quality. We also find that this positive effect is greater when firms are larger and have better financial performance, but less when firms are controlled by government. Our study provides a direct answer to the recent calling for mandatory disclosure on CSR reports, and helps to understand why recent studies of social disclosure regulation suggest that government interventions do not seem to resolve the problems that are generally attributed to voluntary disclosures. Our findings should be of interest to the academics, regulators, and investors. 


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