j 2022

See What We Did: CSR Disclosure After Performance Shortfalls

JIRÁSEK, Michal

Basic information

Original name

See What We Did: CSR Disclosure After Performance Shortfalls

Authors

Edition

2022

Other information

Language

English

Type of outcome

Článek v odborném periodiku (nerecenzovaný)

Field of Study

50204 Business and management

Confidentiality degree

není předmětem státního či obchodního tajemství

Organization unit

Faculty of Economics and Administration

DOI

Keywords (in Czech)

ESG disclosure, performance shortfalls, signaling theory, performance feedback theory
Změněno: 21/12/2023 15:57, Ing. Michal Jirásek, Ph.D.

Abstract

V originále

Environmental, social, and governance (ESG) disclosure has greatly influenced firms’ performance. Given the influence, one can ask whether firms deliberately use ESG disclosure as a tool to mitigate performance shortfalls. Performance shortfalls are situations in which the firm does not attain its performance aspiration. They create a compelling stimulus for managers to react and attempt to reverse the situation. With the growing inflow of funds into ESG investments, increasing disclosure represents a viable tactic for such a reversal. The hypotheses are tested using a sample of S&P 500 firms followed over the years 2011-2018. The study uses fixed-effects panel data models to statistically test the hypotheses. The paper shows firms react to performance shortfalls by increasing their ESG disclosure. However, the appeal of this response decreases with the size of the performance shortfall. The research uncovers a new situational determinant of ESG disclosure, performance shortfalls, and how firms react in their disclosure to experiencing them. Performance shortfalls provide additional motivation for firms to increase their disclosure. This is an important factor to be considered by the stakeholders when the firm does so.