The effect of mandatory CSR disclosure on firm profitability and social externalities : Evidence from China

Research output: Journal Publications and ReviewsRGC 21 - Publication in refereed journalpeer-review

637 Scopus Citations
View graph of relations



Original languageEnglish
Pages (from-to)169-190
Journal / PublicationJournal of Accounting and Economics
Issue number1
Online published20 Nov 2017
Publication statusPublished - Feb 2018
Externally publishedYes


We examine how mandatory disclosure of corporate social responsibility (CSR) impacts firm performance and social externalities. Our analysis exploits China's 2008 mandate requiring firms to disclose CSR activities, using a difference-in-differences design. Although the mandate does not require firms to spend on CSR, we find that mandatory CSR reporting firms experience a decrease in profitability subsequent to the mandate. In addition, the cities most impacted by the disclosure mandate experience a decrease in their industrial wastewater and SO2 emission levels. These findings suggest that mandatory CSR disclosure alters firm behavior and generates positive externalities at the expense of shareholders.