Relationship of corporate social responsibility disclosure on information asymmetry and the cost of capital

摘要

Different from the strong evidence in the literature that voluntary disclosure in general and corporate social responsibility (CSR) disclosure in particular is associated with corporate financial performance results for the association of CSR disclosure and firmlevel cost of capital are not fully convincing. We argue that contradictory findings result from research design limitations and revisit the relationship, hence. Predicting a negative relationship between CSR disclosure and information asymmetry as well as for CSR disclosure and cost of capital, we examine our hypotheses based on a sample of 264 German companies that provide English language CSR reporting along with current stock prices and analyst forecast data. We use artificial intelligence based content analysis to measure CSR disclosure. We proxy for information asymmetry with bid-ask spreads and calculate an implied cost of capital measure. Results reveal that CSR disclosure is significantly negatively associated with information asymmetry as well as cost of capital. Our paper contributes to the existing literature as this is the first study to examine capital cost effects of comprehensive CSR disclosure using nonsubjective measures in the German setting that is known to have an extraordinary rich CSR disclosure and long experience in CSR and CSR disclosure.