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Covid-19 and CSR Disclosure: Evidence From New Zealand

Bahadar, S; Zaman, R
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Journal article (244.5Kb)
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http://hdl.handle.net/10292/15429
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Abstract
Purpose

Stakeholders' uncertainty about firms' value drives their urge to get information, as well as managerial disclosure choices. In this study, the authors examine whether and how an important source of uncertainty – the recent COVID-19 pandemic's effect on corporate social responsibility (CSR) disclosure – is beyond managerial and stakeholders' control.

Design/methodology/approach

The authors develop a novel construct for daily CSR disclosure by employing computer-aided text analysis (CATA) on the press releases issued by 125 New Zealand Stock Exchange (NZX) listed from 28 February 2020 to 31 December 2020. To capture COVID-19 intensity, the authors use the growth rate of the population-adjusted cumulative sum of confirmed cases in New Zealand on a specific day. To examine the association between the COVID-19 outbreak and companies' CSR disclosure, the authors employed ordinary least squares (OLS) regression by clustering standard error at the firm level.

Findings

The authors find a one standard deviation increase in the COVID-19 outbreak leads to a 28% increase in such disclosures. These results remained robust to a series of sensitivity tests and continue to hold after accounting for potential endogeneity concerns. In the channel analysis, the study demonstrates that the positive relationship between COVID-19 and CSR disclosure is more pronounced in the presence of a well-structured board (i.e. a large, more independent board and with a higher proportion of women on it). In further analysis, the authors find the documented relationship varies over the pandemic's life cycle and is moderated by government stringency response, peer CSR pressure and media coverage.

Originality/value

This paper is the first study that contributes to the scant literature examining the impact of the COVID-19 outbreak on CSR disclosure. Prior research either investigates the relationship of the CSR-stock return during the COVID-19 market crisis or examines the relationship between corporate characteristics including the quality of financial information and the reactions of stock returns during COVID-19. The authors extend such studies by providing empirical evidence that managers respond to COVID-19 by increasing CSR disclosure.
Keywords
CSR disclosure; Novel coronavirus; COVID-19; SARS-COV-2; Information uncertainty; Stakeholder-agency theory; Corporate governance; Media coverage
Date
August 5, 2022
Source
China Accounting and Finance Review, Vol. 24 No. 3, pp. 391-415. https://doi.org/10.1108/CAFR-03-2022-0017
Item Type
Journal Article
Publisher
Emerald
DOI
10.1108/cafr-03-2022-0017
Publisher's Version
https://www.emerald.com/insight/content/doi/10.1108/CAFR-03-2022-0017/full/html
Rights Statement
© Stephen Bahadar and Rashid Zaman. Published in China Accounting and Finance Review. Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/ legalcode

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