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RAAS 2024/12
Vol.14 No.2:
41-86
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Corporate Social Responsibility Performance and Readability of Annual Reports
Tsung-Kang Chen1, Hsien-Hsing Liao2, Yijie Tseng3*, Yun Hao4, and Kai Wang4
1Department of Management Science, National Yang Ming Chiao Tung University/Center for Research in Econometric Theory and Applications, National Taiwan University
2Department of Finance, National Taiwan University
3Department of Accounting, Fu Jen Catholic University
4Department of Management Science, National Yang Ming Chiao Tung University
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Abstract:
We examine whether and how corporate social responsibility (CSR) performance affects annual report readability. We find that firms with higher CSR performance provide less readable annual reports, especially in the ‘Notes to consolidated financial statements’ (Notes) section rather than the ‘Management Discussion and Analysis’ (MD&A) section. The CSR performance effect on annual report readability is mainly through the channels of firm performance and financial leverage, supporting shareholder theory (Friedman 1962) and tax shield concern. Meanwhile, we also find that the channels vary with the different motivations for conducting CSR activities. Finally, the CSR performance effect on Notes readability becomes weaker during the financial crisis period.
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Keywords: Corporate social responsibility (CSR); Annual report readability; Notes to consolidated financial statements; Shareholder theory; Tax shields
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Corresponding author
; e-mail: 081647@mail.fju.edu.tw
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©
2024
Review of Accounting and Auditing Studies, ISSN 2221-9374
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