Performance gap and the timing of corporate social responsibility disclosure‐A trust repair perspective

Abstract

AbstractBased on the theory of firm behavior, we explain the voluntary corporate social responsibility (CSR) disclosure behavior of firms from the perspective of trust repair and regard the process of firms' response to the CSR institution as an important way to trust repair for firms' management. We adopt an event history approach with a sample of Chinese firms listed on the A‐share market from 2008 to 2020 and find that faster engagement in CSR disclosure is one of the important trust repair methods for management when firms face performance gaps, and performance gaps positively incentivize firms to voluntarily engage in CSR disclosure. In addition, managers consider the total costs, risks, and benefits of different trust repair methods, there is a substitution effect between different trust repair methods, and the disclosure of internal audit reports and philanthropic donations negatively moderates the relationship between performance gap and CSR disclosure. Our study has important implications for understanding how firm performance affects CSR strategic decisions.