A Study of the Relationship between Corporate Social Responsibility Report and the Stock Market

Abstract

This study mainly investigates the relationship between corporate social responsibility (CSR) reporting and the reaction in the stock market. Specifically, we utilize the data from Taiwanese stock market from 2012 to 2017 to examine whether the CSR report disclosed by the listed companies on the Taiwan Stock Exchange and the Taipei Exchange will cause abnormal returns on the short-, mid- or long-term horizon. The empirical results demonstrate that companies which disclose their CSR reports generate higher and more positive mid- to long-term abnormal returns than undisclosed companies. In addition to filling the gap of previous studies, this study also examines whether CSR reports mitigate the information asymmetry between management and stakeholders. Companies disclosing their CSR reports will boost the confidence of investors and lead to higher stock return valuations.