An empirical study of global corporate social responsibility reporting regulation and practice over 2000-2015 period

This dissertation is motivated by an observation of a global steep increasing trend in corporate social responsibility (CSR) reporting regulation since year 2000. By 2015, world top 63 economies have instituted 345 CSR reporting regulation policies. Among them, 64.2% are mandatory (Carrots&Sticks, 2016). Most previous studies on CSR were conducted when it was practiced voluntarily without regulation. By far, a complete history and full scope quantitative study of recent CSR reporting regulation has not been done yet. Particularly, rare attention has been given to the financial incentives for firms to full CSR under the regulation. In chapter 1, I analyze the drivers of CSR reporting regulation using long differences by looking back at the entire history of CSR regulation and including most countries which have instituted CSR reporting instruments. I find that the most significant and robust driver of global CSR reporting regulation is the size of an economy measured by GDP level of a country. Besides, the deterioration of PM2.5 air pollution level might be a driver to the development of voluntary CSR policies. Both the international trade spillover effect and the international organization promotion effort might be drivers to the development of general sustainability CSR policies. However, during the past 15 years, the regional differences in the development of CSR regulation policies among bordering countries has increased. Additional likely associations with the development of CSR reporting regulation are the extent that a country removes financial bubbles in its stock market and the democratic institution as well as political environment of a country. In chapter 2, I explore financial incentives for firms to fulfill CSR under CSR reporting regulations. The two key questions I addressed are: Is there a link between firms’ CSR performance and financial performance? (Q1) Particularly, can publishing CSR reports motivate firms to fulfill their CSR obligation? (Q2) I answer these two questions by empirically analyzing a large panel data set from China after CSR reporting regulation. The data set includes 120 top firms from China spanning from year 2007 to 2013. The total revenue of sampled firms constitutes around half of China’s non-agriculture GDP. Particularly, we introduce the factor of firms’ CSR reports and reporting behaviors into our study, which has not been considered by most studies of CSR since these studies were done when CSR reporting was practiced voluntarily (Orlitzky, Schmidt, Rynes, 2003; Margolis, Elfenbein, and Walsh, 2007). The results show that the short-run links and long-run links between firms' CSR performance and financial performance are different. In the short run, publishing CSR reports generates higher net profit compared with not publishing CSR reports. However, the marginal impact of lagged CSR performance on net profit is negative. In the long run, the marginal impact of lagged CSR performance on net profit is positive. However, better CSR performance also results in higher total operating cost. Leaders and Followers receive positive marginal impact of lagged CSR performance on net profit in the long run, while the positive marginal impact on Leaders is greater than the marginal impact on Followers. Leaders and Followers' CSR performance need to exceed a certain level to receive a positive net profit from CSR performance. The Uncommitted firms receive negative marginal impact of lagged CSR performance on net profit. Among four CSR performance sub-indices, social CSR performance has the most consistent positive impacts on profitability. Lagged market CSR performance and CSR management performance also have positive effects on profitability. The link between environmental CSR performance and financial performance is very limited and in general negative. In chapter 3, I evaluate the impacts of global CSR reporting regulation on sustainable development since 73% of global CSR reporting policies are related with firms' environmental CSR performance and 38% of global CSR reporting policies are related with general sustainability (Carrots&Sticks, 2016). I select three indicators for sustainable development: energy intensity, CO2 emissions and PM2.5 pollution level. For energy intensity, I followed Fisher-Vanden, Jefferson, Liu and Tao (2004) and used a reduced form model to investigate whether CSR regulation may urge firms to use energy more efficiently or prudently and further reduce a nation’s energy intensity. Since I use macro level time series data, panel unit root test and panel cointegration analysis are used to explore the relations. For CO2 emissions, I started from Kaya identity (Yamaji, Matsuhashi, Nagata & Kaya, 1991), which gives an exact decomposition of CO2 emissions into four factors, and then focused on examining the impact of CSR regulation on the key factor of carbon intensity of energy by using panel cointegration analysis. For PM2.5 pollution level, I used a dynamic panel model and adopted a recently developed econometric method, panel fully aggregated estimator (PFAE) by using X-differencing procedure proposed by Han, Phillips, and Sul (2014) which has strong asymptotic and finite sample performance characteristics that dominate other procedures such as bias corrected least squares (LSDVC), generalized method of moments (GMM), and system GMM methods. Overall, I find that there is a positive long-run Granger causality from 3-year lag of environmental CSR policies to energy intensity. This might be due to the reason that all CSR reporting policies on pollution control are classified into environmental CSR policies. And more CSR policies on pollution control may increase the cost to producers to meet the environmental requirements in the short run. No significant result is found for CSR policies on CO2 emissions. However, both current year general sustainability CSR policies and 3-year lag of environmental CSR policies have significant negative impacts on PM2.5. And 3-year lag of environmental CSR policies also has a significant negative impact on PM2.5. Besides, I also identify some other important factors related with energy efficiency, CO2 emissions and PM2.5 pollution. At the end of each chapter, policy implications and suggestions are provided.LimitedAuthor requested closed access (OA after 2yrs) in Vireo ETD syste