Does stock price crash risk affect corporate social responsibility disclosure?

ABSTRACT

Does crash risk affect companies to improve contents of corporate social responsibility (CSR) disclosure, or harm the corporate willingness to disclose in future? Using a sample of 1,361 listing companies in the Chinese stock market over the period of 2006–2021, we create a new indicator to assess the content diversity of CSR disclosure, and examine the causal effects of crash risk on it. We find that the increase of crash risk has a negative effect on companies’ future CSR disclosure. Furthermore, we employ a difference-in-differences research design and find that the negative effect of crash risk on CSR disclosure is stronger for companies with voluntary disclosure than those with mandatory disclosure. Our findings indicate that the emergence of crash risk will not motivate companies to release more information in future as a compensation of the previous information opacity.

KEYWORDS:

• Stock price crash risk
• Corporate social responsibility
• China
• Chinese stock market

JEL CLASSIFICATION:

• G10
• G34
• M14

Acknowledgements

The author thanks Mark P. Taylor (Editor) and the anonymous referee. The author also thanks Liad Wagman and Chaohua He, for helpful comments and feedback.

Disclosure statement

No potential conflict of interest was reported by the author.

Additional information

Funding

The work was supported by the National Natural Science Foundation of China [71803012]