How do corporate governance and reporting frequency moderate the relationship between CSR reporting and corporate social performance?

Are corporate social responsibility (CSR) reports a signal of genuine efforts by firms to exercise for CSR or a disguise for a firm’s CSR-related problems? An increasing number of US and multinational firms are publishing reports on CSR. Allegedly, these firms publish CSR reports to provide information about their commitment to and achievements in CSR to shareholders and other stakeholders. However, others suspect that CSR reports are more likely a disguise for a firm’s weakness in CSR In an attempt to find an answer to this question, we investigate the relationship between CSR reporting and corporate social performance (CSP). In this paper, we propose a novel approach to examining firms’ intentions behind CSR reporting. We examine the relationship between a firm’s CSR reporting and its actual corporate social performance (CSP). Our logic is that the true intention behind a firm’s CSR reporting can be better examined by observing how it actually performs in terms of CSP than by simply listening to what it says. We expect that if a firm’s intention behind CSR reporting is genuine, the firm is more likely to demonstrate strong CSP. In contrast, if intention of CSR reporting is to hide CSR problems, the firm is more likely to demonstrate poor CSP. From a sample of 313 large US firms during 1996-2006, we found that firms publishing CSR reports generally show strong CSP, suggesting that CSR reporting is more likely to be a signal of a firm’s genuine effort for CSR. We also found that the positive CSR reporting–CSP relationship becomes stronger when firms (1) have democratic corporate governance and (2) publish CSR reports more frequently. Our result suggests that CSR reporting may be understood as a sign of genuine efforts by firms to exercise CSR and that democratic corporate governance and frequency in CSR reporting positively moderate the relationship between CSR reporting and CSP. Our study presents the first large-sample evidence of firms’ intentions behind CSR reporting.