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Mandatory CSR Disclosure, CSR Assurance, and the Cost of Debt Capital: Evidence from Taiwan

Author

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  • Lopin Kuo

    (Department of Accounting, Tamkang University, New Taipei City 251301, Taiwan)

  • Po-Wen Kuo

    (Department of Accounting, Tamkang University, New Taipei City 251301, Taiwan)

  • Chun-Chih Chen

    (Securities and Futures Bureau, Financial Supervisory Commission, Taipei City 106237, Taiwan)

Abstract

This study examined the impact of mandatory corporate social responsibility (CSR) disclosure, CSR assurance and the reputation of assurance providers (accounting firms) on the cost of debt capital. Our difference-in-difference research design in conjunction with univariate and multiple regression analysis was assessed using a large sample of firms listed on the Taiwan Stock Exchange and the Taipei Exchange. Our empirical results revealed that mandatory CSR assurance on CSR disclosure provided by accounting firms tended to reduce the cost of debt capital. However, contrary to expectations, the reputation of the accounting firm (Big 4 accounting firms vs. non-Big 4 accounting firms) tasked with providing CSR assurance did not have a significant effect on the cost of debt capital. These results have implications for firms seeking an assurance provider as well as for Big 4 accounting firms. These results also provide specific evidence relevant to government agencies seeking to update policies and extend the scope of mandatory CSR assurance to other environmentally sensitive industries.

Suggested Citation

  • Lopin Kuo & Po-Wen Kuo & Chun-Chih Chen, 2021. "Mandatory CSR Disclosure, CSR Assurance, and the Cost of Debt Capital: Evidence from Taiwan," Sustainability, MDPI, vol. 13(4), pages 1-19, February.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:4:p:1768-:d:494783
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    Cited by:

    1. Heidi Vander Bauwhede & Philippe Van Cauwenberge, 2022. "Determinants and Value Relevance of Voluntary Assurance of Sustainability Reports in a Mandatory Reporting Context: Evidence from Europe," Sustainability, MDPI, vol. 14(15), pages 1-14, August.
    2. Li‐Chun Kuo & Chia‐Lin Lee & Yun‐Ting Lee, 2022. "The impact of voluntary assurance of CSR reports on firms' operating performance: Evidence from Taiwan," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 4041-4054, December.
    3. Isabel-María García-Sánchez & Nicola Raimo & Víctor Amor-Esteban & Filippo Vitolla, 2023. "Board committees and non-financial information assurance services," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 27(1), pages 1-42, March.
    4. Dongshu Jiang & ZhiXing Ni & Yuxiu Chen & Xue Chen & Chaohong Na, 2022. "Influence of Financial Shared Services on the Corporate Debt Cost under Digitalization," Sustainability, MDPI, vol. 15(1), pages 1-17, December.
    5. Shilei Wu & Hongjie Zhang & Taoyuan Wei, 2021. "Corporate Social Responsibility Disclosure, Media Reports, and Enterprise Innovation: Evidence from Chinese Listed Companies," Sustainability, MDPI, vol. 13(15), pages 1-17, July.

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