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The Informational Contribution of Social and Environmental Disclosures for Investors

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Author Info

  • Denis Cormier

    (Université du Québec - Université du Québec - Université du Québec)

  • Marie-Josée Ledoux

    (Université du Québec - Université du Québec - Université du Québec)

  • Michel Magnan

    (Université Concordia - Université Concordia)

Abstract

Corporations increasingly define their social and environmental initiatives and activities as part of their Corporate Social Responsibility (CSR). Disclosure practices have followed suit as well with social and environmental information typically being combined, often through a CSR report. The emergence of CSR is a response to the demands of activist investors, ethical and green institutional investors as well as rating services (e.g., Jantzi) which evaluate corporations through the lens of CSR, thus going beyond traditional environmental indicators. However, is this trend beneficial to investors? We investigate whether social disclosure and environmental disclosure substitute or complement each other in reducing information asymmetry between managers and investors, taking into account a firm‟s environmental performance and governance attributes. Our findings suggest that social disclosure and environmental disclosure substitute each other in reducing stock market asymmetry, as proxied by share price volatility. Our results also show that the reduction in share price volatility is higher for economic (hard) environmental disclosure than for generic (soft) environmental disclosure. Hence, future research in CSR disclosure may fruitfully distinguish between social and environmental disclosures as well as between hard (economic-based) and soft environmental information.

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Bibliographic Info

Paper provided by HAL in its series Post-Print with number hal-00481571.

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Date of creation: 2010
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Publication status: Published - Presented, Crises et nouvelles problématiques de la Valeur, 2010, Nice, France
Handle: RePEc:hal:journl:hal-00481571

Note: View the original document on HAL open archive server: http://hal.archives-ouvertes.fr/hal-00481571/en/
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Keywords: Environmental disclosure; governance attributes; information asymmetry; social disclosure.;

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