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The impact of CSR performance and CSR disclosure readability on investors’ earnings estimates

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  • Jingyu Gao
  • F.G.H. (Frank) Hartmann
  • Min Zhang
  • Yasheng Chen

Abstract

We investigate how the valence of corporate social responsibility (CSR) performance and the readability of CSR disclosure impact investors’ earnings estimates. Ninety‐seven part‐time MBA students participate in an experiment, in which we manipulate the valence of CSR performance (positive versus neutral) and the readability of CSR reports (high versus low), while holding financial information constant. Our findings reveal that investors make more positive earnings estimates when CSR performance is positive. The readability level of CSR reports also influences investors’ decision‐making process. Moreover, by using an eye‐tracking device, we are able to observe investors’ different reading behaviours upon the different levels of readability.

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  • Jingyu Gao & F.G.H. (Frank) Hartmann & Min Zhang & Yasheng Chen, 2023. "The impact of CSR performance and CSR disclosure readability on investors’ earnings estimates," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(S1), pages 1157-1186, April.
    • Handle: RePEc:bla:acctfi:v:63:y:2023:i:s1:p:1157-1186
    DOI: 10.1111/acfi.12938
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    1. Philip Teng Lin & Yanhui Jin & Fei Gao & Ruifeng Yang & Qian Lin, 2023. "Institutional Investors, CSR Report Readability and the Moderating Role of ESG Performance," SAGE Open, , vol. 13(4), pages 21582440231, November.

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