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Undervaluation and non‐financial information: Evidence from voluntary disclosure of CSR news

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  • Mohammed Benlemlih
  • Jingwen Ge
  • Sujiao Zhao

Abstract

In this paper, we examine whether stock market imperfection plays a role in a firm's decision to release non‐financial information and if so, what the underlying channels are. To address our questions, we web‐scraped corporate social responsibility (CSR) news to form a sample of publicly traded non‐financial US firms from CSRwire and explored exogeneous variation in stock valuation driven by institutional price pressure. Our empirical results show that firms facing stock market undervaluation are more likely than others to release CSR news. This effect is concentrated among firms exhibiting low levels of CSR commitment and low stock price informativeness. Finally, we provide evidence that the stock market reacts positively to CSR news released by undervalued firms and more so for undervalued firms with high information asymmetry.

Suggested Citation

  • Mohammed Benlemlih & Jingwen Ge & Sujiao Zhao, 2021. "Undervaluation and non‐financial information: Evidence from voluntary disclosure of CSR news," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 48(5-6), pages 785-814, May.
    • Handle: RePEc:bla:jbfnac:v:48:y:2021:i:5-6:p:785-814
    DOI: 10.1111/jbfa.12505
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    References listed on IDEAS

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    Cited by:

    1. Jerry Cao & Robert Faff & Jing He & Yong Li, 2022. "Who's Greenwashing Via the Media and What are the Consequences? Evidence From China," Abacus, Accounting Foundation, University of Sydney, vol. 58(4), pages 759-786, December.
    2. Simona-Maria TANASÄ‚ (BRÃŽNZARU)* & Veronica GROSU, 2021. "A Bibliometric Analysis Of Voluntary Disclosure Research," European Journal of Accounting, Finance & Business, "Stefan cel Mare" University of Suceava, Romania - Faculty of Economics and Public Administration, West University of Timisoara, Romania - Faculty of Economics and Business Administration, vol. 15(25), pages 40-47, February.
    3. Hyung Il Oh & Hyunpyo Kim & Jeong‐Bon Kim & Yong Gyu Lee, 2021. "Corporate social responsibility and operating cash flows management: An examination of credit market incentives," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 48(7-8), pages 1494-1522, July.
    4. Chen, Fu & Huang, Zhi-xiong & Wang, Fang & Xie, Zongyu, 2022. "Can corporate social responsibility disclosure alleviate asset price volatility? Evidence from China," Economic Modelling, Elsevier, vol. 116(C).
    5. Eunice S. Khoo & Li Chen & Gary S. Monroe, 2023. "Shareholder election of CSR committee members and its effects on CSR performance," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 50(3-4), pages 716-763, March.

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