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The Consequences of Mandatory Corporate Sustainability Reporting

Listed author(s):
  • Ioannis Ioannou


    (London Business School)

  • George Serafeim


    (Harvard Business School, Accounting and Management Unit)

Registered author(s):

    We examine the effect of mandatory corporate sustainability reporting (MCSR) on several measures of social responsibility using both country and firm-level data. Using data for 58 countries, we show that after the adoption of MCSR laws and regulations, the social responsibility of business leaders increases and both sustainable development and employee training become a higher priority for companies. Moreover, for companies in countries with MCSR, corporate governance improves and on average, companies implement more ethical practices, bribery and corruption decrease, and managerial credibility increases. These effects are larger for countries with stronger law enforcement and more widespread assurance of sustainability reports. We complement the country-level analysis using environmental, social and governance metrics at the firm-level in conjunction with a differences-in-differences research design and we find that for the treatment group, energy as well as waste and water consumption significantly decline, while investments in employee training significantly increase after the adoption of MCSR laws and regulations.

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    Paper provided by Harvard Business School in its series Harvard Business School Working Papers with number 11-100.

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    Length: 45 pages
    Date of creation: Mar 2011
    Date of revision: Oct 2012
    Handle: RePEc:hbs:wpaper:11-100
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