Corporate Social Responsibility (CSR) and Firm Value: International Evidence on the Role of CSR Assurance

Abstract

A growing number of companies around the world have started publishing corporate social responsibility (CSR) reports. However, the sustainability literature remains inconclusive as to whether CSR assurance enhances the credibility of these reports, improves stakeholder trust, and ultimately boosts firm value. Analyzing a global sample of 39,776 firm-year observations from 2002 to 2019, we present robust evidence that CSR assurance positively influences investors' valuation of CSR efforts. Furthermore, auditor-provided CSR assurance is found to have a greater impact on CSR valuation in countries where institutions are more conducive to opaque financial reporting. Our analysis further reveals that improved financial performance and better financial reporting quality are the main mechanisms behind this effect. Finally, the impact of CSR assurance is found to be more significant in countries with weaker legal institutions and CSR norms.