Corporate Social Responsibility and Financial Reporting Quality

This article examines the relationship between corporate social responsibility (CSR) and financial reporting quality. Our findings show that firms with higher levels of corporate social responsibility are associated with higher accuracy of financial forecasts, fewer earnings surprises, and greater coverage by financial analysts. Empirical results hold after we account for potential endogeneity in this relationship. Additional analyses reveal that firms with lower agency concerns, higher customer awareness, more long-term institutional investors, and fewer financial constraints have a stronger positive relationship between CSR and financial reporting quality. Finally, we document the economic implications of this relationship for firm risk and information disclosure