Who Is the Fairest of Them All? Firm and Institutional Determinants of Value Creation Related to CSR Information Disclosure

In this chapter, the authors investigate the impact of the disclosure of corporate social responsibility (CSR) information (in the form of ethical certification announcements) on firm value, measured as stock market reactions. When determining the potential value of CSR practices, investors evaluate disclosed information against firm-level characteristics. To cope with uncertainties related to voluntary disclosure and information asymmetries, investors also rely on heuristic evaluations of the congruity between firm- and institutional-level characteristics. The authors find that ethical certification information is especially valuable in opaque contexts with fewer firm reporting standards and poor protection mechanisms for investors. Overall, our findings suggest that in contexts where information asymmetries between insiders and outsiders are higher, validation of CSR activities by independent third-party institutions is more effective as a value creation mechanism.