Corporate Social Responsibility and Information Asymmetry: Do Earnings Conference Calls Play a Role?

This study examines whether firms’ corporate social responsibility (CSR) performance affects the informativeness of their earnings conference calls. Controlling for confounding information from earnings releases, we find a positive association between CSR performance and the magnitude of market reactions to conference calls. This association persists after controlling for systematic differences between firms with strong and weak CSR performance. A structural equation model further demonstrates that this positive association is due to firms with strong CSR performance providing a greater amount of information, whereas no evidence suggests that the positive association is attributable to the market perceiving the information to be more credible. We also find incremental effects of managers’ tone and firms’ possession of future unfavorable information on the positive association between CSR performance and the market reactions to the calls. Moreover, CSR performance is associated with reductions in financial analysts’ forecast dispersion. Overall, these results are consistent with the idea that the ethical standards associated with CSR performance promote informative disclosures.