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Foreground or background my social responsibility: impact of the trade war on the readability of corporate social responsibility disclosures

Foreground or background my social responsibility: impact of the trade war on the readability of... This study empirically investigates the impact of the U.S.-China trade war on corporate social responsibility (CSR) disclosure readability. We first propose a measure of CSR disclosure readability with the latest word embedding model of Word2Vec. Using the U.S.-China trade war as an exogenous shock, we conduct a difference-in-differences analysis and find that firms release more readable CSR disclosures in response to the trade war. We interpret this finding to indicate that CSR disclosure can be a strategic tool to enhance the firms’ reputations when they suffer a negative shock. Moreover, such an effect is more pronounced for firms with tighter internal governance or external supervision. Our results are robust to confining our sample with a Coarsened Exact Matching algorithm and a battery of robust checks. Finally, we find that the trade war leads to increased charitable donations, indicating that our CSR readability measure is more likely to reflect actual CSR activities. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Information Technology and Management Springer Journals

Foreground or background my social responsibility: impact of the trade war on the readability of corporate social responsibility disclosures

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References (114)

Publisher
Springer Journals
Copyright
Copyright © The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature 2023. Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.
ISSN
1385-951X
eISSN
1573-7667
DOI
10.1007/s10799-022-00384-6
Publisher site
See Article on Publisher Site

Abstract

This study empirically investigates the impact of the U.S.-China trade war on corporate social responsibility (CSR) disclosure readability. We first propose a measure of CSR disclosure readability with the latest word embedding model of Word2Vec. Using the U.S.-China trade war as an exogenous shock, we conduct a difference-in-differences analysis and find that firms release more readable CSR disclosures in response to the trade war. We interpret this finding to indicate that CSR disclosure can be a strategic tool to enhance the firms’ reputations when they suffer a negative shock. Moreover, such an effect is more pronounced for firms with tighter internal governance or external supervision. Our results are robust to confining our sample with a Coarsened Exact Matching algorithm and a battery of robust checks. Finally, we find that the trade war leads to increased charitable donations, indicating that our CSR readability measure is more likely to reflect actual CSR activities.

Journal

Information Technology and Management – Springer Journals

Published: Mar 1, 2023

Keywords: Trade war; Readability; Corporate social responsibility; Reputation theory; Textual analysis

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