Determinants of Corporate Social Responsibility Disclosure

An Empirical Analysis of German and UK Prime Standard Entities

• Prof. Dr. Pia Montag
• Lennart Ender

Within the last decade non-financial corporate information has experienced an immense increase of attention. Not only shareholders, but regulators and scientists as well, focus reporting of Corporate Social Responsibility (CSR) matters. The European Commission (EC) defines CSR as ‘the responsibility of enterprises of their impacts on society’. Transparency concerning any kind of management decisions and corporate activity including those impacts on society reduces asymmetries in the availability of information between management and shareholders and therefore is both main characteristic and fundamental condition of good corporate governance.
Corporate disclosure on social responsibility in general – and comparable to the intentions of risk disclosure – serves two main purposes which exceed the fulfilment of legal requirements: the supply of information as well as the shaping of behaviour. Therefore the contents and authenticity of information do not only serve their addressees by supporting and influencing the processes of decision making. They also serve the publishing companies, which may intensify providing information leading to the companies’ favourable decisions of their addressees. Disclosure practices thus establish an implicit form of behavioural control. A potential shareholder may for example invest in an entity with increased probability, if the company’s disclosed information on CSR complies with his individual values.

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