Abstract:
BACKGROUND : Corporate social responsibility (CSR) disclosure is widespread among the
largest companies in South Africa due to the listing requirements of the Johannesburg Stock
Exchange (JSE). These companies have also increasingly pursued external assurance of their
CSR disclosures in recent years. The increased regulation of CSR disclosure and the increased
rate of obtaining assurance of these disclosures motivated us to perform our study.
AIM : To examine the association between CSR reporting, including both CSR disclosure and
CSR assurance, and firm value of large South African companies.
SETTING : The JSE listing requirements place South Africa, the setting for our study, at the
forefront of corporate governance and CSR reporting.
METHOD : Tobin’s Q is used as a measure of firm value. Three measures of CSR disclosure and
three of CSR assurance are used in this study. The measures are based on data collected by
Klynveld Peat Marwick Goerdeler (KPMG) International on the CSR reporting practices of
large South African companies. The sample period for this study coincides with the sample
period covered in the KPMG surveys conducted during 2008, 2011 and 2013.
RESULTS : No significant association is found between CSR disclosure and firm value. However,
a significant negative association is found between CSR assurance and firm value. Additional
analysis found that the negative association between firm value and CSR assurance is more
significant for companies that are not listed on the Socially Responsible Investment (SRI) index.
CONCLUSION : The results found between CSR disclosure and firm value may suggest that firm
value is unaffected by CSR disclosures. Taken together, the findings on CSR assurance and
firm value and the additional analysis may suggest that in South Africa managers with negative CSR issues are more likely to obtain assurance on their CSR disclosure. The findings
may be of interest to regulators when considering current and future disclosure and assurance
requirements for CSR reporting in South Africa, as well as other parts of the world, shareholders
when considering investment options, and managers when considering the benefit of certain
CSR reporting practices.
