CSR and Financial Performance: International Evidence on the Role of Integrated Reporting

This study examines whether and how the practice of providing CSR information in the
management discussion and analysis (MD&A) section of annual reports affects the relation
between CSR performance and firm value in an international context. Based on a large sample
from 42 countries, our results indicate that while providing CSR information in the MD&A
section does not increase the price investors are willing to pay for the stock of a firm with
high CSR performance, it does decrease the price they will pay for the stock of firms with
high CSR concerns. Further analyses show that this finding is more likely to be observed
when the perceived CSR reporting quality is greater, the level of investors’ CSR awareness is
higher, and the development of a country’s institutional environment is better. Finally,
consistent with the conjecture that the CSR disclosure channel matters to investors, our
evidence shows that firms with high CSR concerns are less likely to provide environmental
and social information in their annual reports.