Corporate Social Responsibility and Market-Based Consequences of Adverse Corporate Events: Evidence From Restatement Announcements
Bibliographic record
Abstract
I analyze the informational value of corporate social responsibility (CSR) disclosures in the presence of bad news (i.e., financial restatements). I do so by examining the link between CSR and (a) restatement likelihood and the (b) market-based consequences of restatement announcements. I find that restatements are lower (higher) for firms that are more (less) CSR responsible, consistent with the view that CSR-conscious firms adhere to a corporate culture that promotes ethical practices. In analyzing the market effects of restatements, I find that investors respond less (more) negatively to restatements by firms that exhibit strong (weak) CSR performance. This is consistent with the notion that investors perceive positive CSR performance to be in line with managers’ incentives to promote corporate ethical values than with their incentives to cover up corporate misconduct. In addition, I find that restating firms that are less CSR conscious are more likely to be named as defendants in class actions following restatements. Although I do not find that the likelihood of litigation dismissal is associated with CSR performance, I find that among the cases settled, the amount of settlements is inversely associated with better CSR performance. Collectively, the evidence suggests that firms can effectively use CSR to hedge against potential risk stemming from adverse corporate events.
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How this classification was reachedexpand
Full frame distilled prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. Learned from the 10,348 direct Codex labels and 10,348 direct Gemma labels. Candidate is the union of thresholded teacher heads; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels or direct frontier model labels.
Codex and Gemma teacher scores by category
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.009 | 0.017 |
| Meta-epidemiology (narrow) | 0.000 | 0.000 |
| Meta-epidemiology (broad) | 0.001 | 0.000 |
| Bibliometrics | 0.000 | 0.000 |
| Science and technology studies | 0.001 | 0.001 |
| Scholarly communication | 0.000 | 0.004 |
| Open science | 0.001 | 0.000 |
| Research integrity | 0.000 | 0.000 |
| Insufficient payload (model declined to judge) | 0.000 | 0.000 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one teacher head, not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".