Business and Society

Accounting researchers should consider a broader perspective on CSR

October 16, 2012 | 3 min read

Allowing for this broader view, Moser and Martin write in their article “A Broader Perspective on Corporate Social Responsibility Research in Accounting”, will raise “a variety of new and interesting research questions that are unlikely to be asked if researchers maintain the traditional shareholder perspective. Moreover, studying such questions will expand our understanding of CSR issues beyond what can be learned if we maintain the traditional perspective.” A key theme of their commentary is that if the associated questions are addressed using a combination of archival and experimental research methods, accounting researchers can provide a better understanding of the drivers and consequences of CSR activities and related disclosures. Moreover, this “will help accounting researchers move to the forefront of CSR research.”

A broader interpretation

The two Pittsburgh researchers discuss two examples of recent CSR studies that align with the (traditional) “shareholder perspective”. The first is Dhaliwal et al. (2012)[1], who measure whether the presence of a stand-alone CSR report helps provide investors with value-relevant information. They find that these reports can be associated with lower analyst forecast error, and that this relationship is stronger in more stakeholder-oriented countries and for firms and countries with more transparent financial disclosure.

Moser and Martin highlight that Dhaliwal et al. suggest “that CSR activities can lead to better financial performance by improving the firm’s reputation with customers in order to increase sales, improving a firm’s reputation with regulators to receive more favorable treatment, attracting and motivating employees, etc..” Adding a broader interpretation of these results, Moser and Martin note that Dhaliwal et al.’s “findings do not preclude the possibility that some CSR activities are not profit-maximizing”, and that, “stand-alone CSR reports provide incremental information, either positive or negative, to the market about a firm’s financial performance.”

Shareholder interest

The second study discussed, is Kim et al. (2012)[2], who examine whether socially responsible firms – in accordance with criteria by Kinder, Lydenburg, and Domini (KLD) - behave differently from other firms in their financial reporting. Kim et al. conclude that socially responsible firms are less likely to manage earnings through discretionary accruals and/or manipulating real operating activities, and are also less likely to be reported in Accounting and Auditing Enforcement Releases.

Moser and Martin agree that this documented negative association between CSR activities and earnings management “is consistent with ethical managers engaging in both more CSR activities and less earnings management.” However, “we note that their results do not preclude the possibility that ethical managers could still be engaging in CSR activities at the expense of shareholders. In fact, a reasonable hypothesis is that some ethical managers believe it is important to be good corporate citizens even when doing so is not in the best interest of shareholders.”

Limitations of archival data

Evidence of a positive link between CSR and financial performance “would help reduce the tension between the two broad perspectives on CSR,” write Moser and Martin. They outline several factors surrounding CSR disclosures that are not yet fully understood but again point out that “if CSR activities actually respond to the needs or demands of a broader set of stakeholders, it is more likely that some CSR investments are made at the expense of shareholders.”

They go on to describe several recent archival accounting studies and express they believe these types of studies alone “are unlikely to provide us with a full understanding of the motivations for, and consequences of, CSR activities and manager’s related disclosure choices.” Also referring to the “multidimensional construct” of CSR performance as described by Brammer and Millington (2008)[3], Moser and Martin go on to recommend the use of controlled experiments which could overcome some of the “limitations” of available archival data.

Experiment examples

Two recent examples of how experiments may complement archival CSR research are discussed. One is a study by Balakrishnan et al. (2011)[4], who examine how employer’s charitable giving affects employee behavior. The other example is a study by Martin and Moser (2012)[5] themselves, in which they use experimental markets to examine whether preferences for societal benefits lead managers to invest in unprofitable green projects. “Using an experiment allowed us to design settings in which all green investments were unprofitable, overcoming the difficulty of identifying such a setting in the field.”

Additionally, they designed circumstances to rule out confounding effects to explain CSR investments, such as external reputation effects and potential future benefits such as positive customer or employee reactions. Finally, acknowledging experiments also have limitations, Moser and Martin conclude their commentary with the recommendation accounting researchers should “use all available research methods to try to better understand why such activities and disclosures have become so prevalent and their consequences for investors and society as a whole.”


  1. Dhaliwal, Dan S., Suresh Radhakrishnan, Albert Tsang, and Yong George Yang. “Nonfinancial Disclosure and Analyst Forecast Accuracy: International Evidence on Corporate Social Responsibility Disclosure.” SSRN eLibrary (July 2011).
  2. Kim, Yongtae, Myung Seok Park, and Benson Wier. “Is Earnings Quality Associated with Corporate Social Responsibility?” SSRN eLibrary (July 30, 2011).
  3. Brammer, Stephen, and Andrew Millington. “Does It Pay to Be Different? An Analysis of the Relationship Between Corporate Social and Financial Performance.” Strategic Management Journal 29, no. 12 (December 2008): 1325–1343.
  4. Balakrishnan, R., G. B. Sprinkle, and M. G. Williamson. “Contracting benefits of corporate giving: An experimental investigation.” The Accounting Review (2011, 86 (6): 1887–1907.)
  5. Martin, Patrick, and Donald V. Moser. “Managers’ Green Investment and Related Disclosure Decisions.” SSRN eLibrary (March 16, 2012).

This article may be reproduced according to our terms of use with attribution (and link, if online) to To be cited as: “Accounting researchers should consider a broader perspective on CSR”, Lloyd Kurtz, and Ingrid Ramaan,, October 16, 2012.

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Research Paper
Donald Moser
Patrick Martin


Ingrid Ramaan
Administrative Editor FSinsight

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