Firm-value effects of CSR disclosure and CSR performance

We examine the effects of CSR disclosure and CSR performance on firm value for the S&P 500 firms from 2011 to 2014 in this paper. We find that CSR disclosure is positively associated with firm value and that CSR disclosure dominates the effects of CSR performance on firm value. On average, the overall firm value increase for one index point of Bloomberg’s ESG Disclosure Score is $245 million, whereas the increase for one index point of the Asset4 ESG Performance Score is $93 million. Moreover, we find that the environmental and the governmental CSR performance scores are positively associated with firm value and that the social score is negatively associated. Our results suggest that CSR disclosure mediates CSR performance. Based on prior research, we argue that CSR disclosure is positively biased and too complex to be processed properly, so investors confuse CSR disclosure with CSR performance.