Is CSR performance related to disclosure tone in earnings announcements?

Abstract

This study examines whether the disclosure tone in earnings announcements is related to a firm’s corporate social responsibility (CSR) performance. We find that more socially responsible firms exhibit a more optimistic tone in earnings announcements. The findings are robust to a variety of sensitivity tests and data from different years. Furthermore, we find that the positive association between CSR performance and disclosure tone in the earnings announcement is particularly apparent in the manufacturing industry. Our findings should assist regulators in better understanding the verbal aspect of earnings announcements. Our findings raise the possibility that firms with good CSR performance may engage in a more subtle form of impression management, i.e., tone management.