10-K Disclosure of Corporate Social Responsibility and Firms’ Competitive Advantages
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The Department of Accounting was founded in 1984 in the College of Business Administration (later College of Business).
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The Department of Accounting seeks to provide a mastery of basic accounting concepts and encouraging critical and creative thinking about accounting problems. It is intended both for internal users (management) and external users (investors, creditors, government officials, the general public).
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1984–present
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- College of Business (parent college)
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Abstract
In this paper, we offer evidence that disclosure of corporate social responsibility (CSR) in the 10-K provides information about firms’ competitive advantages. We create a textual measure of CSR disclosure that aggregates CSR keywords found in 10-Ks. We measure firms’ competitive advantages by using levels of and persistence of industry-adjusted gross margin; selling, general, and administrative (SG&A) margin; and operating margin. We first show that 10-K CSR disclosure intensity is associated with lower levels of gross margin but higher SG&A margin. We then observe that firms with more CSR keywords in their 10-Ks maintain more persistent above-industry-median gross and operating margins. Upon sorting our full set of 10-K CSR keywords into three subcategories (philanthropy, business practice, and product), we find that the intensities of disclosure in these CSR subcategories have associations with varying competitive advantages.
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This accepted article is published as Cannon, J. N., Z. Ling, Q. Wang, and O. V. Watanabe. 2019. 10-K Disclosure of Corporate Social Responsibility and Firms’ Competitive Advantages. European Accounting Review 28(6):000–000. Doi: 10.1080/09638180.2019.1670223. Posted with permission.