CSR reporting as a signal of good management. Do investors really care?

Sammanfattning: The current thesis investigates the role of CSR reporting as an insurance mechanism for the value of the firm in the aftermath of a negative reputational event. The underlying assumption for this mechanism is that, through CSR reporting, the company can signal the quality of its management to investors and therefore build a positive reputation. In order to capture the information value of CSR disclosures for investors, a grading framework for CSR reporting is constructed. Through the use of CSR performance indicators and quality criteria, the grading framework aims at producing CSR scores representative of the underlying CSR performance of the company. The application of the grading framework to a sample of European listed banks affected by negative reputational events allows for an investigation of the insurance effect of CSR through an event study. The findings, aligning with part of prior literature, provide no evidence supporting the insurance role of CSR both on an overall CSR basis and on the different dimensions of CSR (economic, environmental and social).