CSR performance and financial performance: the moderating role of CSR disclosure quality

Sammanfattning: This paper examines the moderating effect of CSR disclosure quality on the relationship between CSR performance and financial performance, using a sample of European listed firms. It is predicted that CSR performance, jointly with CSR disclosure quality, has a positive effect on financial performance. We propose that CSR disclosure quality is a result of three key factors: if the company has its CSR disclosure audited, if the audit is carried out by a high-quality audit provider and if the auditor is independent from the reporting company. The results do not provide evidence supporting the hypotheses that CSR disclosure quality has a positive moderating effect on the relationship between CSR performance and financial performance. We provide four potential explanations for this but argue that the most plausible ones are that our sample may not accurately represent the population and that we may have endogeneity problems. The sample issue may be due to low data availability among smaller firms, causing us to drop observations. This study contributes to existing research by combining the two concepts CSR disclosure and CSR performance, which to the best of our knowledge has not been done before. Furthermore, it investigates two relatively unexplored aspects of auditing of CSR disclosure: audit provider quality and auditor independence.