The relationship between the quality of CSR reporting and firm value. What is the role of analysts - Evidence from Europe

Abstract

Corporate social responsibility has become increasingly popular among firms and stakeholders in the last couple of years. As a result, many firms publish CSR reports to satisfy stakeholder needs. The goal of this thesis is to create a better understanding of the relationship between the quality of CSR reporting and firm value and the effect of analysts in this relationship, using a sample of 65 European companies between 2012 and 2016. Most of the results of this thesis have displayed insignificant and mixed findings. However, evidence has been found for a moderating negative effect for the number of analyst recommendations a firm receives on the relationship between CSR quality and firm value. This indicates that a high quality CSR report is translated to a lower firm value. This study extends current literature on the relationship between the quality of CSR reporting and firm value by examining the role of analysts in this specific relationship. Managers and investors can make use of this research gaining insight in how the portraying of a company through CSR reporting can influence the firm value of a company.