The Reputation-Recovery Effect of Corporate Social Responsibility Reports: Evidence from Taiwan

This study investigates the reputation-recovery effect of corporate social responsibility (CSR) reports in Taiwan. The reputation-recovery effect refers to the releasing of social responsibility report can effectively reduce the market negative reactions after companies had negative CSR events. The sample firms are those issuing 2015 CSR reports in Taiwan. We find that the negative CSR-related news effects are positively associated with the cumulative abnormal returns surrounding the issuance of CSR reports after the news released. This implies that the subsequently disclosed CSR reports could recover the negative impact of negative news on a company’s reputation. Furthermore, the effects are more significant when the CSR reports are prepared mandatory, prepared following GRI4 and verified through an independent third-party. Besides, we found that the reputation recovery effect was mainly from the disclosure of reviews and precautions of negative CSR events. The results imply that improvements after negative CSR events and neutral disclosure can help company recovery reputation, enhance corporate value.