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The Normativity and Legitimacy of CSR Disclosure: Evidence from France

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Abstract

In 2001, France became one of the few countries to require corporate social responsibility (CSR) reporting through its Nouvelles Régulations Économiques #2001-420 (NRE). However, initial compliance with the statute was low, a factor implying the law lacked normativity. In this exploratory study, we attempt to determine whether there is movement toward normativity by examining the change in CSR disclosure from 2004 in comparison to 2010 for a sample of 81 publicly traded French firms. We measure both the space and the quality of CSR disclosures, including in the latter a measure based on informational quality attributes as discussed by the International Accounting Standards Board, the Financial Accounting Standards Board, and the Global Reporting Initiative. We find significant increases in the space allocated to CSR disclosure, as well as some evidence of increased quality; although the informational quality of the disclosures remains quite low and fewer firms are including negative performance information in their reports. Finally, we document that differences in disclosure space and quality in 2004 appeared to be associated with legitimacy-based variables and that those relations remain largely unchanged in 2010. As such, it appears that the NRE’s goals of increased transparency remain unmet.

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Notes

  1. With the exception of Damak-Ayadi (2010), who provides a descriptive study on the type of CSR information (breadth/content) disclosed by French firms after the NRE, no studies appear to have examined the impact of the NRE requirements on corporate CSR disclosure practices by French firms.

  2. The percentage of pages is computed as the number of pages (or fractions of pages) dedicated to discussions about social and environmental issues over the total number of pages of the report analyzed. Similarly, the percentage of total disclosures is determined by the total amount of social and environmental disclosures (on a line-by-line or sentence-by-sentence basis) over the total amount of discussions on all issues.

  3. There are also hybrid combinations of these two basic approaches. For example, Ernst & Ernst (1978) identify the amount of space devoted to each of the various areas of CSR disclosure examined.

  4. Energy disclosures are sometimes listed as an area separate from environment (see, Ernst & Ernst 1978). However, in our review we found that the two categories are difficult to distinguish and as such, merge them for our analysis.

  5. Content analysis schemes are often presented as a measure of quality (see, Brammer and Pavelin 2006; Clarkson et al. 2008). While we agree that disclosure that addresses more areas of CSR interest exhibits higher quality than disclosures that are more limited in scope, traditional content analysis schemes do not usually take into account the qualitative aspects of the information being presented.

  6. While some major differences exist across the conceptual framesworks of the IASB and the FASB (see, McGregor and Street 2007), they are very consistent with respect to discussions of desired quality attributes of information.

  7. Solomon (2000) limits his discussion to the environmental reporting domain. The extension to the broader CSR arena is our extension.

  8. Patten (2000) documents that mandated increases in U.S. firm disclosure of hazardous waste remediation exposures were accompanied by significant increases in the voluntary disclosure of positive environmental information items.

  9. These consisted primarily of firms no longer in existence due to mergers and acquisitions.

  10. Brown and Deegan (1998) note that media coverage can also lead to increased social pressures for corporations, and several recent studies (Aerts and Cormier 2009; Aerts et al. 2008; Brown and Deegan 1998; Deegan et al. 2000; Patten 2002a) document a positive association between media exposure and the extent of social and/or environmental disclosure. In non-tabulated sensitivity tests we included a media exposure measure identified as the number of articles identified in the Europresse database for each company in the year of disclosure, adjusted for firm size. This variable was statistically insignificant in all models.

  11. Our results are robust to estimation using Tobit analysis.

  12. In order to control for the effect of economic factors other than legitimacy variables on CSR disclosure, we re-estimated all models including financial variables used in prior research (i.e., profitability, leverage, asset newness, and capital intensity). We find only asset newness and capital intensity to exhibit statistical significance and, in all cases, all of our primary findings remain unchanged.

  13. We exclude one outlier firm that had 423 pages of disclosure in 2010, more than six standard deviations from the mean for that year. Inclusion does not alter the statistical significance of the comparisons.

  14. Tests of differences in the pages of disclosure across firms issuing stand-alone reports as opposed to only financial reports indicate that the former companies exhibit statistically higher page counts than the latter for both 2004 and 2010.

  15. These page counts exclude the 2004 and 2010 observations for one sample firm issuing stand-alone reports both years, but whose 2010 space measure was deemed as an outlier (see note 8).

  16. Owen et al. (2000, p. 85) refer to managerial capture as “the concept that management takes control of the whole reporting process (including the degree of stakeholder inclusion) by strategically collecting and disseminating only the information it deems appropriate to advance the corporate image, rather being truly transparent and accountable to the society it serves.”

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Acknowledgments

The authors are grateful for comments and suggestions provided by Giovanna Michelon, and participants of the 30th European Accounting Association Annual Congress in Lisbon, the 23rd International Congress on Social and Environmental Accounting Research in St Andrews, the 2012 Conference of the American Accounting Association’s Public Interest Section Mid-Year Meeting (particular thanks to discussant Kim Zahller), the 33ème Congrès de l’Association Francophone de Comptabilité (AFC) in Grenoble (special thanks to discussant Michel Magnan), the 2012 American Accounting Association Annual Meeting (special thanks to discussant Andrew Felo), and the 4th World Business Ethics Forum and research workshop at the University of Padova (special thanks to discussant Federica Ricceri). Charles Cho also acknowledges financial support received from the ESSEC Business School’s Research Center (CERESSEC) and the ESSEC KPMG Financial Reporting Centre. Jean-Noel Chauvey and Sophie Giordano-Spring acknowledge financial support received from the ANR program GEODD (Gouvernance des Entreprises, Organisations et Développement Durable).

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Authors and Affiliations

  1. Montpellier Research in Management, ISEM, Université de Montpellier 1, Rue Vendémiaire, Batiment B, CS 19519, 34960, Montpellier Cedex 2, France

    Jean-Noël Chauvey & Sophie Giordano-Spring

  2. ESSEC Business School, 1 Avenue Bernard Hirsch, CS 50105 Cergy, Cergy Pontoise Cedex, France

    Charles H. Cho

  3. Department of Accounting—5520, Illinois State University, Normal, IL, 61761, USA

    Dennis M. Patten

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  1. Jean-Noël Chauvey
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  2. Sophie Giordano-Spring
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  3. Charles H. Cho
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  4. Dennis M. Patten
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Correspondence to Charles H. Cho.

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Chauvey, JN., Giordano-Spring, S., Cho, C.H. et al. The Normativity and Legitimacy of CSR Disclosure: Evidence from France. J Bus Ethics 130, 789–803 (2015). https://doi.org/10.1007/s10551-014-2114-y

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