Effect of Corporate Social Responsibility Disclosure on Corporate Financial Performance in An Emerging Market

This study examines the relationship between corporate social responsibility (CSR) disclosure and financial performance among listed firms in Chengdu, China. Using the Chinese Academy of Social Sciences (CASS)-CSR 4.0 standard, we analyzed the extent and quality of CSR disclosures for 68 firms over the 2019–2020 period. To address endogeneity, we employed Ordinary Least Squares regression (OLS) regression and Two-Stage Least Squares (2SLS) estimations with two novel instruments. The findings reveal a positive correlation between CSR disclosure and accounting-based metrics such as Return on Assets (ROA) and Earnings per Share (EPS), while a negative relationship with Tobin’s Q underscores the complex dynamics with market valuation. Building on these insights, the study suggests policymakers incentivize voluntary CSR disclosures through tax benefits or regulatory advantages and consider mandating specific CSR information based on CASS-CSR and Global Reporting Initiative (GRI) frameworks. This approach could help enterprises define disclosure boundaries, enhance transparency, and foster accountability, offering valuable insights into the CSR-financial performance nexus in the emerging economy.