Investor‐ versus Multi‐stakeholder Orientation: The Influence of <scp>CSR</scp> Framework Adoption on Information Asymmetry

This study examines how firms’ adoption of corporate social responsibility frameworks (CSRFs) that follow different user orientation approaches affects information asymmetry in capital markets. We draw on novel hand‐collected adoption data from seven established CSRFs for a sample of STOXX Europe 600 firms from 2017–2020. Our findings reveal that CSRFs that primarily target investors are associated with lower information asymmetry, whereas those that target a broad group of stakeholders are not. In particular, we find that capital markets place importance on firms’ common reporting practice of adopting multiple investor‐oriented CSRFs simultaneously. Our analysis finds that the climate‐change‐focused CSRFs are the primary forces behind reducing information asymmetry. Our results have important implications for the current standard‐setting initiatives of the European Financial Reporting Advisory Group and the International Sustainability Standards Board as well as for firms adopting CSRFs.