Do Disclosures of Corporate Transformative Service Initiatives Signal Enhanced Financial Outcomes? Moderating Roles of Firm-Level Factors

Corporate transformative service initiatives (CTSIs) are service-led initiatives by for-profit firms that serve communities experiencing vulnerability and articulate an explicit well-being intent. When disclosed, as with other corporate disclosures, they can function as market-facing signals of firms’ enacted service-oriented societal engagement. However, it remains unclear whether such signaling improves financial outcomes and whether firm-level factors moderate this effect. To address this gap, this study examines the impact of CTSIs disclosures on firms’ financial outcomes and the moderating roles of chief marketing officer (CMO) presence, relative firm size, and firm type. A systematic automated content analysis of sustainability reports, cross-checked with annual reports from 2010 to 2019 for U.S. S&P 500 firms, identifies three main forms of CTSIs disclosures: corporate commitment, corporate giving, and employee volunteering. Dynamic panel analyses show that CTSIs disclosures and their components positively impact firms’ financial outcomes (Total q , return on equity), with stronger effects when a CMO is present. Relative firm size matters, with firms with greater relative asset size benefiting more strongly when a CMO is present, and smaller firms showing broader gains across CTSIs disclosure dimensions. The signaling effects of CTSIs disclosures are consistent across service and non-service firms, suggesting that market responses are driven by the communication of service-oriented transformative initiatives rather than by industry boundaries. These findings extend transformative service research and signaling theory by showing how CTSIs disclosures can position service-led initiatives as financially relevant market signals, with implications for managerial disclosure practice.