Cheol Lee accepted into finance journal
Mike Ilitch School of Business Associate Professor of Accounting Cheol Lee had a recent paper accepted in The Accounting Horizon Journal (AHJ). AHJ is one of three association-wide journals published by the American Accounting Association. This journal seeks to bridge academic and professional audiences with articles that focus on accounting, broadly defined, and that provide insights pertinent to the accounting profession. The paper, “Financial Reporting Conservatism and Voluntary CSR Disclosure,” discusses the quantity and quality of CSR disclosures are associated with the degree of accounting conservatism.
Lee co-authored the article with Seong Cho (Oakland University), Pyungkyung Kang (Sogang University) and Kevin Park (Woodbury University).
Abstract:
This paper examines whether a firm’s degree of conservatism in financial reporting is associated with its voluntary nonfinancial corporate social responsibility (CSR) disclosures and the stock price reaction to such disclosures. Theoretical and empirical studies find that the amount of voluntary disclosures and their credibility vary depending on the degree of financial reporting conservatism. We expand this line of questioning and find that firms that adopt conservative financial reporting are less likely to disclose CSR information. Further analyses show that the market reaction to a firm’s CSR disclosure is reduced when its financial reporting is more conservative. Our evidence suggests that the quantity and quality of CSR disclosures are associated with the degree of accounting conservatism. Therefore, stakeholders should consider a firm’s financial reporting policies when interpreting CSR disclosures.
