Cui, Jo, and Na (2012)
Cui, Jinhua, Hoje Jo, and Haejung Na. “Does Corporate Social Responsibility Reduce Information Asymmetry?” Working paper (Korea University, Santa Clara University), June 2012.
From the authors' abstract: "Employing a large and extensive U.S. sample during 1991-2010, we find an inverse association between CSR engagement and the level of information asymmetry after controlling for various firm characteristics. Based on the simultaneous equation approach, we further find that CSR activities reduce information asymmetry more than information asymmetry decreases CSR activities. Furthermore, after controlling for endogeneity based on dynamic panel generalized method of moment (GMM), we still find an inverse relation between CSR engagement and information asymmetry. We interpret these results to support the stakeholder-theory based information-asymmetry-reduction explanation that considers CSR engagement as a vehicle to reduce asymmetric information between managers and non- investing stakeholders, but not the agency-theory based over-investment hypothesis that views CSR as a waste of valuable resources..."