Does non-financial information disclosure promote firm's exports? Evidence from China's mandatory CSR reporting regulation

Abstract

<p>This paper examines the impact of non-financial information disclosure on firms' exporting performance. Using China's mandatory Corporate Social Responsibility (CSR) disclosure as a quasi-natural experiment, we find that firms binding to the requirement significantly boost exports compared to their non-reporting peers. To understand the economic mechanisms, we propose that the positive impacts could be exposited through <em>foreign</em> media attention and financial constraint. The effects are more substantial when firms are ex-ante inferior in foreign reputation and external credit resources. Further analysis shows that firms with prior-low ESG disclosure levels exhibit more export upsurge, among which the labor protection disclosure is the most striking component. We also document that the export increase is concentrated in countries with a more stringent disclosure requirement, reflecting a reporting distance gravity. State-owned enterprises and polluting firms benefit the most from CSR disclosure mandates. Overall, this paper highlights that international integration could be a key benefit for policymakers to promote a more transparent CSR disclosure in developing countries.<br></p>