Willingness to invest and the assurance of corporate social responsibility reports

Recent research has found that the effect of corporate social responsibility (CSR) information on investment decisions will be eliminated when it is explicitly assessed, especially when CSR is not related to core business activities (immaterial CSR issues). We thus extend prior research by investigating whether (1) CSR assurance increases investors' willingness to invest when CSR performance is material or immaterial to core business activities and (2) CSR assurance moderates the effect of explicit assessment and CSR information on investment judgment. A 2 x 2 x 2 between-subjects experiment was conducted using 213 professional investors. Overall, our results suggest that investors' willingness to invest is greater when positive CSR is verified by third-party assurance in both material and immaterial CSR conditions. In addition, CSR assurance has a significant effect on investment judgment when immaterial CSR performance is explicitly assessed. As the affect-as-information heuristic (i.e., heuristic processing) is likely to be removed when CSR performance is explicitly assessed, the results of this study indicate that the affect heuristic is only eliminated when immaterial CSR is not assured, suggesting that CSR assurance moderates the effect of explicit assessment on investment judgment. Consistent with systematic-heuristic theory, our results thus confirm that the systematic processing of CSR information does not necessarily attenuate affect heuristic processing; rather, these two processing modes can co-occur. Our results concerning the impact of CSR assurance on positive CSR information inform firms that third-party assurance affects investment judgment, especially for parties who consider purchasing these services, for example, managers or audit committee members. As CSR assurance is not mandatory, the audit profession could also be interested in our findings, as they might encourage firms to assure their nonfinancial information to enhance disclosure credibility. The inconclusive results on how CSR assurance affects investment judgment warrant further investigation of this issue in other reporting environments in different countries. Nevertheless, our findings contribute to the CSR literature by identifying novel aspects of the value of CSR assurance in different contexts, that is, the moderating role of CSR assurance and the explicit assessment of CSR information during investment decisions.