CSR and Shareholder Value in the Restaurant Industry: The Roles of CSR Communication Through Annual Reports

Studies on the effects of corporate social responsibility (CSR) on shareholder value identified that CSR communication through marketing channels is a key mechanism necessary to translate CSR into shareholder value. In this study, annual reports are considered the primary information source used by a firm's financial stakeholders (e.g., investors and analysts) in their valuation of the firm. Specifically, this study examined whether the extent to which restaurant firms communicate CSR through their annual reports influences the effect of CSR on shareholder value in returns (i.e., Tobin's Q) and risks (i.e., equity-holder risk). CSR was disaggregated into two distinct types for primary and nonprimary stakeholders. Results corroborate that communicating CSR for nonprimary stakeholders through annual reports helps the nonprimary-stakeholder CSR to increase shareholder value by reducing equity-holder risk, whereas communicating CSR for primary stakeholders does not affect the value relevance of the primary-stakeholder CSR through a change of either Tobin's Q or equity-holder risk.