Voluntary Corporate Social Responsibility Disclosure

Abstract

This article recommends that the U.S. Securities and Exchange Commission (SEC) not regulate corporate social responsibility (CSR) disclosure. Accounting disclosures, whether voluntary or regulated, increase transparency and credibility for all companies. Regulated disclosure increases costs and results in few gains; thus, this article recommends against CSR disclosure regulation. Varying definitions of CSR and nonuniform disclosure make CSR project analysis difficult for investors and analysts. This article presents a model that defines CSR items such as organizational size, CSR project size, amount invested in the project, and what standard companies use for CSR definition and reporting for easy voluntary disclosure. Based on a review of the literature, this article recommends that CSR disclosure stay voluntary. The model suggests allowing SEC oversight in the collection and verification of information but not regulating CSR disclosure. This article suggests that the SEC issue a CSR “seal of approval,” increasing firm values, stock prices, and firm legitimacy.