In the wake of the financial crisis and the recent pandemic, a new upsurge of stakeholder demands has developed calling on firms to shift focus towards long-term value creation and moving away from short-term profits. These trends, call for more transparency and improved non-financial reporting. Stakeholders are more interested in how the firm is contributing for the society which is basically the corporate social responsibility (CSR) of the firm. The link between CSR and firm value has been controversial. The proponents say that it enhances value because it improves relationships between firms and their stakeholders while opponents argue that it is an agency cost for managerial self-interest. The research investigates the impact of CSR disclosure i.e., Environmental, Social and Governance (ESG) activities on a firm’s value. The thesis intents to carry out content analysis to assess disclosure and identify the on long-term value creation in annual financial and sustainability reports through a CSR score. Our research concerns the identification of a set of environmental, social and governance indicators and the elaboration of the same in an index or score which allows the monitoring and assessment of the firm’s activities and policies and overcome the limitations of widely used ESG data. The research aims to provide fresh insights into applications of corporate social responsibility principles and corporate governance that has not received systematic attention and consideration in the literature.
The foreseen implications are as follows:
1. Build comparable and value creating constructs for corporate social reporting.
2. Help regulators, policymakers, global investors, and managers in formulating corporate disclosure policies and design CSR practices.
3. Help firms choose the best CSR strategy based on their need and value impact.
4. The conceptual model might form a part of an extended contribution of thoughts in the existing literature.