Study On The Market Reaction To Corporate Social Report Assurance

In recent years, our economy has gained great achievements, and at the sametime, the enterprises as the basic cells of the national economy also grow rapidly.While we should not only see the good aspects, but also we ought to pay attention tothe bad aspects, that’s the environmental and social problems such as air pollution, theproduct quality and so on, which are produced in the process of company’s fastdevelopment. Hence the corporate social responsibility attracts more and moreattention. Under the condition, Shanghai stock exchange and Shenzhen stockexchange respectively issue guidelines and rules that the listed companies ought torelease social responsibility reports but don’t illustrate clearly whether the socialresponsibility reports have to be assuranced or not. As a result, the amount of thesocial responsibility reports has increased rapidly, but the social reports that areverified only account for little proportion. According to the data statistics, there areabout1867social responsibility reports released by the listed companies until the yearof2011, while among these reports there are only163social reports which are assuredby the third verification party. Therefore, researching on the market reaction to thesocial responsibility reports assurance is of great significance. Because it not onlyaffects the interests of the corporations, but also influences the interests of thegovernment and the investors. Further more, the results of the market reaction isrelated to the attitudes of the companies towards the social report assurance directly,and it is relevant to the measures the government may adopt and the investmentdecisions the shareholders may make. Based on this, this thesis uses the event studymethod to study the market reaction to corporate social responsibility reportassurance. At first, this thesis expounds the theoretical basis of market reaction to the socialresponsibility report verification, including principal-agent theory, sustainabledevelopment theory, signaling theory, efficient market theory and stakeholder theory,then elaborates the empirical research design, including the research hypothesis thatthe social responsibility report assurance will gain positive market reaction and thedescriptive statistics on the sample distribution and the verification institutions. In thebase of the former analysis, the thesis uses the event study method to analyze themarket reaction to the social responsibility report verification, mainly using the Statasoftware to perform t-test of the cumulative abnormal return(CAR) of the samplecompanies, combined with the charts which are made through the Excel tool.According to the empirical results, this thesis draws two conclusions: firstly, thecumulative abnormal return(CAR) of the sample companies was significantly greaterthan zero, which shows that the corporate social responsibility report assurance hasobtained positive market reaction; secondly, the cumulative abnormal return(CAR)fluctuates up and down during the event period, rather than perform smoothly, andthis indicates that Chinese stock market still don’t reach the semi-strong efficientmarket. Finally, the thesis puts forward several suggestions on how to improve thequality of the social responsibility report assurance from different angles andpositions, the corporations, regulator organizations and the CPA institutions forexample, based on the conclusion and the sample data resources.