Mandatory Social Responsibility Disclosure And Stock Liquidity

Under the trend of high-quality development of global economy,Corporate Social Responsibility has become an important practice for modern enterprises.As a social organisation,the value orientation of an enterprise is related to the harmonious development of the enterprise and society,as well as to people’s happiness and social stability.In July 2020,General Secretary Xi Jinping pointed out clearly that enterprises have both economic and legal responsibilities,as well as social and moral responsibilities.According to statistics,a total of 369 A-share listed companies disclosed corporate social responsibility reports in 2009,and 1,422 in 2022,accounting for 30% of the total number of companies.Since 2005,when "Corporate Social Responsibility" was written into the Company Law,social awareness,market system construction and responsibility-fulfilling subjects have all undergone significant changes,and people’s understanding of CSR has gradually deepened.Currently,mandatory CSR disclosure has become the focus of academic attention.Based on theories such as stakeholder and information asymmetry,mandatory CSR disclosure policies may both enhance information transparency and facilitate management to cover up bad news,affecting the effective operation of the stock market.Whereas stock liquidity,a key element of market functioning,may be affected by this policy,the direction of this effect and the mechanism through which this effect is realised are the main research questions of this paper.Based on the policy impact of mandatory disclosure of corporate social responsibility in 2008,this paper uses DID model to explore the impact of mandatory social responsibility disclosure on stock liquidity.First,this paper finds that mandatory corporate social responsibility disclosure significantly reduces stock liquidity.Further,this paper analyzes the impact mechanism of information efficiency and accounting information quality,and believes that mandatory disclosure reduces information efficiency and accounting information quality,which leads to lower stock liquidity.Subsequently,through heterogeneity research,it was found that in enterprises with higher audit quality,higher analyst attention,higher institutional shareholding ratio,the inhibitory effect of mandatory disclosure on stock liquidity was weakened.It indicates that external supervision and internal governance can effectively alleviate the information asymmetry caused by mandatory disclosure.Then,this paper adopts a variety of methods to analyze the robustness of the research conclusions,and proves the robustness of the conclusions of this paper:the influence of mandatory corporate social responsibility disclosure on stock liquidity is studied by replacing the measurement index of stock liquidity;excluding 2008 and 2009 data to avoid the impact of the financial crisis;the propensity score matching(PSM)method and a placebo test was performed.Finally,this paper summarizes the empirical conclusions and puts forward corresponding suggestions.This paper enriches the research on corporate social responsibility and stock liquidity,and finds that mandatory disclosure cannot play an effective role in an imperfect market.However,enterprises with good governance structure,under better external institutional environment or external supervision,will be more inclined to fulfill their social responsibilities and honestly disclose information.