How Can Differences in CSR Report Quality of German and Danish Listed Companies Be Explained? A Longitudinal Study With a Particular Focus on the Impact of Legislation

Abstract

This thesis applies content analysis to analyse and compare the quality of 150 CSR reports published by listed German and Danish companies from four sectors between 2008 and 2017. The aim is to understand what factors impact CSR report quality with a focus on the potential impact of CSR reporting legislation. Institutional, legitimacy and signalling theory form the theoretical foundation for the analysis. The report quality evaluation frame is constructed in a concept-driven way and supplemented by a data-driven frame in a second part aiming at understanding the impact of national culture. Evidence is presented that CSR report quality differs across companies of different size and different sectors within each country but also between German and Danish companies of similar size or within the same sector. Findings suggest that differences in CSR report quality between German and Danish companies may be explained by a combination of firm internal and external factors. Firm size seems to positively impact overall report quality and the extent of reporting on employee matters, while sector affiliation seems to impact the extent of reporting on certain CSR topics, such as environmental matters. National culture and ownership structure also seem to influence CSR report quality through stakeholder expectations, which may explain differences in the extent of reporting on certain topics or differences in choice of format and reporting framework. Mandatory CSR reporting legislation seems to improve the overall CSR report quality and fosters a convergence of report quality of German and Danish companies at an overall higher level than under voluntary reporting. Thus, mandatory reporting in Denmark seems to have moderated the effect of factors causing differences in report quality between German and Danish companies such as firm size. It further seemed to encourage companies from both countries to switch from reporting as a section in their annual report to publishing separate CSR reports, which tends to increase report quality. Furthermore, large and medium-sized German companies primarily seem to use separate CSR reports as perception management tools both under conditions of voluntary and mandatory reporting. Under mandatory reporting requirements, Danish large companies show less indication to do so and medium-sized Danish companies seem to be motivated by the desire to send credible signals about their CSR performance. These different motives may also contribute to the observed differences in CSR report quality.