CSR Practice and Asymmetric Information: The ASEAN-5 Experience of Banking Industry

Abstract

This research explores the relationship between Corporate Social Responsibility (CSR) practices and information asymmetry within the banking sector of ASEAN. Unlike much of the existing literature in accounting and finance, which predominantly concentrates on the Environmentally Sensitive Industry (ESI), this study shifts the focus toward the Socially Sensitive Industry (SSI), presenting a unique and pertinent perspective. The analysis encompasses data from 27 publicly-listed ASEAN-5 banks over the period from 2011 to 2016, yielding a total of 162 bank-year observations for the final sample. Employing a panel regression approach, the study utilizes a fixedeffect model at both the bank and country levels, along with robust standard errors in the analysis. The results reveal that CSR practices, represented through the publication of CSR reports, CSR assurance, and adoption of the GRI framework, have a statistically significant negative association with information asymmetry, as indicated by the market-to-book value and Tobin’s Q ratio. The findings underscore the value of voluntary non-financial information as an important additional resource for stakeholders.