Do family firms engage in voluntary external assurance of corporate social responsibility reports?

Authors: Chih-Wei Peng

Journal: Corporate Management Review. June. 2020, 40(1): 1-33.

Keywords: CSR report assurance; family firms; corporate governance.

Abstract:
Many companies have increasingly voluntarily adopted external corporate social responsibility (CSR) assurance services in order to enhance the credibility of their CSR reports. As family businesses play a crucial role in the socio-economic development of emerging economies, this study thus investigates the relationship between family-controlled firms and voluntarily adoption of external CSR assurance services, using a sample of Taiwanese-listed firms and manually collecting CSR reports spanning the period 2009-2016. Unlike the expectation of the traditional sociopolitical theory or economics theory, this study demonstrates that family-owned firms have less motivation to voluntarily provide assurance of CSR reports compared to non-family firms. Moreover, findings indicate that family firms with high control-cash flow divergence have less motivation to engage in voluntary CSR assurance. In contrast, family firms with independent non-executive board directors have greater motivation to engage in voluntary CSR assurance. Finally, I analyze and discuss the results of comparing the various levels of family firms and their assurance decisions.