Valuation of Corporate Social Responsibility Report Article

Valuation of Corporate Social Responsibility Report - Article Example One of the first findings of the investigation in regards to how Lithuanian companies report social responsibility was that there is a great variation in the content, volume, and indicators disclose by different companies. This can be a problematic issue because investors are not able to compare the information from different companies in a consistent matter. One of the greatest attributes of the financial statements used in the United States by public firms is that they are all prepared in the same manner. Another issue with the practices of Lithuanian companies in regards to social responsibility reports is that very few companies share the information with their shareholders. The culture in this country does not value the importance of social and environmental factors. Most scientists analyze the content of CSR reports separate from reports that illustrate financial information. I believe that this practice might be flawed because the use of a sound corporate social responsibility strategy can greatly impact the behavior of the customers of the company. For instance, Starbucks Cafe is selected by many coffee drinkers over the competition due to its support of green practices such as its use of Fair Trade Coffee. The four main issues included in the CSR report are human rights and human resources, product design and development, environmental protection, and community. The lack of generally accepted principles makes CSR not easily measurable. The firm’s reputation is closely connected to its social responsibility practices. Companies that undermine CSR aspects such as the community can have devastating public relation problems. Back in the late 1990’s Nike Corporation’s reputation hit an all-time low after the revelation of the sweetshops scandal. Many companies use CSR disclosure as an instrument for advertising purposes. On many occasions, CSR information is fragmented in the annual reports, websites, and other company reports. There is a lack of investigations related to valuation methodologies of social information. The GRI framework is an effective methodology used by many Spanish companies to report social information. The GRI is a long-term multi-stakeholder, international process whose mission is to develop and disseminate globally applicable sustainability reporting guidelines. Non-financial reporting provides information regarding ethical, environmental and social aspects. The essential aim of social reporting is to create a social transparency system for responsible decision making. Other names used for CSR disclosure documents are social progress reports, social responsibility reports, social reports, and sustainability reports. CSR philosophies should be integrated into all company activities in order to increase the efficiency of the firm. Some elements that help companies achieve better CSR results are good stakeholder management and leadership, prioritizing CSR needs, coordination with governmental a gencies, and regulations. Empirical studies showed that in Italy firm stock prices are not affected by the release of CSR reports even if firms pay close attention to social responsibility practices because the Italian financial market is not efficient and transparent. In the United States, CSR reports have the greater impact in investor decisions and ultimately in the prices of common stocks.