Migrating to Global Reporting Initiative Guidelines: Does International Harmonization of CSR Information Pay?
| Published date | 01 April 2023 |
| Author | Maher Jeriji,Waël Louhichi,Zied Ftiti |
| Date | 01 April 2023 |
| DOI | http://doi.org/10.1111/1467-8551.12603 |
British Journal of Management, Vol. 34, 555–575 (2023)
DOI: 10.1111/1467-8551.12603
Migrating to Global Reporting Initiative
Guidelines: Does International
Harmonization of CSR Information Pay?
Maher Jeriji,1Waël Louhichi2and Zied Ftiti3
1IHEC Carthage, Carthage-Présidence, Tunisia, 2ESSCA School of Management, Boulogne Billancourt, 92100,
France, and 3EDC Business School, Courbevoie, 92415, France
Corresponding author email: wael.louhichi@essca.fr
Thousands of organizations worldwide currently use the Global Reporting Initiative
(GRI) standards to report on sustainability information. We use data from39 countries
over the 2010–2018 period to examine the incremental value relevance of the interna-
tional harmonization of corporate social responsibility (CSR) disclosure. A propensity
score matching–difference in differences (PSM-DID) research design was used to avoid
selection bias and endogeneity concerns. We nd that migrating to the GRI guidelines
destroys rm value. This relationship is stronger for rms with poor CSR performance,
which suggests that market players,particularly institutional investors, consider GRI mi-
gration as a cost driver – at least in the short term. The introduction of other potentially
confounding institutional factors highlights the effectiveness of the negative relationship
between rm value and GRI migration for countries with more opaque nancial mar-
kets and less sustainable business environments. Our ndings have several implications
for policymakers, academics and practitionersin understanding both the motivations and
the consequences of CSR harmonization reporting on nancial markets.
Introduction
As corporate social responsibility (CSR) prac-
tices depend on local institutional environments
(Walker, Zhang and Ni, 2019), the use of several
CSR reporting standards can pose a barrier to
trade, consequently hindering CSR performance
(Tschopp and Nastanski, 2014). Bondy and
Starkey (2014) highlight the importance of iden-
tifying universal issues within CSR policy. Since
the early 2000s, the main purpose of the Global
Reporting Initiative (GRI) has been to develop an
The authors gratefully acknowledge the insightful and
timely suggestions by the Editor-in-Chief,Professor Dou-
glas Cumming, the Associate Editor, Professor Jia Liu,
and three anonymous reviewers. We also thank the GRI
organization for providing access to the GRI database.
The ideas, methodologyand ndings expressed in this pa-
per are the sole responsibility of the authors.
international standardized format and content for
corporate reporting on environmental and social
performance and its implementation. By using
comparable and veriable indicators, GRI enables
the comparison of the CSR reports of rms from
different countries (Brown, de Jong and Levy,
2009; Fuente, García-Sanchez and Lozano, 2017).
It is considered the most popularly recognized
set of voluntary international guidelines for CSR
reporting (Marimon et al., 2012).1
Our motivation to investigate GRI migration
arises from the intensifying debate on the ir-
relevance and international incomparability of
1The GRI standards are referenced in the policies or
regulations of more than 40 countries and regions,
and by almost 30 stock exchanges worldwide. (Source:
https://www.globalreporting.org/media/mwydx52n/
linking-gri-standards-and-european-directive-on-non-
nancial-and-diversity-disclosure.pdf.)
© 2022 British Academy of Management and Wiley Periodicals LLC. Published by JohnWiley & Sons Ltd, 9600 Gars-
ington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA, 02148, USA.
556 M. Jeriji, W. Louhichi and Z. Ftiti
CSR information (Adams,2004; Cor mier, Ledoux
and Magnan, 2011) and its potential effect on
the behaviour of international investors and -
nancial analysts (Dhaliwal et al., 2012, 2014;
Michelon et al., 2015). Research on the conver-
gence of CSR disclosure is still sparse (Tschopp
and Nastanski, 2014), with few studies undertaken
from the users’ standpoint. While some researchers
(e.g. De Klerk, de Villiers and van Staden, 2015;
De Villiers and Marques, 2016; Kaspereit and
Lopatta, 2016) have investigated the value rele-
vance of CSR information quality following dif-
ferent GRI levels, two unresolved questions of
theoretical and practical importance are put for-
ward: (1) whether CSR harmonization disclosure
is value-relevant and (2) whether GRI migra-
tion is seen as an improvement in transparency
and accountability or if it is merely considered a
symbolic action. Two competing perspectives, the
benet/cost approach of voluntary disclosure the-
ory (Verrecchia, 1983) and the greenwashing ap-
proach of legitimacy theory (Mahoney et al.,
2013), have set the tone, each of which bases its
predictions on a different premise about manage-
ment’s ultimate motivation for CSR disclosure. In
doing so, our workprovides a new approach to un-
derstanding managers’ motivations for this form
of CSR disclosure practice.
According to the economic benet/cost perspec-
tive, managers’ decision to migrate to GRI would
be a matter of cost–benet analysis. If perceived
as a net cost driver, investors will penalize GRI mi-
grator rms by reducing their market value. More-
over, stakeholders havestrong intuitive beliefs that
rms focus more on creating the perception of
being responsible instead of implementing CSR
activities and practices to minimize their opera-
tions’ environmental and social impact (Nekhili
et al., 2017b). Therefore,a sceptical and suspicious
public would not hesitate to accuse companies of
false claims. More specically, investors will rele-
gate CSR reporting harmonization to mere green-
washing, and penalize GRI migrator rms.
Previous literature on CSR harmonization (e.g.
De Klerk, de Villiers and van Staden, 2015;
De Villiers and Marques, 2016; Kaspereit and
Lopatta, 2016) has failed to separate the harmo-
nization effects of CSR information. Thus, we
propose a procedure forselecting only comparable
companies regarding CSR harmonization disclo-
sure – ‘GRI migrators’ and others thathave main-
tained, until now,the publication of CSR informa-
tion without referring to the GRI. Consequently,
we clearly distinguish between the migration to
and the adoption of GRI guidelines. Overall, we
assimilate questions related to GRI migration as
a quasi-experiment by comparing the reaction of
companies that migrated to GRI (treatmentr ms)
and those that did not (control rms), before and
after the migration.
This study may be of interest to the regula-
tors, since it allows for an understanding of criti-
cal levers thatpromote more substantive disclosure
through international CSR harmonization. More-
over, the results of this study may be of potential
interest to managers and international investors
in determining their disclosure and investment de-
cisions, respectively. Overall, we nd that GRI
migration destroys rms’ market value. This de-
valuation is more pronounced for companies
experiencing poor CSR performance, conrming
that international investors view GRI migration
practices as a short-term cost driver, because the
negative trend dissipates after a few years.
The remainder of this paper is structured as
follows. The next section provides our theoreti-
cal framework and develops our hypotheses. The
third section presents the research protocol. The
fourth section reveals the main characteristics of
our data. The fth section details and discusses our
results, and the nal section concludes.
Theoretical framework and hypothesis
development
Incremental value relevance of CSR harmonization
GRI proponents argue that using a uniform CSR
reporting standard will improve comparability,
which allows investors and managers to make bet-
ter investment decisions, thereby enhancing in-
formation transfers across many companies and
countries (Diouf and Boiral, 2017; Fortanier,Kolk
and Pinkse, 2011). Some studies have empiri-
cally investigated the value relevance of CSR dis-
closure quality measured using GRI levels (e.g.
Greeves and Ladipo,2004; Kaspereit and Lopatta,
2016; Lee and Maxeld, 2015; Yang et al., 2021).
In this context, scholars are motivated by the
assumption that principles-based GRI improves
transparency because it emphasizes improved dis-
closure and better cross-country comparability
(Einwiller, Ruppel and Schnauber, 2016). As
a result, there is less information asymmetry,
© 2022 British Academy of Management and Wiley Periodicals LLC.
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