Should corporate social reporting be voluntary or mandatory? Evidence from the banking sector in France and the United States

This research project aims to investigate how country contexts pressure firms for greater reporting activity and to explore the impact of these pressures on disclosure quality.

A theoretical lens is used to based on the three pillars of institutions: regulative, normative, and cultural in order to assess qualitatively how strong each pillar is reflected in creating a context with regard to disclosure, and then to compare two disclosure ratings' reports – that of the Carbon Disclosure Project (CDP) and that of CERES – to provide a quantitative comparison of disclosure quality.

Expecting that countries with higher regulative pressures, such as France, will lead to a “minimum‐requirement” type of disclosure, while countries with more liberal markets, such as the USA, will present higher quality disclosure, counter‐theoretical evidence was found in the results, indicating that French firms exhibit higher quality disclosure than US firms on average.

The findings, although derived from a small sample limited to the banking sector, point to the possibility that higher reporting quality is more closely linked to normative and cultural pressures, and that these pressures appear to be more important in stronger regulatory contexts.

The results inform the public policy literature, seeking to explore the effectiveness of self‐regulation in face of increasing mandatory requirements. The paper also contributes to the disclosure literature, by establishing a relationship between disclosure quality and institutional context, and to the institutional theory literature by inscribing the study within the nascent stream of empirical papers in search of a methodology to compare institutional contexts across countries and their impact on firms' reporting activities.