Does external assurance enhance the credibility of csr reports? Evidence from csr-related misconduct events in Taiwan

This study examines the credibility of corporate social responsibility (CSR) reports and the role of external assurance on CSR reports. Based on a sample of listed firms in Taiwan, we find that the issuance of CSR reports is not associated with a lower incidence, or frequency, of future CSR-related misconduct, unless accompanied by external assurance. In other words, external assurance can enhance the credibility of CSR reports. Moreover, the perceived credibility of CSR reports depends on whether firms genuinely fulfill their CSR commitments. For first-time offenders, prior CSR reports play a significant role in protecting firm value when misconduct does occur; however, for repeat offenders, such an insurance role does not exist, regardless of whether the CSR report is assured or not. Our findings attest to the benefits of CSR assurance and underscore the importance of understanding CSR practice in the context of country-specific institutions.