Publication Type

Journal Article

Version

publishedVersion

Publication Date

11-2025

Abstract

Corporate social responsibility (CSR) refers to the notion that firms are accountable not only to shareholders but also to a broader set of stakeholders including customers, employees, creditors, and the communities in which they operate. Although CSR has long been part of corporate discourse, its prominence has grown with the rise of environmental, social, and governance (ESG) concerns. Today’s consumers and stakeholders are increasingly attentive to issues such as climate change, economic inequality, labor rights, and social justice, prompting firms to align their strategies with evolving societal expectations. Building on this increasingly salient backdrop, Chu et al. (2026), hereafter CCT, examine how managerial overconfidence influences firms’ CSR engagement and its subsequent impact on firm value following financial restatements. CCT find that firms led by overconfident CEOs reduce their CSR activities after a restatement, and when they do engage in CSR, the positive association between CSR and firm value becomes significantly weaker. This study contributes to and connects three key areas of research. The first is the literature on the capital market consequences of financial restatements. Prior studies have shown that restating firms experience significant losses in shareholder value (Anderson & Yohn, 2002; Palmrose et al., 2004), face higher costs of capital (Hribar & Jenkins, 2004), suffer reputational damage and regulatory penalties (Karpoff et al., 2008), and are more likely to encounter litigation (Palmrose & Scholz, 2004). These consequences underscore the importance of understanding how firms attempt to repair their reputations and recover financially following restatements.

Keywords

CSR, CEO overconfidence, restatement

Discipline

Accounting | Business Law, Public Responsibility, and Ethics | Corporate Finance

Research Areas

Corporate Reporting and Disclosure

Publication

International Journal of Accounting

First Page

1

Last Page

11

ISSN

1094-4060

Identifier

10.1142/S109440602580006X

Publisher

World Scientific Publishing

Copyright Owner and License

Authors-CC-BY

Creative Commons License

Creative Commons Attribution 3.0 License
This work is licensed under a Creative Commons Attribution 3.0 License.

Additional URL

https://doi.org/10.1142/S109440602580006X

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