Corporate social responsibility disclosure : relation with exchange listing and financial performance for Dutch companies

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Corporate Social Responsibility Disclosure:

Relation with exchange listing and financial

performance for Dutch companies

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Name V. Igno Notermans

Student number 10651136 Superisor Mark Dijkstra

Faculty Economics and Business, University of Amsterdam Study BSc Future Planet Studies, major Economics

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Statement of Originality

This document is written by Student V. Igno Notermans who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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Abstract

This research aimed to provide insight into the corporate social responsibility (CSR) disclosure practices for Dutch companies in 2014-2015. It examines whether listed companies disclose more CSR information than non-listed companies. Secondly, it studies the relationship between the level of CSR disclosure and the financial performance of a company. It uses the transparency benchmark to measure the level of CSR disclosure, with the sample consisting of 192 companies. Listed companies are expected to disclose more information, along with a positive relationship on financial

performance. However, these are not supported by the results of the multiple regression analyses. Still, companies that are larger and belong to a sector facing stricter environmental regulations are significantly disclosing more information. These findings suggest the relationship between the level of CSR disclosure and financial performance is more complex.

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1. Introduction

Large companies are becoming more actively involved in disclosing information on their activities that not only influence the shareholder gains, but also the stakeholder effects (Gamerschlag, Möller & Verbeeten, 2010). Reporting on corporate social responsibility (CSR) has become mainstream, as 71percent of large companies worldwide include CSR in their annual report or disclose a separate CSR report (KPMG, 2013). In The Netherlands this percentage is slightly higher (82 percent), but the increase in CSR reporting is stagnating due to its already high level (KPMG, 2013).

This research focuses on Dutch companies in the period 2014-2015, and its aim is twofold. First, to identify whether listed companies disclose more CSR information than non-listed companies. Second, whether the level of CSR disclosure relates to the financial performance of a firm. Companies

disclose information in order to meet the demand for disclosure by its stakeholders, and to avoid greater pressure (da Silva Monteiro & Aibar-Guzmán, 2010). Moreover, firms also disclose information in order to obtain legitimacy and prestige from its stakeholders (Gamerschlag et al., 2010). It is hypothesized that listed companies disclose more information on CSR, as they are more visible and face more pressure from stakeholders.

Furthermore, a positive relation between CSR disclosure and financial performance might exists as more profitable companies have more resources available for revealing CSR information. Disclosing CSR information can also provide the firm with a better reputation, or it signals that it has superior CSR performance compared to others. Likewise, the company shows that the interests of stakeholders are satisfied. Therefore, a positive relation between CSR disclosure and financial performance is assumed.

The transparency benchmark developed by the Dutch Ministry of Economic Affairs will be used to measure the level of CSR disclosure. This benchmark examines the publicly available reports of firms on both content, quality and clearness. The sample consists of 192 companies, of which 67 are listed. the hypothesis are tested by mean comparison and multiple regression analysis. Control variables include the size and industry a firm belong to. The scores of the transparency benchmark are used as independent and dependent variable. It contributes to the robustness of the study, as both the different factors that might explain the level of the transparency benchmark are tested, and the influence of the transparency benchmark score on the financial performance.

This research examines companies in the Netherlands, whereas most studies have been focused on Anglo-Saxon countries (Burgwal & Vieira, 2014). Moreover, no other research has used the

transparency benchmark to measure the level of CSR disclosure. Lastly, it does not only include the largest (listed) companies of a The Netherlands, but medium to large companies as well (33

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companies with assets worth less than 100 million). This contributes to a more comprehensive analysis of the Dutch situation.

This research is structured as follows: in the next chapter the relevant literature and theories about CSR disclosure and financial performance are reviewed. In the third chapter the research design is presented, followed by the results in chapter four. The last chapter consists of a conclusion.

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2. Theoretical Framework

2.1 CSR Disclosure

Corporate Social Responsibility (CSR) is the voluntary inclusion of social and environmental concerns in the business operations and stakeholder interaction by companies (Commission of the European Communities, 2001, p.7). In other words, CSR is the policy of a company that determines its strategy and concerns with societal issues. By that, it attempts to comply to the three P’s: People, Planet and Profits (Carroll, 1999). In short, People is about labor standards and taking care of

employees, Planet refers to environmental issues like pollution and Profits are the economic value that is generated. An example is product safety, where a company is obliged to follow legislation on non-toxic components like paints. A company can take actions that move beyond these rules of law, by using materials that are even beneficial for humans like paints that contain vitamins. CSR is how the company tries to deal with product safety. Both by following the law and even by moving beyond specific regulations.

CSR is an ambiguous concept which includes many factors, there is no clear measurement of CSR (McWilliams & Siegel, 2000). Therefore, the disclosure of CSR instead of the actual CSR actions is frequently measured by scholars (Margolis & Walsh, 2001). The disclosure refers to revealing the economic, social and environmental impact the company's daily activities cause. This disclosed information is provided in the form of the annual report or in a separate CSR report. CSR disclosure thus refers to the information a company reveals on its CSR practices, in the form of an annual report or even press releases and published research.

By reporting on CSR activities a company is more transparent on the societal risks and opportunities it faces (Gamerschlag et al., 2011). The report enhances the corporate image and builds trust among stakeholders. The report also helps the firm itself to understand and measure its performance on both economic and social-environmental issues. According to the Global Reporting Initiative (GRI) guidelines not only positive, but also the negative performance have to be communicated as well (Global Reporting Initiative, 2016a). Moreover, the CSR information describes the goals a firm sets and the strategy of its management to achieve these goals.

Reporting on CSR practices is not mandatory for Dutch companies. From 2017 onwards large companies with more than 500 employees will be obliged by an European Directive to report on social and employee-related, respect for human rights, environmental, anti-corruption and bribery matters (European Parliament and Council of the European Union, 2014; Global Reporting Initiative, 2016b). The directive states that firm have to disclose information on their policy on each of the above themes, including the outcomes and risks involved in the specific policy. On the environmental part for example, it has to report about policy regarding its (non-) renewable energy use, greenhouse

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gas emissions, water use and air pollution. On social-related matters, the information has to include the actions taken to ensure gender equality, respect for trade unions and implementation of

fundamental conventions of the International Labour Organisation (European Parliament and Council of the European Union, 2014).

For The Netherlands, the transparency benchmark will be used to fulfill the obligations of the

Directive(MVO Nederland, 2014). The approximately hundred Dutch companies that will be obliged to report according to the Directive are already included in the transparency benchmark. This research therefore will use this benchmark to measure the level of transparency of CSR reporting. The

methodology section will elaborate more on the criteria of the transparency benchmark developed by the Ministry of Economic Affairs.

2.2 The level of disclosure and its determinants

The first question of this research is about the determinants of the level of CSR disclosure. A frequently used theory explaining the difference in levels of CSR disclosure by various firms is the stakeholder theory (da Silva Monteiro & Aibar-Guzmán, 2010). This theory states that a wide range of actors are interested in the social policy and behaviour of a company. This goes beyond the usual interests in the accounting reports from shareholders and creditors. These actors can be consumers, employees, but also media and special interest groups. They actively demand information of the company’s activities that influence them directly or the broader community. Moreover, the stakeholders lend the firm legitimacy and prestige (Russo & Perrini, 2010). A mutual dependency exists, where also the stakeholders needs business for its long-term economic operations and value creation.

A company discloses information in order to avoid greater stakeholder pressures, but also to influence its stakeholders to provide the company with legitimacy and prestige. Stakeholders need to be

incorporated in the firm’s policy as well, as serving their interests will ask them to serve the interests of the company. Stakeholders are thus more likely to work along with the company, for example by disclosing valuable information to the firm on their preferences or on other competitors. Moreover, they provide the company with more legitimacy and a better corporate image (Russo & Perrini, 2010).

The theory of political costs explains another incentive for firms to disclose information to

stakeholders (Gamerschlag et al., 2010) . Managers are concerned with regulatory actions that incur costs for the company. These regulations are pressed by politicians, but also by specific interest groups. A company tries to reduce the chances of political and societal regulations and actions involving costs. Disclosing information on its CSR practices is a way to build up some credits with these groups, or even a social reputation. Moreover, it lowers the pressure of stakeholders and the chance of adverse regulations and actions, thus costs (Gamerschlag et al., 2010).

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Both theories have implications for the variables that might explain the level of CSR disclosure a company executes. The first variable is whether a firm is listed or not. Listed companies are more visible and therefore face more pressure from stakeholders. Whenever new developments and (news) event take place, the listed companies will be taken as examples as their societal existence is more prominent. The listed companies disclose more information in order to incorporate the needs of stakeholders and receive legitimacy. Moreover, the greater visibility of these companies makes them more vulnerable to adverse regulations. To reduce this risk, they will disclose more information (da Silva Monteiro & Aibar-Guzmán, 2010).

Still, as listed companies are on average larger than non-listed companies, the size of the company should be controlled for. The same argument for listed companies holds for size as well. Bigger companies are involved in more businesses and have more stakeholders. This results in greater societal pressure, and these firms will disclose more information in order to demonstrate their actions are legitimate (Burgwal & Vieira, 2014; Gamerschlag et al., 2010; da Silva Monteiro & Aibar-Guzmán, 2010).

Firms active in industries that have a potentially large negative impact on society receive more attention from for example lobby groups. These try to influence the public opinion and politicians to incur costs on sectors that are bad to society (Gamerschlag et al., 2010). For example, sectors with high environmental impact like the oil and gas industry have more incentives to disclose CSR information to reduce the potential costs (Reverte, 2009). Also, firms active in the financial sector could be more likely to disclose information. The argument is that they would like to restore the reputational damage the financial crisis of 2008 caused. Moreover, these industries already have to comply with strict regulation. If they do not reveal information it could signal bad performance on these regulations (Burgwal & Vieira, 2014).

2.3 Financial performance

Besides the determinants of the level of CSR disclosure, this research focuses on the connection between CSR and financial performance as well. First of all, more profitable firms have more resources available from which the costs of disclosing CSR information can be funded (Burgwal & Vieira, 2014). The presumption is that CSR disclosure is costly, and only financially sound companies can bear these costs. Secondly, the relationship also holds the other way around. CSR disclosure might provide a better reputation of the firm. When the firm signals it is actively concerned with the interests of stakeholders, the stakeholders may perceive the firm and its products as more reliable (McWilliams & Siegel, 2001). For example, a company is actively against plastic-based ingredients in its skincare products. This shows the consumers that the firm is actively concerned with both the environment, but also with the health of its consumers. The company signals it monitors its products

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actively, and consumers perceive the company as more reliable. Therefore, they are willing to pay more for the products. Together with increased sales this increases the financial performance.

Thirdly, by disclosing information on CSR the firm signals that has superior performance at CSR practices, therefore reducing asymmetric information. CSR disclosure is costly, too costly for companies that have inferior CSR performance. It is not in the interest of companies to disclose information that reveals their bad performance, as this worsens their corporate image. Disclosing information that is false, thus stating that the firm has superior performance where it actually is inferior, might only be beneficial on a short term. These are however outweighed by the costs of negative corporate image and repairing costs. Companies that disclose information signal that they have a superior CSR performance relative to competitors. They signal to provide over more intangible assets like legitimacy, which secure profits and financial performance (Clarkson, Li, Richardson et al., 2008).

The stakeholder view suggests that CSR disclosure results in improved stakeholder relationship. By disclosing CSR information, the company shows that the interests of stakeholders are satisfied. The stakeholders take into account that the company recognizes their interests as well. This results in a bonding or cooperation between the firm and its stakeholders (Roberts, 1992). Moreover, it creates lasting and productive relations, as these stakeholders act like ambassadors to the company and provide positive promotion to the company. This may result in a sound and continuing connection with for example consumers, which in the end increases sales. Next to benefits, also disadvantages are prevented. Stakeholders that potentially can harm the firm most are appeased.

Also a negative relationship between CSR disclosure and financial performance is possible. This can be explained by the fact that it is costly to disclose information on CSR practices. Consequently, it worsens the competitive position of a firm (Friedman, 2007), especially as it is not obliged for all companies to disclose the information. Other companies can perform better when they use the resources now allocated to conduct CSR reporting to increase profits or invest in other projects.

Moreover, as CSR moves the focus from shareholders to a broader range of stakeholders, the interests of managers and shareholders may become at odds (McWilliams & Siegel, 2001). This agency problem arises as managers are tempted to use CSR resources to foster their own agendas or for empire building, at the costs of shareholders. For example, improving working conditions, lowering the amount of working hours and hiring more employees are defendable from a CSR perspective and increase the specific business unit in the firm. These actions are not in the interest of the shareholders however (Friedman, 2007). Following this theory, a negative response on the stock market will be the result of a disclosure of CSR information, as the company signals it is not only solely focused on the shareholders’ value (Becchetti, Di Giacomo & Pinnacchio, 2006).

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Under pressure from stakeholders, more resources will be directed to them instead of to the shareholders. Financial performance may become inferior to social responsibility. The firm is in a quest for legitimacy from stakeholders, and will be distracted from their competitive behavior and quest for profit maximizing business (Scholtens, 2008; Sethi, 1979). This worsens their competitive position when other companies are more engaged in profit maximizing business than the firm. In the end, this will worsen its financial performance.

The costs and benefits of disclosing CSR can also outweigh each other, which implies a neutral relationship with financial performance (McWilliams & Siegel, 2001). Benefits are for example the reduction in production costs of a higher labor productivity which arise from more intrinsic

motivation or better working conditions (Turban & Greening 1997). By disclosing CSR, the company shows it is not only about profits, but also about well-established working conditions and labor practices.

Moreover, more complex relationships are conceivable as well. For example, an U-shaped interaction over time exists, where on the short run the costs of conducting and disclosing CSR are bigger than the benefits (Barnett & Salomon, 2002). On the medium-to long-run however, the benefits gathered, resulting in a better financial performance of the firm. Costs of CSR disclosure are immediate, as its benefits like a close stakeholder relationship need time to develop. This last view also suggests a lagged relationship exists, where financial performance follows CSR disclosure later in time.

2.4 Prior empirical results

CSR disclosure is measured in two different ways (Burgwal & Vieira, 2014). The first one measures the level of disclosure by counting. The number of words, sentences or pages attributed to CSR are measured. Still, this measurement does not tell much about the level and quality of disclosure. A report can be very elaborate on its strategies, but very brief about the steps it has taken to achieve these. The second measurement is content analysis, like the transparency benchmark. The CSR report is then analyzed on the basis of the inclusion of certain (environmental-social) targets or level of disclosure (detailed analysis given, even substantiated by data) (Burgwal & Vieira, 2014). The drawback of this method is that it is more subjective than the counting methodology.

A widely used measurement of CSR disclosure is the KLD index, which refers to a measurement developed by Kinder, Lydenberg, Domini (now called the MSCI ESG Intangible Value Assessment). This is an independent investment research firm, that analyzes the combination of financial

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environmental and social risks factors (McWilliams & Siegel, 2000; MSCI, 2016; Waddock & Graves, 1997)1.

Few studies have empirically tested the relationship between the level of CSR disclosure and the quotation on the stock market. Da Silva Monteiro and Aibar-Guzmán (2010) found that this

relationship is positive for Portuguese listed companies. The size of the firm has been included in the regression, contributing to the robustness of their findings. Moreover, also size was found to have a positive relation with the level of CSR disclosure. This is inline with other empirical results (Burgwal & Vieira, 2014; Gamerschlag et al., 2010; da Silva Monteiro & Aibar-Guzmán, 2010). Furthermore, previous literature confirms that firms active in more environmentally sensitive industries are more likely to disclose information as well(Burgwal & Vieira, 2014; Gamerschlag et al., 2010; Reverte, 2009; da Silva Monteiro & Aibar-Guzmán, 2010). These industries usually include the oil & gas and the steel & chemical sectors.

Prior empirical research on the relationship between CSR disclosure and financial performance does not provide clear results. By analyzing 95 different studies, Margolis and Walsh (2001) reveal that roughly 50% of these found a positive relationship, 25% found no relationship at all, 20% provided mixed results and the remaining 5% found a negative relationship. However, the studies they analyze are hard to compare as many different proxies are used to examine the financial performance and CSR. Also the differences in time frame and regionality are not taken into account. For example, periods of recession and country-specific regulations can influence the relationship heavily (Barnett & Salomon, 2012; Burgwal & Vieira, 2014; Allouche & Laroche, 2005).

Margolis, Elfenbein and Walsh (2007) grouped the different uses of CSR performance measurements into nine categories. Some categories provide a stronger relation with financial performance:

charitable contributions, revealed misdeeds, self-reported social performance and observed

perceptions. Among others, transparency disclosure measures provide a weaker link with financial performance.

Orlitzky, Schmidt, and Rynes (2003) conducted a meta-analysis of 52 previous studies. Their results show that the relationship is interdependent on the applied measures for CSR and financial

performance. When CSR is measured by reputation indices and financial performance by accounting-based measures, the relationship tends to be more significant. Overall, they find evidence for the existence of a positive relationship.

Prior empirical results do support a positive relationship between the level of CSR disclosure and a quotation on the stock market, the size and belonging to an environmentally sensitive industry. However, a clear relationship between the level of CSR disclosure and financial performance is not provided by previous results. It rather indicates a positive over a negative relationship, but

conclusions remain to be made. 1

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3. Research design

The first question of the research is: Are listed companies more likely to disclose CSR information? The hypothesis is that listed companies are more likely to disclose information, even when size is controlled for. This will firstly be tested by a t-test on the difference of the means of the transparency benchmark score from listed and non-listed companies. As listed companies are on average larger and larger companies tend to disclose more information, the variable size needs to be controlled for. Therefore, the following regression will be tested:

𝑇𝑇𝑇𝑇 = 𝛼𝛼 + 𝛽𝛽1 𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿 + 𝛽𝛽2 𝐿𝐿𝐿𝐿𝐿𝐿(𝑎𝑎𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿) + 𝛽𝛽3 𝐿𝐿𝐿𝐿𝐿𝐿(𝐿𝐿𝑎𝑎𝑠𝑠𝐿𝐿𝐿𝐿) + 𝛽𝛽4 𝐼𝐼𝐼𝐼𝐿𝐿𝐼𝐼𝐿𝐿𝐿𝐿𝐼𝐼𝐼𝐼 + 𝜀𝜀

Where:

TB = the score on the transparency benchmark Listed = dummy variable, 1 if the firm is listed Log(assets) = logarithm of total assets

Log(sales) = logarithm of sales

Industry = industry fixed effects, with added dummy variables for the twelve different sectors, 1 if the firm is included in the specific sector

The second question is: Are financially better performing companies more likely to disclose CSR information? The hypothesis is that there exists a positive relationship. This will be tested first by a Pearson correlation between the variables transparency benchmark score, return on assets (ROA), logarithm of assets, logarithm of sales, the dummy variable listed and dummy variables indicating the sector of the firm. Secondly, it will be tested by the following regression:

𝑅𝑅𝑅𝑅𝑅𝑅 = 𝛼𝛼 + 𝛽𝛽1 𝑇𝑇𝑇𝑇 + 𝛽𝛽2 𝐿𝐿𝐿𝐿𝐿𝐿(𝑎𝑎𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿) + 𝛽𝛽3 𝐿𝐿𝐿𝐿𝐿𝐿(𝐿𝐿𝑎𝑎𝑠𝑠𝐿𝐿𝐿𝐿) + 𝛽𝛽4 𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿 + 𝛽𝛽5 𝐼𝐼𝐼𝐼𝐿𝐿𝐼𝐼𝐿𝐿𝐿𝐿𝐼𝐼𝐼𝐼 + 𝛽𝛽6 𝑇𝑇𝑇𝑇 ∗ Log(assets) + 𝜀𝜀

Where:

ROA = return on assets

TB*Log(assets) = interaction variable between the score on the transparency benchmark and the logarithm of total assets

The transparency benchmark will be used to measure CSR disclosure. The TB is launched by the Dutch Ministry of Economic Affairs in 2004, and has been published annually since2. The benchmark examines the embeddedness of CSR in external, periodically published reports of a company. The transparency benchmark is performed based on annual (financial) report and social, environmental

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The criteria of the benchmark changed drastically in 2014 to align it with new guidelines from the Global Reporting Initiative (GRI) and integrated reporting practices. The results before and after 2014 are therefore incomparable.

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and/or CSR reports are. The information must be published periodically, thus brochures, press releases and magazines are not taken into account. The information also must be publicly available, thus reports that are can only be viewed upon payment are excluded.

The methodology of the benchmark includes both a self-assessment and an examination by Ernst & Young. Companies are able to assess their reports based on a questionnaire within a self-assessment tool that is developed by the Ministry of Economic Affairs. Afterwards, a team of reviewers from Ernst & Young examine of the company’s reports and the provide a score. If the self-assessment is used, the team will check the self-assessment on quality and will communicate differences in interpretation with the company. Leading is the team’s analysis. When the self-assessment is not completed, the score will be based on annual reports. Companies can reveal their disagreement on the team’s interpretation and score, which ultimately will be overcome by a third part, a panel of experts (Transparency benchmark, 2015).

The benchmark primarily consists of large dutch companies with more than 500 employees3. The criteria along with which corporate reports are examined are divided into two main categories: content oriented and quality oriented criteria. A total of 200 points, 100 for each main category, can

maximally be obtained. The content part include for example a description of the business model and policies and results. The criteria contain whether a company explains the specific CSR policies it has, if it has defined goals for them and whether these are explained in detail, including goals, quantitative data and a time line. The more detailed and CSR specific information is disclosed, the more points can be earned.

The quality section is more focused on for example the consistency, reliability and relevance of the information. The criteria include whether an independent party has verified the information of the CSR report, external experts are consulted, to what extent the reported subjects are the most relevant issues to the company and how these are determined. Moreover, included is whether the scope and boundary of the reporting is aligned with the information needs of stakeholders, and how they are accounted for in both the reporting process and the policy and activities. The criteria are publicly available (Transparency benchmark 2015, Transparency benchmark, 2016b). To illustrate the content of the transparency benchmark, the 2015 reports of two companies from the industrial goods sector, namely Akzo Nobel (total score of 198) and OCI (36 points), are discussed. The scores of every company are publicly available on the website of the transparency benchmark

(www.transparantiebenchmark.nl/en).

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The benchmark includes the companies from the following categories: Public Interest Entities with more than

500 employees, Organizations listed in Amsterdam’s stock exchange, Organizations with substantial activities in the Netherlands related to revenue and/or amount of employees, (Partly) State-owned companies,

Universities and University Medical Centers , Large organizations (more than 250 employees) who have been included in the participants group on a voluntary basis in the past (Transparency benchmark, 2015).

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Akzo Nobel ranked 1st in 2015 and therefore received the Crystal prize. According to the jury of the Crystal prize the company discloses its information in a detailed and integrative manner

(Transparency benchmark, 2015). When the CSR sections of the annual reports of Akzo Nobel and OCI are compared, some differences are clear. For example, at the first page of Akzo Nobel’s report its progress on its own-defined sustainability indicators are shown, including the results of three previous years (Akzo Nobel, 2015; Transparency benchmark, 2015). The report of OCI however does not include specific goals related to CSR at all. It does also include little information on the social and environmental aspects of its business practices. A graph of its greenhouse gas emissions is depicted, but an explanation or embeddedness in relevant policy lacks. The transparency benchmark does award a point to OCI on its insight into environmental impact, but that is only 1 out of 8 (OCI, 2015;

Transparency benchmark, 2015).

Moreover, the transparency benchmark also analyses whether the firm explains why it informs about certain topics and how stakeholders are involved. OCI does not include both. It does for example explain about investing in educational programmes, and provides a description of these programmes and how many students are involved. However, the performance on education can not be compared with previous years or with a future goal. The question remains why this topic is of importance to the company, why it is involved in these programmes and how this influences the performance of the company. Therefore, its score is low on both social criteria and clearness and relevance of the report on the transparency benchmark (OCI, 2015; Transparency benchmark, 2015) .

Akzo Nobel however explains in detail which CSR topics are most important to the company and how these are determined. It states that both a long list of topics has been made according to its internal strategy and according to many stakeholders, ranging from issues raised by shareholders but also from employees and in media reports. An important topic for instance is the energy, resource use and carbon footprint throughout the value chain. This is described both qualitatively (describing the impactful value chains for example) and quantitatively (by a resource efficiency index and greenhouse gas emissions per ton of production for example). The report is detailed and provided many graphical representations of the content. Therefore, the score on the transparency benchmark is both high on environmental aspects of its business practices, as well as on relevance clearness (Akzo Nobel, 2015; Transparency benchmark, 2015).

Lastly, when a company has no publicly available annual report, a score of zero is appointed. This is also done when the report was not published in time or when the firm is a subsidiary of a group and did not refer to a report on group level. In 2014 and 2015 approximately 40% and 47% of the scores consisted of null scores. These null scores have been excluded as no analysis on the firms information has been conducted and thus influence and shift the data heavily.

The other variables of this research have been obtained via Orbis. Included is the status of the company on the stock exchange: listed, unlisted or delisted. After checking whether delisted

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companies were listed in 2014 or 2015, the delisted and unlisted companies were merged. A dummy variable was created, where 1 was assigned to companies that are listed. The expected relationship with both the transparency benchmark score and the return on assets is positive (Scholtens, 2008; da Silva Monteiro & Aibar-Guzmán, 2010). Moreover, the size of a firm has been measured by both the logarithm of total assets and the logarithm of total sales (both in thousands of Euros). Also size is expected to have a positive relationship with both the benchmark score and the return on assets (Burgwal & Vieira, 2014).

Financial performance can be measured by market-based indicators, such as the price per share and by accounting-based indicators such as Return on Assets (ROA) (Scholtens, 2008). As this research includes also non-listed companies, the ROA will be used to measure financial performance. The ROA is a ratio of net income over its total assets, and the percentage before taxes were used here. No relation with the transparency benchmark score is expected (Scholtens, 2008). Lastly, the sector a company belonged to was obtained via Orbis. The industry fixed effect has been included by adding a dummy for each of the twelve sectors. A 1 was assigned to companies that belonged to the specific sector and 0 to all others.

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4. Results

This research focuses on companies in The Netherlands. The companies were selected on the basis of their inclusion into the transparency benchmark and the availability of their data in the database Orbis. Orbis contains detailed information on both listed and non-listed companies on a global scale. It contains more data for companies that are listed. The years 2014 and 2015 are chosen as these are the most recent available data. The combination of the databases resulted in 192 companies, of which 67 are listed. In appendix 1 the population sample can be found.

In appendix 2 the descriptive statistics and Pearson correlation are presented, excluding the dummy variables listed and the sector variables. For data retrieved from the Orbis database, the 2015 values have not all been collected yet resulting in less observations compared to 2014. The number of observations of assets is larger than for sales in both years, which could make it a better indicator of size. The variables assets and sales show strong correlation. This is no surprise, as both are indicators of the size of a company.

In table 1 mean scores on the transparency benchmark per sector are provided. Largest sector is the services industry (36%), smallest the metal industry (0.5%). Notable is the energy industry, with a mean score of 141, where the total average is 106. This supports the theory that this sector faces stricter environmental regulations and therefore is likely to disclose more information (Burgwal & Vieira, 2014; Gamerschlag et al., 2010; Reverte, 2009; da Silva Monteiro & Aibar-Guzmán, 2010). The high mean of the energy intensive metal industry supports this theory as well, although it represents only one firm and the result is backed with too little data.

The high mean of the transport sector (mean of 147) is however supported by a sufficient amount of companies (10 firms). As it is an industry which is environmentally sensitive, it support the theory that it would disclose more information. Moreover, two sectors have a notable lower than average score: the publishing (mean of 76) and the retail (mean of 88) sector. As these are not sectors that provide large negative impact on social and environmental issues, this is in line with theory as well. Other sectors are in line with the expectations of the theory (Gamerschlag et al., 2010; Reverte, 2009).

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Table 1: Mean score on the transparency benchmark by sector for 2014

4.1 Listed

The mean scores on the transparency benchmark for listed (105) and non-listed (104) companies show no large difference (table 2). The t-test shows no significant difference, as the p-value is 0.5379 for 2014 (appendix 3, table 13). The regression also shows no significant relation between whether a company is listed and the score on the transparency benchmark (table 3). When controlled by size and the industry fixed affects are added, the variable listed also shows no significance. The results for 2015 show similar results, and are included in appendix 3. The variable size however has significant and positive relation with the transparency benchmark score. When both the logarithms of size and assets are included, these size variables become insignificant. These logarithms are highly correlated, which indicates multicollinearity. This is further supported by the fact that when one of the two are omitted from the regression, both become significant.

An explanation for these insignificant results is the exclusion of the null scores from the data. These null scores account for more than 40% of all the observations from the transparency benchmark and therefore shift the data heavily. A null score is appointed when the annual report is not publicly available, is not published in a timely manner or when the firm is a part of a larger group of firms and did not refer to the report of the parent company (Transparency benchmark, 2015). When the

companies with a null score are included, the variable listed are significant for both years (appendix 2). This is further explained by the fact that only two listed companies received a null score. However, because the null scores affect the data to such a large extent and the reason for a null score are not

Mean by sector 2014 Mean Number of firms

Banking 107 17 Chemicals 106 7 Construction 116 13 Food 113 11 Energy 141 10 Machinery 104 12 Metals 146 1 Services 102 62 Publishing 76 7 Retail 88 17 Transportation 147 10 Other 128 7 All 106 174

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individually explained, the resulting tests are not sound enough. The hypothesis that listed companies disclose more information than non-listed companies, is therefore rejected.

Table 2: Means of listed and non-listed companies for 2014

T statistics in parentheses. * p<0.05, ** p<0.01, *** p<0.001

Table 3: Regression output for listed and the transparency benchmark score for 2014

4.2 Financial performance

The Pearson correlation matrices (appendix 2, tables 7 and 8) indicates that there is no relationship between the ROA and transparency benchmark score of a firm for both 2014 and 2015. In table 4 the regression with ROA as the dependent variable for 2014 is shown. It shows that the transparency benchmark score is not significant in any case, where different control variables are included. Both the logarithms of assets and sales are included, together and separately, but do not show significance Transparency benchmark score listed and unlisted Listed Unlisted All

Mean Mean

Transparency benchmark score 106 107 106

Listed and transparency benchmark score for 2014 (1) Transparency benchmark score (2) Transparency benchmark score (3) Transparency benchmark score (4) Transparency benchmark score (5) Transparency benchmark score (6) Transparency benchmark score Listed -0.812 -10.80 -16.48 -6.643 -7.395 -3.144 (-0.10) (-1.30) (-1.69) (-0.63) (-0.79) (-0.31) Logarithm of 9.741*** 12.67** 5.725 9.253*** assets (5.31) (2.85) (1.19) (4.51) Logarithm of -0.0185 4.014 8.772** sales (-0.00) (0.82) (3.04) Constant 106.8*** -26.48 -65.16 31.81 13.50 52.44 (21.15) (-1.03) (-1.73) (0.61) (0.39) (1.07)

Industry Fixed No No No Yes Yes Yes

effects

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in any case. Moreover, the dummy variable listed and the interaction variable between the

transparency benchmark score and the logarithm of assets are not significant. This is not changed by adding the industry fixed effects. The results for 2015 show similar results. Therefore, the hypothesis that there exists a positive relationship between the level of CSR disclosure and financial

performance, is rejected.

Standard errors in parentheses * p<0.05, ** p<0.01, *** p<0.001

Table 4: Regression output for financial performance and transparency benchmark score for 2014 ROA and

transparency benchmark score for 2014

(1) ROA (2) ROA (3) ROA (4) ROA (5) ROA (6) ROA (7) ROA (8) ROA (9) ROA (10) ROA

Transparency -0.0018 0.0041 -0.0011 -0.0012 0.0062 0.0053 0.0110 0.0035 0.0059 0.0549 benchmark (0.011) (0.012) (0.013) (0.013) (0.014) (0.014) (0.011) (0.014) (0.075) (0.038) score Logarithm of -0.385 -0.611 -0.609 -1.071 -0.856 -0.489 -0.531 assets (0.305) (0.670) (0.693) (0.697) (0.726) (0.313) (0.698) Logarithm of 0.356 0.633 -0.0993 sales (0.704) (0.740) (0.450) Listed -0.0160 -1.681 (1.486) (1.596) Transparency 0.00035 0.0032 benchmark (0.005) (0.002) score * logarithm of assets Constant 4.495*** 9.322* 8.081 8.066 10.65 8.295 5.765 5.309 6.331 -0.674 (-1.321) (-4.038) (-5.546) (-5.740) (-7.456) (-7.782) (-5.018) (-7.371) (9.802) (3.347)

Industry No No No No Yes Yes Yes Yes Yes Yes

N 164 164 127 127 127 127 164 127 164 164

R square 0.000 0.010 0.010 0.010 0.176 0.185 0.171 0.174 0.171 0.168

Adjusted R -0.006 -0.002 -0.014 -0.023 0.073 0.074 0.099 0.071 0.093 0.096

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5. Conclusion

The aim of this research has been twofold: to identify whether Dutch listed companies disclose more CSR information than non-listed companies and whether the level of CSR disclosure relates to the financial performance for Dutch companies for the period 2014-2015. The transparency benchmark, developed by the Dutch Ministry of Economic Affairs, was used in order to measure the level of CSR disclosure. This benchmark measures the quality of publicly available and annually published

documents of a company.

The total sample consisted of 192 Dutch companies, of which 67 were listed. To test the difference between level of CSR disclosure of listed and non-listed companies, a t-test on the differences of the means was used. Moreover, a multiple regression was performed where the transparency benchmark score was the independent variable and the dummy listed the dependent variable. Control variables included the size of a company and industry fixed effects. Secondly, to test the relation between the level of CSR disclosure and financial performance, a multiple regression was performed as well. The independent variable was the return of assets, the dependent variable the transparency benchmark score. Control variables included size, industry fixed effects, the dummy listed and an interaction variable between size and transparency benchmark score.

The results reveal that listed companies do not disclose more CSR information than non-listed

companies. This is not in line with theory stating that listed companies are more visible in society, and therefore receive greater demand from stakeholders to disclose information. Still, the size of a

company does show to be significant, affirming the theory that larger companies disclose more CSR information. For these results it should be noted that the null scores on the transparency benchmark were excluded, as no analysis on the information of a firm had been conducted and influence and shift the data heavily.

Moreover, no significant relationship exists between the level of CSR disclosure and financial performance. Also when various variables are controlled for, no relation was found at all. Furthermore none of the control variables show significant influence on the financial performance of a company. This contradicts the theory that financially sound firms have more resources to allocate to CSR disclosure and therefore a positive relationship exists. It does provide evidence for the argument that the relationship is more complex, including the suggestion of a lagged relationship.

Lastly, several industries showed notable different scores on the transparency benchmark. Larger means were found in the energy, metal and transport sector, whereas lower ones were found in the publishing and retails industries. This supports the theory that this sector faces stricter environmental regulations and therefore is likely to disclose more information.

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Appendix 1: Population sample

Company name:

1. 2 SISTERS EUROPE B.V. 2. A. HAKPARK B.V.

3. AALBERTS INDUSTRIES N.V. 4. ABN AMRO GROUP N.V. 5. ACCELL GROUP NV

6. ACE INNOVATION HOLDING B.V. 7. ACHMEA INTERNE DIENSTEN N.V. 8. AEGON NEDERLAND N.V. 9. AERCAP HOLDINGS N.V. 10. AGRIFIRM FEED B.V. 11. AIRBUS GROUP SE 12. AKZO NOBEL NV 13. ALBRON NEDERLAND B.V. 14. ALLIANDER N.V. 15. AMSTERDAM COMMODITIES N.V. 16. ANWB B.V.

17. APERAM STAINLESS EUROPE 18. APG ASSET MANAGEMENT N.V. 19. ARCADIS N.V.

20. ASM INTERNATIONAL NV 21. ASML HOLDING N.V. 22. ASR NEDERLAND NV

23. ATRADIUS CREDIT INSURANCE N.V. 24. AUDAX B.V.

25. B & S INTERNATIONAL B.V. 26. BALLAST NEDAM INFRA B.V.

27. BANK NEDERLANDSE GEMEENTEN NV, BNG 28. BAVARIA N.V.

29. BE SEMICONDUCTOR INDUSTRIES N.V.

30. BELEGGINGSMAATSCHAPPIJ BRAVERASSA B.V. 31. BETER BED HOLDING NV

32. BIDVEST DELI XL B.V. 33. BINCKBANK NV

34. BLOKKER HOLDING B.V.

35. BRABANTSE ONTWIKKELINGS MAATSCHAPPIJ HOLDING B.V. 36. BRUNEL INTERNATIONAL NV 37. CATOM B.V. 38. CENTRIC HOLDING B.V. 39. CIMPRESS N.V. 40. COMORE B.V. 41. COOP HOLDING B.V. 42. COOPERATIE AVEBE U.A.

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43. COOPERATIE KONINKLIJKE COSUN U.A. 44. COOPERATIEVE RABOBANK U.A.

45. CORBION N.V.

46. CREDIT EUROPE BANK N.V.

47. DAMEN SHIPREPAIR ROTTERDAM B.V. 48. DE PERSGROEP NEDERLAND B.V. 49. DELOITTE HOLDING B.V. 50. DELTA N.V. 51. DOC KAAS B.V. 52. DOCDATA NV 53. DOW BENELUX B.V. 54. DPA GROUP N.V.

55. DURA VERMEER GROEP N.V. 56. DUTCH FLOWER GROUP B.V. 57. ENECO HOLDING N.V.

58. ENEXIS HOLDING N.V.

59. ERASMUS UNIVERSITEIT ROTTERDAM HOLDING B.V. 60. ERNST & YOUNG (CIS) B.V.

61. ESPERITE N.V. 62. EURETCO HOLDING B.V. 63. EUROCOMMERCIAL PROPERTIES N.V. 64. EXACT HOLDING NV 65. FAGRON NV 66. FORBO FLOORING B.V. 67. FORFARMERS NEDERLAND B.V. 68. FUGRO NV 69. GASTERRA B.V. 70. GEMALTO N.V. 71. GRONTMIJ NV 72. GRONTMIJ NV 73. GVB HOLDING N.V. 74. HAVENBEDRIJF ROTTERDAM N.V. 75. HEIJMANS NV 76. HEINEKEN NV 77. HEMA B.V. 78. HERTEL HOLDING B.V.

79. HOLDING NATIONALE GOEDE DOELEN LOTERIJEN N.V. 80. HOLIDAY HOLDING ROTTERDAM B.V.

81. HUISHOUDELIJKE HULP KWADRANTGROEP B.V. 82. HURKS GROEP B.V.

83. ICS GROEP B.V.

84. IHC MERWEDE HOLDING B.V. 85. IMC B.V.

86. ING GROEP NV

87. INGKA HOLDING B.V.

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89. JOH. MOURIK & CO. HOLDING B.V. 90. JUMBO GROEP HOLDING B.V. 91. KARDAN N.V.

92. KAS BANK NV 93. KENDRION N.V.

94. KONINKLIJKE AHOLD NV 95. KONINKLIJKE BAM GROEP NV

96. KONINKLIJKE BOSKALIS WESTMINSTER NV 97. KONINKLIJKE BRILL NV

98. KONINKLIJKE DSM N.V.

99. KONINKLIJKE FRIESLANDCAMPINA N.V. 100. KONINKLIJKE HASKONINGDHV GROEP B.V. 101. KONINKLIJKE KPN NV

102. KONINKLIJKE LUCHTVAART MAATSCHAPPIJ N.V. 103. KONINKLIJKE PHILIPS N.V.

104. KONINKLIJKE VOLKER WESSELS STEVIN N.V. 105. KONINKLIJKE VOPAK N.V.

106. KONINKLIJKE WESSANEN N.V. 107. KPMG N.V.

108. KRAMP GROEP B.V.

109. LEASEPLAN CORPORATION NV 110. LOUIS DREYFUS COMPANY B.V. 111. MACINTOSH RETAIL GROUP NV 112. MN SERVICES N.V.

113. MONUTA HOLDING N.V. 114. N.V. HVC

115. N.V. LUCHTHAVEN SCHIPHOL

116. N.V. NEDERLANDSCHE APPARATENFABRIEK "NEDAP" 117. N.V. NEDERLANDSE GASUNIE

118. N.V. NEDERLANDSE SPOORWEGEN 119. N.V. NUON ENERGY

120. NEDERLANDSE WATERSCHAPSBANK NV 121. NEWAYS ELECTRONICS INTERNATIONAL N.V. 122. NIBC BANK NV 123. NIDERA B.V. 124. NN NETHERLANDS B.V. 125. NUTRECO N.V. 126. NXP SEMICONDUCTORS N.V. 127. OCI N.V

128. ONTWIKKELINGSMAATSCHAPPIJ OOST NEDERLAND N.V. 129. ONVZ ZIEKTEKOSTENVERZEKERAAR NV

130. ORANJEWOUD N.V. 131. ORDINA N.V.

132. OWM DSW ZORGVERZEKERAAR UA 133. PERFETTI VAN MELLE GROUP B.V. 134. PGGM N.V.

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135. PLUS HOLDING B.V. 136. POSTNL N.V. 137. PRICEWATERHOUSECOOPERS EE HOLDINGS B.V. 138. PRORAIL B.V. 139. Q PARK N.V. 140. RANDSTAD HOLDING NV 141. REFRESCO GROUP N.V. 142. RELX NV

143. ROCKWOOL BENELUX HOLDING B.V. 144. ROTO B.V.

145. ROYAL BANK OF SCOTLAND NV (THE) 146. ROYAL DUTCH SHELL PLC

147. ROYAL IMTECH N.V. 148. ROYAL TEN CATE NV 149. SBM OFFSHORE N.V.

150. SIEMENS NEDERLAND N.V. 151. SLIGRO FOOD GROUP N.V. 152. SNS BANK N.V.

153. STERN GROEP NV 154. STICHTING ESPRIA

155. STICHTING ZORGPARTNERS FRIESLAND 156. TBI HOLDINGS B.V.

157. TELE2 NETHERLANDS HOLDING N.V. 158. TELEGRAAF MEDIA GROEP N.V. 159. TENNET HOLDING B.V. 160. THE GREENERY B.V. 161. TKH GROUP N.V. 162. TMF GROUP HOLDING B.V. 163. TNO BEDRIJVEN B.V. 164. TNT EXPRESS N.V. 165. TOMTOM NV

166. TUI NEDERLAND HOLDING N.V. 167. TWYNSTRA GUDDE HOLDING B.V. 168. UNICA GROEP B.V.

169. UNILEVER GROUP 170. UNIPER BENELUX N.V.

171. UNIVERSITEIT NYENRODE B.V. 172. USG PEOPLE N.V.

173. VAN DEN BAN GROUP HOLDING B.V. 174. VAN LANSCHOT NV

175. VAN LEEUWEN BUIZEN GROEP B.V. 176. VAN OORD N.V.

177. VAN WIJNEN GROEP N.V. 178. VASTNED RETAIL N.V. 179. VDL GROEP B.V.

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181. VGZ ORGANISATIE B.V. 182. VIMPELCOM HOLDINGS B.V. 183. VION HOLDING N.V.

184. VITENS N.V.

185. VODAFONE LIBERTEL B.V. 186. VOS LOGISTICS BEHEER B.V. 187. VREUGDENHIL GROEP B.V. 188. WAVIN N.V.

189. WOLTERS KLUWER NV 190. YARDEN HOLDING B.V. 191. ZEEMAN GROEP B.V.

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Appendix 2: Descriptive statistics

Table 5: Descriptive statistics for 2014

Table 6: Descriptive statistics for 2015

Descriptive statistics 2014 Listed Unlisted All

Mean Mean Std. Dev. Min Max N

Transparency benchmark

score 106 107 106 54 6 195 179

ROA 4.14 4.61 4.18 7.47 -24.62 42.01 182

Assets (million euros) 13408 2999 18718 90124 1.22 992856 183 Sales (million euros) 12528 3306 6259 30279 3.51 346845 141

Logarithm of assets 14.72 13.39 14.02 2.21 7.11 20.72 183

Logarithm of sales 14.58 13.57 13.84 1.74 8.17 19.66 141

Descriptive statistics 2015 Listed Unlisted All

Mean Mean Std. Dev. Min Max N

Transparency benchmark

score 107 104 105 57 5 196 184

ROA 5.44 4.90 4.80 5.75 -10.17 31.21 99

Assets (million euros) 20156 5313 25809 102615 24.75 841769 99 Sales (million euros) 15434 5697 9763 30279 90.60 243373 74

Logarithm of assets 15.36 13.89 14.57 2.11 10.12 20.55 99

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Table 7: Pearson correlation matrix for 2014

Table 8: Pearson correlation matrix for 2015 Pearson correlation

2014

Transparency benchmark score

ROA Assets Sales Listed

Transparency benchmark score 1.0000 ROA -0.0132 0.8669 1.0000 Assets 0.3730* 0.0000 -0.0967 0.1940 1.0000 Sales 0.3219* 0.0000 -0.0251 0.7676 0.8453* 0.0000 1.0000 Listed -0.0073 0.9243 -0.0032 0.9656 0.2125* 0.0039 0.2574* 0.0021 1.0000 Pearson correlation 2015 Transparency benchmark score

ROA Assets Sales Listed

Transparency benchmark score 1.0000 ROA 0.0887 0.3925 1.0000 Assets 0.4191* 0.0000 -0.0905 0.3728 1.0000 Sales 0.2921* 0.0141 -0.0099 0.9334 0.8766* 0.0000 1.0000 Listed 0.0298 0.6880 0.0280 0.7830 0.2015* 0.0455 0.3381* 0.0032 1.0000

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Banking 107 17 Chemicals 106 7 Construction 116 13 Food 113 11 Energy 141 10 Machinery 104 12 Metals 146 1 Services 102 62 Publishing 76 7 Transport 147 17 Retail 88 10 Other 128 7 All 106 174

Banking 100 17 Chemicals 107 7 Construction 106 13 Food 113 11 Energy 153 10 Machinery 114 12 Metals 105 1 Services 104 62 Publishing 73 7 Transport 153 17 Retail 88 10 Other 132 7 All 105 174

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Appendix 3: Differences between listed and non-listed companies

Table 11: Means of listed and non-listed companies for 2014

Table 12: Means of listed and non-listed companies for 2015 Transparency benchmark score listed and

unlisted 2015 Listed Unlisted All

Mean Mean

Transparency benchmark score

Including null scores 127 68 52

Transparency benchmark score listed and

unlisted 2014 Listed Unlisted All

Mean Mean

Transparency benchmark score

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T-test on mean

2014 N Mean Std. Err. Std. Dev.

[95% Conf. Interval] Unlisted 113 61 106.78 105.97 4.99 7.01 53.07 54.75 96.89 ; 116.67 91.95 ; 119.99 Listed Combined 174 106.49 4.06 53.51 98.49 ; 114.50 Difference 0.8115 8.52 -16.02 ; 17.64

Difference = mean (unlisted) – mean (listed) t = 0.0952

H0: difference = 0 degrees of freedom = 172

Ha: Difference < 0 Ha: difference !=0 Ha: difference > 0 Pr(T < t) = 0.5379 Pr(T < t) = 0.9243 Pr(T < t) = 0.4621

Table 13: T-test for differences in mean for listed and non-listed companies in 2014

T-test on mean

2015 N Mean Std. Err. Std. Dev.

[95% Conf. Interval] Unlisted 121 63 103.74 107.32 5.23 7.18 57.51 56.97 93.38 ; 114.09 92.97 ; 121.67 Listed Combined 184 104.96 4.21 57.19 96.64 ; 113.28 Difference -3.5819 8.91 -21.15; 13.99

Difference = mean (unlisted) – mean (listed) t = -0.4022

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Table 15: T-test for differences in mean for listed and non-listed companies in 2014, including null scores

T-test on mean 2015

including null scores

N Mean Std. Err. Std. Dev. [95% Conf. Interval] Unlisted 306 67 41.02 100.91 3.56 7.44 62.31 60.87 34.01 ; 48.03 86.06 ; 115.76 Listed Combined 373 51.78 3.42 66.11 45.05; 58.51 Difference -59.89 8.37 -76.35; -47.43

Table 16: T-test for differences in mean for listed and non-listed companies in 2015, including null scores

T-test on mean 2014

including null scores

N Mean Std. Err. Std. Dev. [95% Conf. Interval] Unlisted 263 63 46.88 102.60 3.90 7.18 63.24 57.02 39.20 ; 54.56 88.24 ; 116.97 Listed Combined 326 57.64 3.64 65.80 50.48 ; 64.82 Difference -55.72 8.52 -72.86 ; -38.59

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Table 17: Regression output for listed and the transparency benchmark score for 2014

Table 18: Regression output for listed and the transparency benchmark score for 2015 Listed and transparency benchmark score for 2014 (1) Transparency benchmark Score (2) Transparency benchmark Score (3) Transparency benchmark Score (4) Transparency benchmark Score (5) Transparency benchmark Score (6) Transparency benchmark Score Listed -0.812 -10.80 -16.48 -6.643 -7.395 -3.144 (-0.10) (-1.30) (-1.69) (-0.63) (-0.79) (-0.31) Logarithm of 9.741*** 12.67** 5.725 9.253*** assets (5.31) (2.85) (1.19) (4.51) Logarithm of -0.0185 4.014 8.772** sales (-0.00) (0.82) (3.04) Constant 106.8*** -26.48 -65.16 31.81 13.50 52.44 (21.15) (-1.03) (-1.73) (0.61) (0.39) (1.07)

effects N 174 165 127 127 165 127 Listed and transparency benchmark score for 2015 (1) Transparency benchmark Score (2) Transparency benchmark Score (3) Transparency benchmark Score (4) Transparency benchmark Score (5) Transparency benchmark Score (6) Transparency benchmark Score Listed 3.528 -0.592 -4.275 0.427 0.910 2.222 (0.40) (-0.06) (-0.33) (0.03) (0.08) (0.17) Logarithm of 10.90*** 11.31 3.497 9.634*** assets (4.37) (1.66) (0.48) (3.63) Logarithm of -1.595 2.800 6.005 sales (-0.21) (0.36) (1.50) Constant 103.7*** -37.57 -14.75 86.03 -36.04 89.45 (19.91) (-1.03) (-0.27) (1.26) (-0.79) (1.32)

effects

N 184 95 70 70 95 70

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Table 19: Regression output for listed and the transparency benchmark score for 2014 including null scores

Table 20: Regression output for listed and the transparency benchmark score for 2015 including null scores Listed and transparency benchmark score for 2014 including null scores (1) Transparency benchmark Score (2) Transparency benchmark Score (3) Transparency benchmark Score (4) Transparency benchmark Score (5) Transparency benchmark Score (6) Transparency benchmark Score Listed including 55.72*** 43.20*** 44.45*** 50.98*** 48.20*** 56.77*** null scores (6.40) (4.94) (4.60) (5.16) (5.35) (5.88) Logarithm of 10.10*** 14.14*** 9.402* 7.830*** assets (5.72) (3.68) (2.36) (4.22) Logarithm of -5.821 -3.019 5.133* sales (-1.39) (-0.72) (2.16) Constant 46.88*** -89.19*** -67.12* -48.00 -82.93** -3.865 (12.24) (-3.72) (-2.07) (-1.22) (-2.65) (-0.10)

N 326 312 256 256 312 256 Listed and transparency benchmark score for 2015 including null scores (1) Transparency benchmark Score (2) Transparency benchmark Score (3) Transparency benchmark Score (4) Transparency benchmark Score (5) Transparency benchmark Score (6) Transparency benchmark Score Listed including 59.89*** 31.95** 34.13* 40.63* 34.95** 44.97** null scores (7.16) (2.69) (2.22) (2.44) (2.75) (2.81) Logarithm of 14.98*** 16.91* 7.537 12.23*** assets (5.40) (2.32) (0.94) (4.16) Logarithm of -5.304 1.637 8.515 1.239 sales (-0.64) (0.18) (1.72) (0.14) Constant 41.02*** -136.4*** -87.23 16.23 -108.5* 24.74 (11.56) (-3.49) (-1.36) (0.16) (-2.12) (0.24)

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Appendix 4: Regression output financial performance and transparency

benchmark score

Transparency -0.0018 0.0041 -0.0011 -0.0012 0.0062 0.0053 0.0110 0.0035 0.0059 0.0549 benchmark (0.011) (0.012) (0.013) (0.013) (0.014) (0.014) (0.011) (0.014) (0.075) (0.038) score Logarithm of -0.385 -0.611 -0.609 -1.071 -0.856 -0.489 -0.531 assets (0.305) (0.670) (0.693) (0.697) (0.726) (0.313) (0.698) Logarithm of 0.356 0.633 -0.0993 sales (0.704) (0.740) (0.450) Listed -0.0160 -1.681 (1.486) (1.596) Transparency 0.00035 0.0032 benchmark (0.005) (0.002) score * logarithm of assets Constant 4.495*** 9.322* 8.081 8.066 10.65 8.295 5.765 5.309 6.331 -0.674 (-1.321) (-4.038) (-5.546) (-5.740) (-7.456) (-7.782) (-5.018) (-7.371) (9.802) (3.347)

Industry No No No No Yes Yes Yes Yes Yes Yes

N 164 164 127 127 127 127 164 127 164 164

R square 0.000 0.010 0.010 0.010 0.176 0.185 0.171 0.174 0.171 0.168

Adjusted R -0.006 -0.002 -0.014 -0.023 0.073 0.074 0.099 0.071 0.093 0.096

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Transparency 0.0094 0.0164 0.0137 0.0141 0.0223 0.0223 0.0212 0.0214 0.1380 0.0898 benchmark (0.011) (0.012) (0.014) (0.014) (0.016) (0.016) (0.013) (0.016) (0.088) (0.039) score Logarithm of -0.428 -0.482 -0.617 -0.703 -0.708 -0.537 0.529 assets (0.314) (0.788) (0.823) (0.872) (0.914) (0.333) (0.866) Logarithm of 0.325 0.368 0.295 0.297 -0.376 sales (0.882) (0.889) (0.964) (0.976) (0.483) Listed 0.924 0.0407 (-1.536) (-1.723) Transparency -0.00810 -0.00467 benchmark (0.006) (0.002) score * logarithm of assets 3.610* 9.039* 5.710 6.567 10.41 10.43 10.90* 9.952 0.969 3.078 Constant (-1.475) (-4.248) (-6.343) (-6.531) (-8.527) (-8.655) (-5.434) (-8.482) (12.34) (3.201)

No No No No Yes Yes Yes Yes Yes Yes

Industry 95 95 70 70 70 70 95 70 95 95

N 0.008 0.027 0.016 0.022 0.187 0.187 0.128 0.178 0.147 0.143

R square -0.003 0.006 -0.028 -0.038 -0.001 -0.019 0.000 0.005 0.010 0.017 Adjusted R 5.865 5.838 5.838 5.866 5.761 5.813 5.856 5.743 5.829 5.806 Root MSE 0.00949 0.0164 0.0137 0.0141 0.0223 0.0223 0.0212 0.0214 0.138 0.0898

Corporate social responsibility disclosure : relation with exchange listing and financial performance for Dutch companies