Disclosure Quality, Legitimacy, and Investor Resilience: Replicating Zahller, Arnold, and Roberts (2015) in a post-CSRD semiconductor setting

Details

Supervisors

De Winne, Rudy

Faculty

Louvain School of Management

Degree label

Master [120] en sciences de gestion, à finalité spécialisée

Abstract

enCorporate sustainability reports have never been more detailed, or more distrusted. As disclosure volume grows under regulations like the EU Corporate Sustainability Reporting Directive (CSRD), the report itself stops signalling anything. What matters is its quality. Zahller, Arnold, and Roberts (2015) provided the only experimental evidence that CSR disclosure quality builds investor trust that protects firms during a crisis, but their study is a decade old, set in a voluntary disclosure regime, a low-materiality sector, and a narrower investor population than exists today. This thesis retests that pathway under conditions Zahller et al. couldn’t: a post-CSRD regulatory environment, the semiconductor sector, and a population of retail investors recruited via Prolific (N = 90). A 2×2 between-subjects experiment manipulated the accuracy and completeness of a fictional semiconductor firm's CSR report. Perceived organisational legitimacy was measured before an exogenous sector wide shock, and social resilience after it. Moral Awareness was tested as an individual level moderator. Neither accuracy nor completeness affected the composite resilience measure directly. Both, however, raised perceived legitimacy, and legitimacy fully mediated their effect on resilience (replicating Zahller et al.'s pathway). The accuracy-legitimacy coefficient found here (β = .31) is nearly identical to their original estimate (β = .335) despite every surrounding condition having changed, evidence that the mechanism travels across contexts rather than being specific to the original study. Completeness's effect on legitimacy was stronger here than in 2015, consistent with disclosed shortfalls retaining signalling value even once broad coverage became a legal requirement. Moral Awareness couldn’t be meaningfully tested due to a pronounced ceiling effect in the sample. Exploratory item-level analysis suggests social resilience is not a single behaviour. Legitimacy fully explains why better disclosure reduces investors' intention to divest, exactly as the theory predicts. It explains nothing, however, about investor patience during a slow recovery: there, completeness has a direct, unexpected effect of its own, leaving investors less patient once a firm has admitted its own shortcomings. A pattern with some resonance to backfire effects documented elsewhere in the CSR literature. This difference, while exploratory, suggests disclosure quality protects some investor behaviours more than others, rather than resilience uniformly, and that "social resilience" may be better understood as several distinct investor responses than a single construct.