Abstract: With the rapid growth of China's economy, there are a number of social problems have appeared. In particular, the frequent absence of corporate social responsibility(CSR) has caused a strong demand for CSR information disclosure. In December 2008, China's Securities Regulatory Commission(CSRC), Shanghai Stock Exchange and Shenzhen Stock Exchange jointly issued a notice to require some listed companies disclosing CSR reports. This rule change indicates the beginning of the era of mandatory CSR disclosure in China, which has aroused widespread academic concerns on the economic consequences of CSR disclosure. Among them, the impact of CSR disclosure on the market level has been the research focus, but whether it will ultimately affect the development of micro real economy remains unclear. As a national compulsory policy, mandatory CSR disclosure changes the performance of CSR activities and has an important impact on its resource allocation. In these circumstances, this study attempts to provide evidence for the economic consequences of mandatory CSR disclosure in the microeconomic entity from the perspective of enterprise innovation performance, meanwhile, to explore its internal mechanism.Follow the ideas above, this paper uses the quasi-natural experiment of mandatory CSR disclosure policy, taking A-share listed companies in Shanghai and Shenzhen stock markets from 2003 to 2016 as samples, and applies the PSM-DID method to investigate the impact of mandatory CSR disclosure on companies' innovation performance. Stata14 is implemented to complete the data processing and analysis, and all continuous variables are winsorized at level 1% and99%. Finally, 1603 sample companies, a total of 7010 firm-year observations are obtained.In this paper, we find that mandatory CSR disclosure significantly promotes the firm's innovation performance,which shows up in the raising number of patent applications. Compared with non-invention patents, the number of invention patents increases significantly. This indicates that the mandatory CSR disclosure policy not only increases the innovation quantity, but also promotes the innovation quality which represents the technological progress and competitive advantage of companies. Meanwhile, this relation is more significant when firms under severe information asymmetry, financing constraints, and with more agency conflict, which indicates that the mechanism of mandatory CSR disclosure in promoting innovation performance is to alleviate information asymmetry and agency problems. Further research found that the improved innovation performance is mainly focused on the firms with higher disclosure quality and greater political and social risks. This indicates that the information effect of mandatory disclosure is mainly achieved by transmitting risk information to external stakeholders, so as to alleviate the information asymmetry between them. Besides, after the implementation of mandatory CSR disclosure, firms gain more commercial credit financing and bank loans.Overall, as an important transition of China's information disclosure system, mandatory CSR disclosure has played a positive role in promoting the development of China's real economy. This finding expands the research on mandatory CSR disclosure and micro enterprise behavior, importantly, providing a useful reference for policy makers to understand the pros and cons of mandatory CSR disclosure system and improve it in the future. However, the study also has some limitations. Future research might compare and analyze the different effects between mandatory CSR disclosure and voluntary disclosure, so as to provide more powerful evidence for exploring the effectiveness of the mandatory disclosure policy.
Key words: mandatory social responsibility disclosure; innovation performance; information asymmetry; agency cost