Which firms opt for corporate social responsibility assurance? A machine learning prediction

Abstract

On the background of voluntary assurances made by corporations in line with the assertions in their corporate social responsibility disclosures, we investigate which types of firms will obtain an independent certification of their corporate social responsibility disclosures. The study is based on firms listed on the Johannesburg Stock Exchange (JSE) from 2015 to 2019. Deviating from traditional regression approaches, we employ machine learning techniques and show that machine learning techniques obtain superior performance compared to traditional logistic regression at predicting the likelihood of corporate social responsibility assurance by a corporation. The result also shows that large firms with high CSR score, independent board, highly leveraged and belonging to finance industry are the most likely to assure their CSR disclosures.