Between Risk and Responsibility: Economic Policy Uncertainty, CSR Disclosure, and Affiliated Directors

ABSTRACT This study examines the impact of economic policy uncertainty (EPU) on corporate social responsibility (CSR) reporting and assurance, emphasizing the role of affiliated directors in this relationship. Using a sample from 21 countries, covering the period from 2002 to 2021, the study employs country, industry, and year fixed‐effects regressions to analyze the relationship between EPU and CSR reporting and assurance. The study further examines the moderating role of board affiliations on CSR reporting and assurance. We find that EPU increases the CSR reporting tendency of firms, though it does not significantly affect the likelihood of obtaining third‐party assurance for CSR reports. Additionally, the study shows that affiliated directors play a critical role in promoting CSR reporting and getting third‐party assurance during EPU, thereby helping to lessen information asymmetry between managers and stakeholders. The findings highlight the importance of board affiliations in navigating firms during periods of uncertainty by inducing them to engage in corporate CSR disclosure.