Corporate social responsibility has evolved as a business strategy, but the business worth of voluntary social conduct has not been well understood. The contradictory research findings mean that social performance is not maximized, which constrains economic growth and sustainable development. Grounded by stakeholder theory, this correlational study was aimed at examining the effect of social responsibility factors on the market-based Fama-French cost of capital. Within a sample of 71 United States banks, the publicly available ethical ratings, financial data, and stock market data were analyzed using multiple regression models. Contrary to the positive effect of social conduct on financial performance common in the literature, this study revealed no significant effect of social factors on the accounting returns, and, consequently, the shareholders perceived the social activities as risky and therefore demanded higher returns. The study also showed that governance, diversity, and employee relation were positively related to accounting returns while product and community factors were negatively related to profits. The implied higher cost of raising equity finance following engagement in social activities is a lesson for corporate managers to exercise caution in their social conduct and carry the investors along. Such inclusive policy could help to minimize investor bias and moderate their consequential adverse reactions to well-intentioned corporate actions. This research contributes to positive social change by assisting the bank managers, directors, investors, regulators, and government in improving the discharge of their respective roles to ensure optimal allocation of resources to competing social activities in a manner that may maximize performance and improve the overall stakeholder wellbeing.

This thesis investigates whether IFRS adoption has led to an increase in the relevance of accounting information for investment decisions. Furthermore, the effects of IFRS are implicitly compared across accounting traditions. As such,  the effects of IFRS on the “quality” of financial reporting are measured based on the cases of listed firms in Germany and listed firms in the UK. This study approaches the effects of IFRS on the quality of financial reporting from two angles. First a review of the academic literature is done to determine whether there has been a general consensus about the effects of IFRS adoption on financial reporting of listed firms in Germany and the UK. As a result of this literature study, a number of propositions are deduced about the effects of IFRS. Subsequently, the investigation of the effects of IFRS takes a statistical perspective. Financial and accounting data are obtained for two samples, one of German listed firms and another of UK listed firms. A number of empirical models are used to determine the quality of financial reporting, including the earnings-returns association (Lev ,1989; Lev & Zarowin, 1999), asymmetric sensitivity of earnings and asymmetric persistence of earnings (Basu, 1997), and the market-to-book ratios (Roychowdhury & Watts, 2003). Additionally, a new tool is introduced for a joint interpretation of the econometric test results, leading potentially to a new method of financial report analysis under dynamic regulatory conditions. Significant statistical evidence is found suggesting a drastic reduction (to the point of complete elimination) in income smoothing in Germany corresponding to the transition from the German national GAAP to IFRS. Additionally, with the introduction of IFRS, the information content of accounting earnings in German firms appears to have increased substantially, while market-to-book ratios have converged towards “1”. On the other hand, the introduction of IFRS in the UK corresponds to statistical evidence consistent with a shift from asymmetric timeliness of earnings under UK GAAP to a significant downward bias in earnings under IFRS. The study also shows significant inter-industry differences in the effects of IFRS that suggest that the inconsistencies in the results of previous studies may have been due to the significant noise created by diverse samples, or due to biased industry representations in the data.