Has the COVID-19 pandemic helped the top management of big Russian companies think more about employees?

In Russia, a lot of attention is paid to non-financial reporting of a company, investors pay attention to a comprehensive disclosure of non-financial reporting in the annual reports of companies. The purpose of the study is to assess the impact of social aspect disclosure of non-financial corporate reporting on the value of company shares in the periods before and after the coronavirus pandemic. The research methodology includes panel regression, textual analysis, and quantitative analysis indicators of the social content of companies’ annual reports. Drawing on the results of machine learning and LDA, the author compiled main “topics” of words, selected during the study of Russia’s peculiarities and mentality of investors: what is the primary attention of investors while studying the social policy of a company. The glossary incorporates 110 words and phrases recurrent in the text of annual reports and devoted to social policy. These words are subdivided into separate topics (employee health, labor conditions, social network for personnel, employee development, social activity). The findings show that in the period of 2021-2022, social factors began to play a more important role in the process of shaping investment attractiveness. Evaluation of indicators for two periods, referred to as “pre-Covid” and “post-Covid”, made it possible to prove an increase in the number of significant social factors on the value of company’s shares. Thus, if in 2018-2019 only 3 significant indicators were identified, then in 2020-2021 the number of significant social variables increased to 9, which confirms hypothesis 3. It was found that social policy indicators have a direct relationship (working conditions, average number of training hours) and the reverse (ATS, injuries, social investments). We confirm the theoretical contribution of the signaling theory, since the signals associated with social policy influence investors and the decisions they make.

1. Ankudinov, A. B., Badykova, I. R., & Markhanova, E. S. (2018). Empirical analysis of the relationship between the costs of professional development of employees and the financial efficiency of Russian companies. Manager, 9(4), 74–83, https://doi.org/10.29141/2218-5003-2018-9-4-8.

2. Smotritskaya, I. I., & Frolova, N. D. (2021). The quality of corporate governance and market capitalization of Russian companies: empirical analysis. Upravlenets, 12(4), 2–15. https://doi.org/10,29141/2218-5003-2021-12-4-1,

3. Fedorova, E. A,, Stepnov, I. M., Drogovoz, P. A., Rashchupkina, A. A, & Remesnik, A. A. (2021). Influence of the level of disclosure of corporate social responsibility on the price of shares: quantitative and textual analysis. Economic Journal of the Higher School of Economics, 25(3), 423–451. https://doi.org/10.17323/1813-8691-2021-25-3-423-451,

4. Zakhmatov, D. Yu., & Valitov, G. Sh. (2022). Influence of ESG Factors on the Market Capitalization of Russian Companies. Siberian Financial School, 3(147), 183–192. https://doi.org/10.34020/1993-4386-2022-3-183-192.

5. Ahmad, N., Mobarek, A., & Roni, N. (2022). Revisiting the impact of ESG on financial performance of FTSE350 UK firms: Static and dynamic panel data analysis. Cogent Business & Management, 8, 1–18. https://doi.org/10.1080/23311975.2021.1900500.

6. Ahsan, H., & Dinithi, R. (2022). Labor investment effi ciency and credit ratings. Finance Research Letters, 48, 102924. https://doi.org/10.1016/j.frl.2022.102924.

7. Albert, T., Tracie, F., & Huijuan, C. (2023). Environmental, Social, and Governance (ESG) disclosure: A literature review. The British Accounting Review, 55, 101149. https://doi.org/10.2139/ssrn.4270942.

8. Ankiewicz, M. et al. (2021). Effectiveness of investing in socially responsible companies during the COVID-19 pandemic. Procedia Computer Science, 192, 4732–4740. https://doi.org/10.1016/j.procs.2021.09.251.

9. Bolognesi, E., & Burchi, A. (2023). The impact of the ESG disclosure on sell-side analysts’ target prices: The new era post Paris agreements. Research in International Business and Finance, 64, 101827. https://doi.org/10.1016/j.ribaf.2022.101827.

10. Cong, C. & Xu, Qianwen. (2022). A new perspective on extra consumer costs for green parcel packaging — An exploration of signal theory and green values. Journal of Cleaner Production, 382, 135361. https://doi.org/10.1016/j.jclepro.2022.135361.

11. Fatma, H. Er. K., Emrah, K., & Bodo, B. S. (2022). Corporate social responsibility news and stock performance: A systematic literature review. Borsa ˙ Istanbul Review, 23(2), 443– 463. https://doi.org/10.1016/j.bir.2022.11.017 p.443-446.

12. Halder, Ya., Luna, S-R., & Beatriz, P-F. (2022). Relationship CSR and employee commitment: Mediating effects of internal motivation and trust. European research on management and business economics, 28, 100185. https://doi.org/10.1016/j.iedeen.2021.100185.

13. Hörisch, J., Freeman, R. E., & Schaltegger, S. (2014). Applying Stakeholder Theory in Sustainability Management: Links, Similarities, Dissimilarities, and a Conceptual Framework. Organization & Environment, 27(4), 328–346. https://doi.org/10.1177/1086026614535786.

14. Jieying, G., Dongxiao, Ch., Jun, Zh., & Tao, Ye. (2022). Environmental, social and governance performance: Can it be a stock price stabilizer? Journal of Cleaner Production, 379, 134705. https://doi.org/10.1016/j.jclepro.2022.134705.

15. Juanjuan, Zh., Yuming, Zh., & Yongkun, S. (2022). Restart economy in a resilient way: The value of corporate social responsibility to fi rms in COVID-19. Finance Research Letters, 247, 102683. https://doi.org/10.1016/j.frl.2022.102683.

16. Khorin, A., & Krikunov, A. (2021). ESG-risk factors and value multiplier of telecommunications companies. Journal of Corporate Finance Research, 15(4), 56–65. https://doi.org/10.17323/j.jcfr.2073-0438.15.4.2021.

17. Rui, A., Zhen, Sh., Chen, L., Changhui, Ya., & Qingru, Zh. (2022) The relationship between CSR and financial performance and the moderating eff ect of ownership structure: Evidence from Chinese heavily polluting listed enterprises.Sustainable Production and Consumption, 30, 117–129. https://doi.org/10.1016/j.spc.2021.11.030.

18. Syrus, M. Is., & Ahsan, H. (2022). How impact investing fi rms are responding to sustain and grow social economy enterprises in light of the COVID-19 pandemic. Journal of Business Venturing Insights, 18, 00347. https://doi.org/10.1016/j.jbvi.2022.e00347.

19. Tahir, Is., Rauf, Is., Abdul, H. P., Liang, X., Mahmood, R., Muhammad, Ir., & Muhammad, Sh. M. (2021). The impact of corporate social responsibility on customer loyalty: The mediating role of corporate reputation, customer satisfaction, and trust. Sustainable Production and Consumption, 25,123–135. https://doi.org/10.1016/j.spc.2020.07.019,

20. Xi, Zh., Weihong, Ch., & Ge, R. (2022). The impact of corporate social irresponsibility on emerging-economy firms, long-term performance: An explanation based on signal theory. Journal of Business Research, 144, 345–357. https://doi.org/10.1016/j.jbusres.2022.02.005.

21. Zhongfei, Ch., & Guanxia, X. (2022). ESG disclosure and financial performance: Moderating role of ESG investors. International Review of Financial Analysis, 83, 102291. https://doi.org/10.1016/j.irfa.2022.102291.