In this paper we address the impact of the introduction of the National Greenhouse and Energy Reporting scheme on corporate carbon reporting, and subsequently identify factors that influence the level of voluntary carbon reporting. A review of the literature demonstrates a large number of potential factors have been previously deployed to explain voluntary reporting practices; however, the analytical and empirical methods widely used in the literature have limiting statistical assumptions and confine analysis to a small number of explanatory factors. To address this limitation in prior research we apply advanced machine learning methods, such as gradient boosting machines and random forests, to identify predictive variables through analytical means. We compare the performance of machine learning methods with traditional methods such as logistic regression. We find that machine learning methods significantly outperform logistic regression and provide fundamentally different interpretations of the role and influence of different predictive variables on voluntary carbon reporting. While most variables were not statistically significant in the logit results, a number of key proxies for financial performance, corporate governance, and corporate social responsibility have out-of-sample predictive power of the level of voluntary carbon reporting in the machine learning analysis.

We examine the value-relevance of corporate social responsibility (CSR) expenditure utilizing the Indian setting of mandatory CSR spending regulation which commenced in 2014. India is the only country where regulators mandate both CSR reporting and spending. Our interest is in two types of firms that meet the minimum specified thresholds: firms that voluntarily made CSR expenditures pre-regulation (voluntary spenders) and firms that did not (forced spenders). This separation in revealed preference allows researchers and investors to observe, at least on average, a firm's true CSR strategy type (proactive/leader versus reactive/follower) through their pre-regulation expenditure strategy. This unique quasi-experimental setting allows us to investigate whether CSR spending is positively associated with shareholders’ value, both when spending was voluntary pre-regulation (for voluntary spenders) and after it became mandatory post-regulation (for voluntary and forced spenders). We find that for voluntary spenders, the markets assess CSR expenditure as valuation-enhancing pre-regulation, but post-regulation the valuation benefits are significantly weakened. The market's assessment is that a forced spender's (imposed) CSR expenditure is, on average, less valuable than that of voluntary spenders, consistent with such spending being viewed as a form of corporate taxation. Further, we find that shortfalls from the required spending amount are penalized by the market for voluntary spenders but rewarded for forced spenders. We also find that advertising appears to play an important communication role both pre- and post-regulation. We view the results as being consistent with the notion that mandated expenditures are viewed differently than those made voluntarily.