Theoretical Review on the Role of Corporate Social Responsibility (Cross-organizational Ethics) in Earning Forecasting by Investors

The purpose of this study is to review on the role of corporate social responsibility (Cross-organizational ethics) in earning forecasting by investors؛ that expands the literature by examining two reasons which may reduce the ability of investors to forecasting future earnings. Firstly, according to the agency and stakeholder theory that explain the management's motivation for performing corporate social responsibility activities, corporate goals for providing social responsibility activities are typically diverse. Therefore, it is difficult to identify investors' indices to predict the required returns based on the resources allocated to social responsibility activities. Secondly, resources devoted to corporate social responsibility activities are invisible, because the costs of these activities are usually compounded by sales, public and administrative costs. There is also not enough information for investors to measure resources spent on social responsibility activities. As respects to providing information about the expected earnings of a company has an impact on stakeholder decision-making it is expected that companies that are committed to social responsibility indicators In order to respond to shareholders and other stakeholders, in anticipation of earnings, they have the necessary and sufficient accuracy in order to protect the rights of stakeholders and minimize their bias and personal judgments in predicting profit. Finally, the Intensity of corporate social responsibility activities reduces the ability of investors to predict future earnings and determining the company's corporate social responsibility costs by selling, public and administrative costs reduces the ability of investors to predict future earnings.