Abstract Government orchestration describes regulatory settings in which governments delegate some governance functions to private actors; for instance, business conduct is monitored by stakeholders under CSR disclosure regulation. This article examines the impact of this type of regulation on stakeholder monitoring, which is a core yet little‐examined governance function. We analyse the effects of the European Union's Non‐Financial Reporting Directive (NFRD) on stakeholder accusations and on the relationship between CSR and accusations across firms in 28 OECD countries (2007–2018) using a difference‐in‐differences design. The analysis shows that government orchestration significantly increases the number of stakeholder accusations by inducing a transparency dynamic. It also demonstrates a fundamental shift in how reported CSR relates to stakeholder accusations. In the past, companies were able to protect themselves from accusations by publicly reporting their CSR efforts. More recently, two patterns have emerged: where no disclosure regulation exists, CSR no longer buffers firms against accusations; under regulation, it produces a ‘backfire effect’ whereby CSR increases accusations. These findings advance research on the government–CSR nexus and social evaluations and offer a contextual explanation for previously inconsistent results on the link between CSR and stakeholder accusations.
Bartosch et al. (Fri,) studied this question.
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