CSR Disclosure and Price Discovery Efficiency in MENA Firms: The Moderating Roles of Foreign Directors and Shareholders

This study investigates the impact of Corporate Social Responsibility disclosure (CSRD) on the price discovery efficiency of 220 non‐financial firms listed on stock exchanges across 10 MENA countries from 2010 to 2022. We analyze how CSRD influences the speed at which new information is incorporated into stock prices. Our findings indicate that global CSRD and all CSRD components (environmental disclosure, social disclosure, human rights disclosure and employee disclosure) decrease pricing efficiency by amplifying information asymmetry. We conclude that CSRD acts as noise rather than a credible signal. Additionally, our study shows that foreign directors exert a beneficial moderating effect on the relationship between CSRD (including the overall CSRD measure and the four components) and price discovery efficiency. Finally, foreign shareholders serve as a positive moderator in the relationship between CSRD (including the overall CSRD measure, environmental disclosure component, and employee disclosure component) and price discovery efficiency.