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Motivations for issuing standalone CSR reports: A survey of Canadian firms
Abstract
Purpose
– The purpose of this paper is to provide insight into the companies’ motivations to issue or not issue voluntary standalone corporate social responsibility (CSR) reports in the Canadian context.
Design/methodology/approach
– The authors realized a questionnaire survey that asked Canadian companies why they do or do not issue standalone CSR reports, what their motivations and costs are, and the extent to which they comply with GRI guidelines.
Findings
– The results show that larger firms issue standalone CSR reports. As larger firms have more political visibility and are subject to greater external scrutiny than smaller firms (Watts and Zimmerman, 1986), the findings indicate that firms primarily issue standalone CSR reports in response to external scrutiny by stakeholders, which is consistent with a stakeholder perspective. The survey also identifies that ancillary motivations for Canadian firms for issuing standalone CSR reports are consistent with legitimacy and signalling perspectives.
Research limitations/implications
– The authors acknowledge that the generalizability of the findings is limited due to the sample being situated within a single national context. The inferences drawn from such a sample in Canada may not be applicable to other countries with different national institutional contexts. In addition, the small size of the sample may limit the generalizability of the findings. The authors also did not specifically consider the quality of the CSR reports in the study. Finally, the work may be affected by the inherent weaknesses associated with survey research, including the inherent bias of the individuals responding to the survey.
Originality/value
– The research adds to the growing body of research on voluntary CSR disclosures, with particular reference to the Canadian context.
... There are still no mandatory SR requirements for SMEs (Dias et al., 2019;Thorne et al., 2014), which may explain the lower level of reporting in these companies (Lee et al., 2017). Other possible reasons include SMEs' lack of both financial and managerial resources for reporting, their low visibility (compared to larger firms; Dienes et al., 2016), the perception that their social and environmental effects are negligible (Cantele & Zardini, 2020), minimal external pressure from stakeholders (Scagnelli et al., 2013) or a lack of awareness of the benefits of reporting (Revell & Blackburn, 2007). ...
... This section provides a comprehensive review of the literature on the business case for SR. This stream of literature is based on insights from the Social and Environmental Accounting (SEA) literature (e.g., Adams, 2002;Dobbs & van Staden, 2016;Thorne et al., 2014), pointing out the costs and benefits associated with SR. Additionally, we draw on prominent literature in the CSR research field (e.g., Carroll & Shabana, 2010;Kurucz et al., 2008) due to the fact that firms' use of sustainability reports has evolved out of CSR policies and actions (e.g., Demir & Min, 2019;Tilt, 2009). ...
... In this vein, organizations undertaking SR activities are associated with a better public image (Adams, 2002;Moneva & Hernández-Pajares, 2018). Over time, firms engaging in SR may "improve their reputation" (Armitage & Marston, 2008;Bebbington et al., 2008;Castilla-Polo & Sánchez-Hernández, 2020;Parsa & Kouhy, 2008;Thorne et al., 2014), which determines the status of the firm within the industry. Furthermore, Girella et al. (2019) concluded that SR can play a valuable role in helping a firm to secure a better position in the value chain of the industry in which they operate. ...
The main aim of this paper is to provide insights into how the business case for sustainability reporting (SR) in SMEs is perceived by two groups of experts (consultants and academics). In particular, we examine how these two groups prioritize a set of costs and benefits associated with this type of reporting. The study draws on the best–worst method, a multicriteria decision‐making technique. Interviews were conducted with consultants and academics to gather detailed information about their perceptions regarding the costs and benefits that may be derived from the implementation of SR in SMEs. Consultants identified “competitive advantage” and “reputation and legitimacy” as the most relevant potential benefits of implementing SR in SMEs, while academics identified the “economic cost” as the most important criterion to be considered in the decision‐making process. Experts' perceptions of the business case for sustainability may encourage nonreporting SMEs to engage in sustainability. The identified gap between consultants and academics in the prioritization of costs and benefits is especially relevant to the emerging field of SR in SMEs. The study addresses an important topic from across the social and environmental accounting literature, the business case for SR in SMEs.
... Chauvey et al., 2015;Venturelli et al., 2017), the reasons that lead companies to adopt this practice (e.g. Duran and Rodrigo, 2018;Thorne et al., 2014) and the effects produced in terms of legitimacy (e.g. Cho and Patten, 2007;De Villiers and Alexander, 2014). ...
... Finally, our results show that non-financial disclosure does not respond only to normativity, stakeholder and corporate legitimization logics (e.g. Chauvey et al., 2015;Cho and Patten, 2007;Thorne et al., 2014) but can be an effective profitability driver (e.g. Buallay, 2020;Singh and Chakraborty, 2021). ...
Purpose
Focusing on the Agri-Food and Beverage sector, the paper investigates the direct effect of worldwide mandatory non-financial disclosure on several financial dimensions as well as its moderating effects on the relationship between sustainability and financial performance.
Design/methodology/approach
The authors performed fixed-effect regressions on a sample of 180 global listed companies, considering a period of eight years. The authors also tested the moderating effects of non-financial disclosure regulation on the relationship between sustainability and financial performance.
Findings
The authors found a positive direct impact of mandatory non-financial disclosure on Operating Return on Asset, Return on Equity and Return on Sales. The analysis also highlighted the negative moderating effects of non-financial reporting regulation on the relationship between sustainability issues and financial performance. As for the Cost of Debt, the authors found mixed results.
Research limitations/implications
This study considers a short-term perspective focusing on a limited sample composed of companies playing a key role in the global agri-food system.
Practical implications
The paper identifies which financial performance dimensions are positively or negatively affected by mandatory non-financial disclosure. Accordingly, managers can rearrange corporate activities to deal with further reporting normative requirements concurrently preserving financial performances and fostering corporate sustainability.
Social implications
This study recommends fostering mandatory non-financial disclosure to increase corporate transparency fostering the sustainability transition of the Agri-Food and Beverage industry.
Originality/value
The paper highlights global mandatory non-financial disclosure effects on financial performance considering a sector that is cross-cutting impactful on plural sustainability issues.
... The latent variable CE Management Strategy (CEMS) was measured as a reflective first-order construct, with 7 items (Baumgartner, 2014;Bettley & Burnley, 2008;Gallardo-Vázquez & Sanchez-Hernández, 2014). CR variable is evaluated as a first-order construct made up of 7 items, based on previous literature (Bhimani et al., 2016;Thorne et al., 2014;Windolph et al., 2014;Hapsoro & Husain, 2019). ...
Awareness about the circular economy as a sustainability paradigm is growing globally, being the agri-food sector one of the most significant industries moving towards circular operations. The natural resource-based view theory can provide a basis to analyze organizational resources and capabilities allowing a clear definition of circular economy strategies and performance. How accounting and reporting can leverage these concepts, is being debated currently at the academic level. In this context, this study examines to what extent Argentinian agri-food organizations use circular reporting to translate circular economy strategy into better performance. Survey data were collected from 238 agri-food Argentinian organizations and analyzed using partial least squares structural equation modeling (PLS-SEM). General results show that a natural resource-based circular economy strategy positively affects performance and circular reporting has a significant indirect effect on environmental and economic performance, through the improvement of natural resource-based circular economy strategies.
... However, motivations behind CSR engagement continue to be debated. According to both the stakeholder and legitimacy perspectives, the purpose of CSR engagement is to manage pressures from stakeholders and regulators (Adams 1999;Caron and Turcotte 2009;Thorne, Mahoney, and Manetti 2014), to meet moral obligations of businesses and social expectations (Roberts 1992;Donaldson and Preston 1995;Gibson 2000), or to enhance organizational trustworthiness (Greenwood and Van Buren 2010). 19 Accordingly, CSR engagement can be considered a legitimizing tool and a public relations exercise (Cho and Patten 2007;Cho, Roberts, and Patten 2010;Thomas and Lamm 2012). ...
The regulatory reform of internal controls (ICs) in China mandates that certain firms incorporate corporate social responsibility (CSR) engagement into ICs and issue IC reports. Using a staggered difference-in-differences research design, we find that IC effectiveness has worsened following this reform, but this deterioration is partially mitigated when mandated firms report their CSR engagement. Additional analyses demonstrate that this deterioration is further lessened when CSR reports are prepared in accordance with Global Reporting Initiative reporting guidelines or assured by external auditors and when firms spend more on CSR activities. Finally, cross-sectional analyses suggest that CSR engagement mitigates the deterioration in IC effectiveness more in non–state-owned enterprises and in firms that have better financial performance, lack political connections, or are located in regions with higher market development or social trust.
Data Availability: Data are available from the public sources cited in the text.
JEL Classifications: M4; M48.
... In this study, the identified sample consists of 61 German companies in the overall healthcare sector. Thorne et al. (2014) focussed on a single country to ensure that corporate governance structures, requirements on reporting, and the reporting culture and behaviour are comparable. 61 companies are HDAX companies of the sectors pharma, medical technology and conglomerates. ...
This study assesses the status quo of sustainability reporting by
German healthcare companies. First, content analysis was conducted based on eight sustainability reports. Second, we developed case studies for three of those firms by investigating the further reporting environment. The results indicate that the specific business sector of a company does not influence its sustainability reporting level. Moreover, the case studies show a differentiated picture in regards to the sustainability activities of those companies. Most companies recognise sustainability as a subordinate part of their company values and often integrate substantial sustainability schemes. Only one company emphasises that sustainability has always been at the core of the company’s philosophy. To ensure a more transparent and sustainable development, this outcome indicates that new laws should not only require the creation of a sustainability report, but also regulate the formalities of it to derive a common standard.
... The tension between sustainability discourse and practice has generated extensive and in-depth studies on voluntary corporate sustainability reporting, often resulting in contradictory conclusions (Milne & Gray, 2013;Unerman & Chapman, 2014). While some authors have supported the potential of nonfinancial reporting to make corporations more accountable and transparent about their social and environmental impacts (Bebbington et al., 2014;Rodríguez & LeMaster, 2007), some studies have called into question the validity of this accounting practice because it tends to be limited in scope (O'Dwyer et al., 2005), disingenuous (Aras & Crowther, 2009), and utilized as a legitimacy tool (Cho et al., 2012;Magness, 2006;Milne & Gray, 2007) or to respond to institutional pressures (Thorne et al., 2014). Supporters of legitimacy theory maintain that companies engage in sustainability reporting mainly to secure their own interests (Milne & Gray, 2013) with the explicit aim of deflecting, obfuscating, or rationalizing their relatively poor social and environmental performance under reputational threats (Cho et al., 2010, rather than indicating rational plans and actions for facing real sustainability problems (Boiral, 2013;Cho et al., 2010;Patten, 2012). ...
The adoption and reporting of CSR policies have important ethical and managerial implications that need scrutiny. This study answers the call of CSR scholars for further studies in controversial sectors by focusing on the voluntary reporting practices of companies that market products or services that generate addiction among consumers. It contributes to the debate on organizational legitimacy and corporate reporting by empirically analyzing whether and how corporations in the tobacco, alcohol and gambling industries disclose their CSR actions and what reactions such disclosures generate in stakeholders. Drawing on legitimacy theory and organizational façades, we apply a consequent mixed-methods design (initiation approach) built on (i) a content analysis of reports prepared by a large set of companies listed on the European, British, US, Canadian, Australian and New Zealand stock exchanges and (ii) an experiment on how different actions taken by the companies (preventive vs. remedial) elicit different perceptions of company hypocrisy and action effectiveness. While previous analyses have focused on “sin” or “harm” industries, this is one of the first to assess how companies account for “addiction”, which is more difficult for them to report and legitimate due to long-term negative consequences. This study contributes to the literature on the instrumental use of CSR reporting by empirically investigating how addiction companies shape their organizational façades and manage organizational legitimacy through disclosure. Moreover, the experimental evidence advances the knowledge of how cognitive mechanisms influence stakeholders in terms of legitimacy assessment and the perceived hypocrisy/effectiveness of CSR disclosure.
... in addition to providing a practical insight into potential impression management activities through assessing CSr disclosure quality in respect to the CSr disclosure-action portrayal gap, the study also aims to contribute to the CSr literature by considering the antecedents and consequences of the CSr disclosureaction portrayal gap. first, in considering the antecedents of the gap, while the literature has examined the determinants of CSr activities and disclosures (Giannarakis, 2014;Thorne, Mahoney, & Manetti, 2014) and CSr-related controls (feder & weißenberger, 2021), we investigate the influence of management control systems (MCS) 2 on the CSr disclosure-action portrayal gap. our focus on the MCS is pertinent as since legitimacy theory and stakeholder theory imply that organisations make CSr disclosures for the purpose of legitimising their activities and satisfying external stakeholder's expectations concerning CSr, 'appropriate management controls would need to be in place to help managers ensure that a business …. ...
This study examines the association between management control systems (MCSs), specifically the interactive and diagnostic use of controls, with the corporate social responsibility (CSR) disclosure-action portrayal gap (i.e. the disparity in employees’ perception of their organisation’s emphasis on CSR disclosures relative to CSR actions) and the subsequent impact on employees’ perceptions of organisational performance, both operational performance and corporate social performance. Data were collected using a survey of US lower-level managers, with the data obtained from 209 respondents and analysed using structural equation modelling (SEM). The results reveal that the interactive and diagnostic use of controls both exhibit a significant negative association with the CSR disclosure-action portrayal gap, that is, the use of these controls reduces the gap. In addition, the various dimensions of the CSR disclosure-action portrayal gap exhibit a significant negative association with both operational and corporate social performance, that is, lower gap, higher performance. The study contributes to the CSR literature by providing the first empirical insight into employees’ perception of both CSR disclosures and actions, and hence, the CSR disclosure-action portrayal gap. In addition, the study contributes to the MCS and organisational performance literature by providing the initial empirical insight into the role of MCSs in mitigating the gap through enhancing the interactive and diagnostic use of controls, and the negative association between the gap and employees’ perceptions of organisational performance.
... Hence, social responsibility disclosure is important because it is a part of the dialogue used by the company to convey the ethics of its business operations to stakeholders to generate a positive company reputation (Lubis, Pratama, Pratama, & Pratami, 2019). Companies could choose to use corporate social responsibility (CSR) disclosure as one of their primary strategies of signaling superiority by disclosing more CSR information than is mandatory to comply with laws and regulations (Thorne, Mahoney, & Manetti, 2014). This is in line with the legitimacy theory, which states that the survival of an organization depends on market forces and social expectations. ...
Indonesia’s Environmental, Social and Governance Index (ESG Index) score and ranking released by the Global Risk Profile (2020) indicate that the social responsibility disclosure of companies in Indonesia is still very minimum. This study aims to analyze the effects of green accounting, Chief Executive Officer (CEO) power, gender diversity, and nationality diversity on social responsibility disclosure. This study uses ISO 26000 to assess social responsibility disclosure to measure and report social responsibility policies and practices to provide new perspectives for business people. This study uses a quantitative approach and panel data regression on 102 financial sector companies listed on the Indonesia Stock Exchange (IDX) for the 2018–2020 period. The analysis technique uses multiple linear regression analysis with statistical tools SPSS 20. The results show that green accounting, CEO power, and gender diversity of the board of commissioners do not affect social responsibility disclosure. In contrast, the national diversity of the board of commissioners has a significant negative effect on social responsibility disclosure. Human rights and fair operating practices are subjects that companies need to highlight to increase social responsibility disclosure while increasing transparency of the allocation of costs that companies spend on social and environmental sectors.
... To signal that their corporate sustainability activities are effective and not a greenwashing attempt (Cohen and Simnett, 2015), companies tend to release high-quality SRs and assure them (Clarkson et al., 2011). Prior research applying signalling theory (Clarkson et al., 2011;Maroun, 2019;Thorne et al., 2014) points out that companies adopt SRA practices, which are extremely expensive, to enhance the credibility of their SRs (Maroun, 2020). ...
Purpose
This paper aims to investigate whether religiosity and religious diversity affect the adoption of sustainability reporting assurance (SRA) by companies based in predominantly Roman Catholic and Protestant countries. To this aim, a theoretical framework is developed using the social norm, signalling and agency theories.
Design/methodology/approach
A pooled logit regression model is applied on a sample of 2,541 firm-year observations collected from the most sustainable companies in Europe in the period between 2004 and 2015 to test the effect of religiosity on SRA adoption. Different analyses are used to check for the robustness of the findings and a generalized method of moments (GMM) is used to address potential endogeneity issues.
Findings
The results of this study show that companies based in highly religious countries are more likely to adopt SRA practices to show compliance with the religious social norms of their stakeholders. The results also show that companies based in predominantly Roman Catholic countries are more likely to adopt SRA practices than those operating in Protestant countries. This may be due to the fact that the structural organization of Catholicism is based on a vertical, top-down control system, which does not foster trust and requires constant assurance. This explains the emphasis placed on SRA by stakeholders adhering to Catholicism. Stakeholders from Protestant countries, on the other hand, tend to rely more on the principles of social ethics and social mutual control that characterize their doctrine and, therefore, do not need any additional, external assurance of corporate commitment to sustainability.
Originality/value
This paper provides new insights into the influence that religiosity and religious diversity have on SRA. This study also provides evidence on the usefulness of social norm theory for conducting empirical research into corporate practices and could set an example for future studies in this field.
... The study suggests that these companies are financially well-resourced to innovate at risk and thus to provide positive signals to stakeholders and external agents. Our findings are consistent with (Thorne et al., 2014) as largest companies have more political visibility and are subject to greater external scrutiny by international stakeholders. In this way motivations for largest Russian companies for disclosing innovation activities are consistent with legitimacy and signaling perspectives. ...
Purpose
The paper examines whether, along with the financial performance, the disclosure of research and development (R&D) expenses, patent portfolios, patent citations and innovation activities affect the market capitalization of Russian companies.
Design/methodology/approach
The paper opted for a set of techniques including bag-of-words (BoW) to retrieve additional innovation-related data from companies' annual reports, self-organizing maps (SOM) to perform visual exploratory analysis and panel data regression (PDR) to conduct confirmatory analysis using data on 74 Russian publicly traded companies for the period 2013–2019.
Findings
The paper observes that the disclosure of nonfinancial data on R&D, patents and primarily product and marketing innovations positively affects the market capitalization of the largest Russian companies, which are mainly focused on energy, raw materials and utilities and are operating on international markets. The study suggests that these companies are financially well-resourced to innovate at risk and thus to provide positive signals to stakeholders and external agents.
Research limitations/implications
Our findings are important to management, investors, financial analysts, regulators and various agencies providing guidance on corporate governance and sustainability reporting. However, the authors acknowledge that the research results may lack generalizability due to the sample covering a single national context. Researchers are encouraged to test the proposed approach further on other countries' data by using the compiled lexicons.
Originality/value
The study aims to expand the domains of signaling theory and market valuation by providing new insights into the impact that companies' reporting on R&D, patents and innovation activities has on market capitalization. New nonfinancial factors that previous research does not investigate – innovation disclosure indicators (IDI) – are tested.
... Research has extended to include using integrated reporting as a means to improve accountability to stakeholders. Although investigating CSR reporting rather than integrated reporting, Thorne et al. (2014) concluded in their investigation of firms based in Canada that it is stakeholder scrutiny and activism that triggers the production of standalone CSR reports. This conclusion is consistent with the tenets of accountability, legitimacy and signalling theories (Dumay et al., 2015). ...
Purpose
The International Integrated Reporting Council (IIRC) has promulgated the production of integrated reports to enhance transparency and encourage improved stakeholder relationships. The purpose of this study/paper is to explore how managers prioritize the needs of stakeholders and to what extent integrated reporting is associated with those stakeholder relationships.
Design/methodology/approach
The paper uses a case study/interpretative approach to compare the underlying motivation for the preparation of an integrated report across three case study sites from three different industry groups. Face-to-face and telephone semi-structured interviews, email correspondence and a review of the integrated reports form the basis for the data collection and analysis.
Findings
The case studies investigated for this project provide evidence that integrated reporting did motivate further stakeholder engagement to increase the organizations’ legitimacy and transparency. Overall, the authors found that the three case study organizations used the production of an integrated report to cement their place as a “leader” in their respective industry group. Moreover, managers regarded the current statutory accounts as inadequate in communicating and engaging with a broad range of stakeholders. There were elements of enhancing, defending and repairing legitimacy and managers tended to equate legitimacy with transparency.
Research limitations/implications
Three case study sites were selected on the basis of producing exemplary integrated reports, and senior executives provided their views on stakeholder engagement. For the scope of this study, the stakeholders themselves were not involved in this investigation which can be viewed as a limitation.
Practical implications
The international IIRC Framework is built upon the notion that stakeholders are integral to assisting the organization in creating value. The outcomes of this investigation suggest that for preparers, the incumbent organization is reliant on the leadership of senior managers (inclusive of the chief executive officer) and directors to actually instigate the process. In Australia and New Zealand, given that integrated reporting is not mandatory, regulators have no influence over the scope, content and veracity of integrated reports. It seems likely that further stakeholder engagement will become intrinsic to the business model of organizations as a means to quell any notion that it is engaging in greenwashing.
Originality/value
The value of this paper is to contrast how three quite distinct organizations are using their integrated reports to communicate their approach to stakeholder engagement. Stakeholder salience dimensions are used to explore the importance attributed by senior managers.
... Sustainability reporting became prominent because it considers both environmental and social sustainability information. Despite its prominence and perceived usefulness, it has received criticism and has been branded as greenwashing, opportunistic, cosmetic, implausible, lacking genuine efforts, and failing to meet users' expectations (Thorne et al., 2014). In addition, SR has been criticized because it fails to represent the proper reporting practices of firms, with this being described as symbolic in form (Khan et al., 2021). ...
Sustainability reporting is gaining attention among industry professionals and academics. However, it has been criticized since it fails to represent the proper reporting practices of firms, with this being described as symbolic in form. Regardless of this criticism, management of firms in East Africa is increasingly adopting sustainability reporting, despite being voluntary. Therefore, the paper analyzed the determinants of sustainability reporting of East African firms. Eight years of annual reports of 74 listed firms in Kenya, Tanzania, and Uganda were used. Random and fixed effect regression techniques were employed for the estimates. The study found that firms’ specific characteristics such as size, Tobin’s Q, industry affiliation, and ownership structure have a positive and significant influence on firms’ management to adopt sustainability reporting practices. In addition, it was suggested that firms with a more considerable asset and Tobin’s Q provide more sustainability reporting than those with smaller assets and Tobin’s Q. The results further showed that firms’ age and return on assets do not influence sustainability reporting. The evidence further demonstrated that firms with foreign parent companies significantly disclosed more sustainability information than local firms. The paper concludes that the firm-specific characteristics influence their sustainability reporting practice. The study provides policy implications because it can assist the governments and regulators in these countries in guiding the firms’ reporting practices.
... The next is to reduce firm risk, promote long-term value creation, maintain market position and create a door for higher investments (value creation theory; Artiach et al., 2010;Khlif et al., 2015;Miralles-Quiros et al., 2017;Yu & Zhao, 2015). Another is to send superior positive performance signals that make a company more appealing to investors in the market (signaling theory; Connelly et al., 2011;Loh et al., 2017;Spence, 1973;Thorne et al., 2014). Others contend that it is used to show corporate transparency and, hence, enhance corporate reputation and image (Batista & Francisco, 2018). ...
Aside from scanty research in developing economies’ context on the sustainability and firm value nexus and the dearth of studies on disclosure quality globally, available studies seem to have neglected the multidimensional nature of disclosure quality in measuring the construct. This paper was, therefore, designed to examine the effect of the extent and quality of sustainability disclosure on market value of firms. To achieve the study’s objectives, 31 relevant sustainability performance indicator aspects were analyzed for the 39 companies drawn from 9 sectors for the period 2010–2019. This results in 390 firm-year observations and 12,090 data points used to calculate unweighted sustainability extent and quality indices. Findings from regression analysis suggest a positive non-significant association between extent of sustainability disclosure and firm market value. Quality of sustainability disclosure was found to be negatively related to market value. Variations were also found in the value effect of the extent and quality of sustainability disclosure across the economic, social and environmental dimensions of sustainability. Joining two separate streams of research—extent and quality of sustainability disclosure—the study offers new and insightful evidence on the value relevance of the duo from a developing clime. This result is relevant for firm managers who make decisions about sustainability initiatives knowing that investors react to the reportage of these initiatives. It is also of relevance in the implementation of robust policies that encourage joint efforts by firms and the investing public in fostering even sustainable development.
... In this study, the identified sample consists of 61 German companies in the overall healthcare sector. Thorne et al. (2014) focussed on a single country to ensure that corporate governance structures, requirements on reporting, and the reporting culture and behaviour are comparable. 61 companies are HDAX companies of the sectors pharma, medical technology and conglomerates. ...
This study assesses the status quo of sustainability reporting by
German healthcare companies. First, content analysis was conducted based on eight sustainability reports. Second, we developed case studies for three of those firms by investigating the further reporting environment. The results indicate that the specific business sector of a company does not influence its sustainability reporting level. Moreover, the case studies show a differentiated picture in regards to the sustainability activities of those companies. Most companies recognise sustainability as a subordinate part of their company
values and often integrate substantial sustainability schemes. Only one company emphasises that sustainability has always been at the core of the company’s philosophy. To ensure a more transparent and sustainable development, this outcome indicates that new laws should not only require the creation of a sustainability report, but also regulate the formalities of it to derive a common standard.
... Most of researches regarding voluntary sustainability report are based on this theory. Sustainability report is used to reduce skepticism of stakeholders , change public perception of sustainable performance (Clarkson et al. 2008), and fulfill demands of stakeholders (Sassen et al. 2018;Thorne et al. 2014;Dienes et al. 2016). This pressure gets worse due to the increase of mass media concern with the issue of sustainability (Reverte 2016) which makes a company that is more impressionable to the mass media more likely to make a sustainability report. ...
The latest regulations in Indonesia (SEOJK No 16/SEOJK.04/2021) have required public companies to make a sustainability report every year in order to increase sustainable investment. Prior to this regulation, several public companies had made sustainability reports and received benefits of sustainability report. This makes issuers ask whether after being obligated, public companies still get the benefits that have been obtained from voluntary sustainability reports and under what conditions the mandatory sustainability reports are beneficial for public companies. This study answers the public companies' doubts by conducting a systematic literature review on research on mandatory and voluntary sustainability reports in Q1 and Q2 journals from 2008-2018. Before answering the issuers' doubts, this study explains the reasons why issuers make voluntary sustainability reports and the benefits derived from voluntary sustainability reports. After that, based on previous research, this study explains whether the benefits obtained from voluntary sustainability reports can still be obtained in mandatory sustainability reports. This study found that sustainability reports were made because of the desire to benefit from these reports initiated by company leaders coupled with institutional pressure. The benefits of voluntary sustainability reports are the positive perception of shareholders and increased concern for the company's sustainability. Mandatory sustainability reports can still provide some (though not all) of the same benefits as voluntary sustainability reports. In addition, the sustainability report must be able to cover the weaknesses of the voluntary sustainability report with the condition that there is strict legal coercion, strict supervision, and the addition of an obligation to audit sustainability information which is strengthened by market demands to make a sustainability report. Therefore, the Indonesian government must pay attention to these conditions for this regulation to be implemented properly.
... In addition to their function of increasing transparency and mitigating potential asymmetry information, many critics of the presentation of CSR reports see them as little more than a public relations tool, which raises the concerns of Unerman et al. (2010) that CSR reports are deliberately designed to manage stakeholders' perceptions and to maintain stakeholders' approval of business survival. Thorne et al. (2014) also draw attention to how a firm's motivation to publish a CSR report is to merely manage political and media visibility. ...
Purpose
This study aims to investigate the relationship between social impact, corporate social responsibility (CSR) reporting and firm performance in the context of the Association of Southeast Asian Nations (ASEAN) banking industry, providing insight into CSR-performance nexus debate, especially for non-environmentally sensitive industry (NESI).
Design/methodology/approach
We use a sample of 27 publicly listed banks in five ASEAN member countries (i.e. Indonesia, Malaysia, Singapore, Philippines and Thailand), with the period of observations ranged from 2011 to 2019 year. This study also carefully accounts for endogeneity issues and the dynamics of social impact – CSR reporting – bank financial performance relationship.
Findings
The results show that social impact (performance) and CSR reporting negatively associate with bank performance, either measured by accounting performance or market performance. The negative association between social performance and bank financial performance also persists in a longer-term relationship. This result implies that social performance and CSR might not have the expected result for banks in ASEAN developing countries and the expected effect also does not manifest in the following periods.
Practical implications
The negative association between social performance and financial performance implies that banks’ CSR in ASEAN might be misstargeted or that it takes more time to manifest the expected outcome. Therefore, banks should be able to foresee if social investment will finally offset the opportunity cost from diverting financial resources away from their core activities. On the other hand, policymakers must standardize the reporting related to social activities for banks and should bring the environmental and social issues to the depositors’ attention to show that these issues are also relevant in the banking industry.
Originality/value
To the best of the authors’ knowledge, this study is among the first to provide empirical evidence on the direct relationship between social impact, CSR reporting and firm performance in the context of ASEAN’s NESI. The results should be of potential interest value to ASEAN’s banks, regulators and shareholders.
... In CSR research about the organizations, a legitimacy explanation can be given after a thorough examination of the disclosure and changes in it [97]. The motivation of firms for issuing standalone CSR reports is consistent with legitimacy theory [98]. ...
The purpose of this research paper is to review the complete CSR literature laying emphasis on CSR constructs and the theoretical perspectives in Pakistan. Collation of existing empirical and exploratory research has been used to make arguments about current status of academic CSR research. A total of sixty-five published articles on CSR from 2000 to 2021 have been reviewed. A thorough overview of CSR constructs highlighted that overall, the CSR constructs are not properly developed, and theoretical foundations are lacking. Corporate donations and philanthropy captured as CSR construct are still familiar among the researchers. It has been observed that the most recent literature is approaching towards maturity. The findings suggest that the lack of adequate explanation of theoretical foundations mislead the interpretation of results. There is partial support in the literature that CSR pays to the firms, as is depicted by the positive relationship between CSR and the facets investigated by the researchers but thorough emphasis is required on CSR measurement. The research can serve as basis for the beginning of an extensive exploration of CSR through the lens of theoretical perspectives and the strong theoretical foundations can result in a mature CSR construct and major contribution in the body of literature.
... Accordingly, as measured in previous studies, social responsibility accounting practice is quantified in this study by the employee dimension, environmental dimension, community dimension and quality of product dimension. The practice of social responsibility has been measured in different studies (e.g., (Al-Tamimi, 2014;Al Ramahi, Alaboud, Owais, AlRefae, & Shahwan, 2014;Kim & Choi, 2013;Leon & Araña, 2014;Martínez & Del Bosque, 2013;Minnee, Shanka, Taylor, & Handley, 2013;Razek, 2014;Thorne, Mahoney, & Manetti, 2014)). ...
This study aims to present a true image of social responsibility accounting (SRA) in Jordanian companies listed on the Amman Stock Exchange (ASE). A survey questionnaire was employed to check the level of SRA practice, and a checklist was used to discover the level of SRA disclosure which was collected from the annual reports of the firms listed on the ASE. The questionnaires and annual reports were employed to collect information from 104 companies in the financial, services, and industrial sectors for this study. SPSS was used to for data analysis and the results showed that the level of SRA practice in listed companies on the ASE is good, while the level of SRA disclosure is very low. The latter could be related to many reasons, including lack of awareness of Jordanians companies' managers in the culture of SRA and related issues due to the novelty of SRA disclosure in Jordan and developing countries. In addition, companies mostly focus on product quality when they practice SRA.
... The dissemination of timely information could possibly enhance its perceived usefulness (Islam & Rahman, 2017). In a similar vein, online CSR disclosures can be appraised for the "timeliness of their information" (Thorne, Mahoney & Manetti, 2014). This discourse leads to the following hypothesis: ...
Large organizations, including listed businesses, financial service providers as well as public services entities are increasingly disclosing information on their environmental, social and governance (ESG) issues through corporate websites or via social media. Therefore, this research uses valid measures from the Elaboration Likelihood Model (ELM) to explore the individuals' attitudes toward online corporate social responsibility (CSR) communications. The data was gathered from a structured questionnaire among three hundred ninety-two respondents (n=392). A structural equations modeling partial least squares (SEM-PLS 3) approach was used to analyze the data. The findings revealed that the timeliness, relevance and accuracy of information as well as the source expertise were highly significant antecedents that were affecting the research participants' attitudes toward CSR communications. This contribution implies that there is scope for content curators to publish quality online information on their business activities to improve their trustworthiness and positive credentials among stakeholders.
... Scholars revealed that firm size as one of the attributes of company characteristics indicated a positive and significant correlation on the quantity and quality of SRP [1,2,10]. The correlation may be linked with the greater public scrutiny of large firms, which arguably pushed them to engage in SRP [19,2,20]. Secondly, by the absolute advantage, big firms possess in disseminating information. Communication is relatively less costly for larger firms, even though implementation of clean technologies requires huge investment [21]. ...
The paper examined the determinants of sustainability practice (SP) in Nigerian. Two main dimensions of the factors influencing sustainability practice were investigated. First, company characteristics, proxied by firm size (FSIZE), dividend per share (DIPS), Tobin's-Q (TOBQ), type of industry (IDTY), and profit after tax margin (NPTM). Secondly, the board characteristics, proxied by disclosure of board roles and function (DBRF), chairman roles in the board (DCRB), board members appointment date (BADT), shareholders engagement policy (DISS), and board meetings with attendance records (DMBM). The content analysis approach was introduced to extracted relevant data from 270 annual reports of the sample companies between 2011 and 2020. The Global Initiative Reports GRI (G4) index was used to examine these annual reports. The panel regression result exerts that all of the elements of board characteristics are important determinants of SRP in Nigeria. This suggests that factors related to the identity of companies might influence the disclosure for SRP, particularly when the disclosure is voluntary. Whereas, the proxies of the company characteristics except for DIPS, TOBQ, and IDTY are not important factors, which might be linked with the voluntary nature of sustainability practice in Nigeria. The results further reveal a low level of disclosure. The low rating and disclosure indicated that listed Nigerian firms are still behind when it comes to disclosing and reporting sustainability activities in line with the GRI-G4 guidelines. Therefore, the study is empirically and theoretically relevant, as it might be in need of investigating the commitments and contributions of Nigerian companies and institutions towards a sustainable world by 2030.
... Regarding firm-specific factors, CSR reporting is positively associated with firm size, ownership structure, corporate governance, and management-specific characteristics. Indeed, larger companies are more scrutinized and, thus, tend to disclose CSR information in a higher quantity and of better quality (e.g., [37][38][39]). Furthermore, the greater the ownership dispersion, the higher the likelihood that the firm discloses information [40]. ...
The aim of this discussion paper is to address three major concerns in establishing sustainability in service organizations regarding the intersections among external reporting, internal governance, and business management and innovation. External reporting addresses issues related to sustainability information specificities and determinants, the pros and cons of mandating CSR disclosures, and the need for assurance. The internal management of sustainability refers to the opportunities and challenges for services to introduce sustainable business models and sustainability innovation. Finally, internal governance prioritizes the control process and systems employed by managers to make informed decisions and implement sustainability strategies. By means of an extensive and sophisticated literature review, the article contributes to untangling the opportunities and challenges that services face when adopting external and internal practices to commit to sustainability. Specifically, the paper addresses how company-level mechanisms of transparency, accountability, and innovation are linked to system-level mechanisms of implementation that lead to the adoption of sustainability in service organizations.
... Para abordar el objetivo del estudio se elaboró un cuestionario ad hoc tipo encuesta, que se compuso de 5 secciones (ver Anexo): Aspectos generales, Estrategia y cultura (6 ítems); Prácticas de EC dividida en 4 áreas: Abastecimiento (5 ítems), Producción (7 ítems), comercialización y distribución (9 ítems) y destino final (5 ítems); Información circular (7 ítems). Las preguntas incluidas dentro de cada sección fueron desarrolladas en base a estudios anteriores relacionados con la implantación de la EC; con el sector agroalimentario y con información de sostenibilidad y circular (Bhimani et al., 2016;Ellen Macarthur Foundation, 2017;Laboratorio de Ecoinnovación, 2017;ONU FAO, 2020;PACE, 2021;Salimi, 2021;Stewart & Niero, 2018b;Thorne et al., 2014;Verbeek, 2016;Windolph et al., 2014;Zhu et al., 2010). En la mayoría de las preguntas se aplicó una escala de Likert de 4 puntos. ...
El impacto ambiental del sector agroalimentario es crítico a nivel mundial dados los altos niveles de contaminación, pérdida de recursos y de energía que le son atribuidos. Así, el desarrollo de la economía circular en el sector aparece como una oportunidad y un desafío. Para esto, la generación de información útil para la toma de decisiones circulares es clave, siendo los reportes de sostenibilidad una importante vía para lograrlo. En este contexto, la presente investigación busca evaluar el grado de internalización de la economía circular en empresas agroalimentarias argentinas, incluyendo la información circular que se divulga y si existen factores que lo influencian, desde la teoría institucional. Se trata de un estudio descriptivo y exploratorio de corte mixto. Para llevarlo adelante se analizaron 210 respuestas recibidas a una encuesta diseñada ad hoc, mediante estadística descriptiva y test de diferencias de medias para contrastar las hipótesis. Los resultados generales muestran que los niveles de internalización son bajos tanto en la estrategia, prácticas como en la información circular que se divulga. Las empresas agroalimentarias argentinas se ven afectadas por factores institucionales para implementar la economía circular. Futuras investigaciones deben concentrarse en entender las motivaciones y barreras que deben superarse para lograr una verdadera adopción de la economía circular en el sector.
Purpose
This paper aims to assess the cumulative evidence on the determinants of sustainability assurance (SA) reports and the choice of assurance provider quality. It addresses the contradictory and inconsistent findings of past studies conducted over the past two decades.
Design/methodology/approach
The authors undertake a meta-regression analysis that enables systematic, comparative assessment of the variables associated with the choice of SA and the type of assurance provider. The authors undertake a chronological analysis with the aim of identifying systematic differences in the empirical evidence across distinct time periods.
Findings
The results indicate that there is very little evidence to support many of the expected associations between commonly studied predictor variables (namely, measures based on agency and corporate governance conceptions) and the choice of SA and the assurance provider type. As a result, research on this topic does not make as effective a contribution as might be expected. There is, however, a time period difference. The authors find results from studies using company data prior to 2010 are significantly different from those using post-2010 data. The results indicate the decision to publish SA to be significantly associated with companies in the oil industry and utilities, and larger organisations where agency costs tend to be higher. Obtaining assurance from a higher-quality provider is found to be associated with companies in environmentally sensitive industries and in stakeholder-oriented countries.
Practical implications
The study shows that as yet there is not sufficient evidence to support expected results. Users of the research should be aware of this, and researchers should know that more work is needed. The authors suggest researchers take greater care in the choice and comparability of variable measurement and expand the conceptual base when selecting predictor variables.
Social implications
Companies need to be more transparent and accountable to critical stakeholders such as report users and regulators, and the latter should be more aware that the organisational practice of SA and choice of service provider have changed over time and are increasingly open to agency and other cultural biases.
Originality/value
To the best of the authors’ knowledge, this is the first study to apply meta-regression techniques for understanding the body of literature on SA and provider choice.
Sustainability reporting has been widely acknowledged as a crucial corporate sustainability practice and recently received increasing attention from regulators, standard‐setters, practitioners, and researchers. Motivated by the abundance of work, and the variety of theoretical perspectives and existing evidence, this paper explores how the research on sustainability reporting determinants has developed over time and what is known and not known about this topic. To address this question, we conducted a systematic literature review of articles on sustainability reporting determinants published in ABS‐ranked journals between 2002 and 2021. Building on Lozano et al. (2015) framework of corporate sustainability theories, our findings provide an updated overview of factors driving sustainability reporting and the determinants still under debate. Furthermore, to fill existing gaps and inspire future research developments, findings suggest further work focus on non‐listed companies, environmentally sensitive industries, underexplored geographical areas, and qualitative methods. Finally, the paper has implications for managers and policymakers.
This paper provides a theoretical framework and empirical support for an examination of corporate financial performance (CFP) from the perspective of an effect that is analogous to corporate social responsibility (CSR) advertising. We propose that not all companies are capable of “doing well by doing good.” Through an analytic model, we identify three key elements for determining a company's CSR advertising‐analogous effect on CFP: the incremental margin (gross profit rate), the sales–CSR elasticity and sales demand in the market (market share). By re‐examining the equivocal relationship between CSR and CFP based on a sample of publicly held US companies from 1991 to 2018, we document that companies in the best position to undertake CSR activities (with gross profit rates, sales–CSR elasticities and market shares above the industry medians) have a superior advertising‐analogous effect to other companies. Moreover, our empirical results show that companies in the best position to undertake CSR activities face less severe agency problems when they conduct more CSR activities than other companies. Finally, in a test of whether regular advertising expenditures and CSR devotion could jointly enhance current CFP, the results show that the positive joint effect is more pronounced for companies in the best position to undertake CSR activities than for other companies.
Purpose
This study uses a multi-level framework to systematically summarize and synthesize the empirical literature on determinants of sustainability disclosure.
Design/methodology/approach
This review study is based on 159 empirical studies examining determinants of sustainability disclosure and published in Charted Association of Business Schools (CABS) ranked journals over the last 40 years.
Findings
Companies are experiencing multi-level pressures for sustainability disclosure. Macro-level variables include political, legal, social-cultural and international pressures. Meso-level factors include customers' concerns, shareholders’ and investors' demands, industry-level variables and media coverage. Micro-level factors include the firm-level governance mechanisms, executives' reporting attitude and role of sustainability promoting institutions. Unlike in developed markets, companies in developing markets feel minimal public pressure for sustainability disclosure but rather are influenced by international NGOs, the media and international buyers. Multi-level and multitude of pressures for sustainability disclosure explains the widely observed differences between studies.
Originality/value
This research presents the most extensive systematic review of the extant sustainability disclosure literature and is the first study to group determinants into micro-, meso- and macro-level components using multi-level analysis.
We verify the effect of ESG disclosures on firm performance using NSE 500 index listed companies spanning from 2010 to 2020. The study employs a method‐of‐moments quantile regression approach to test whether ESG disclosures lead to superior firm performance. We find evidence that environmental, social, and governance disclosures positively influence firm performance. Higher quantiles of ESG disclosures are associated with better market performance (Tobin's Q), and the same lead to lower profitability (ROA). The present study suggests that companies aspiring to improve their financial performance may pay more attention to ESG disclosure practices.
Monografia porusza temat sprawozdawczości w zakresie zrównoważonego rozwoju praktykowanej, najpierw dobrowolnie, a obecnie pod wpływem przepisów wynikających z Dyrektyw Komisji Europejskiej obligatoryjnie, przez spółki w Polsce i na świecie. Opracowanie dotyczy teorii, standardów, przepisów i praktyki ujawnień tych informacji w zakresie zrównoważonego rozwoju w raportach rocznych spółek oraz ich ewolucji na przestrzeni lat. Praca ta ma w założeniu stanowić platformę do dyskusji nad szczegółową systematyką informacji ujawnianych w raportach dotyczących zrównoważonego rozwoju w obszarach: teoretycznym (podjętej próby określenia pojęć podstawowych w zakresie raportowania zrównoważonego rozwoju na podstawie badań), praktycznym (polegającym na wskazaniu standardów i prawodawstwa regulujących ten rodzaj raportowania) oraz normatywnym (polegającym na próbie stworzenia systematyki raportowanych informacji przez polskie spółki).
Purpose
Corporate social responsibility (CSR) remains a prevalent topic for businesses worldwide, especially for those operating in developing countries. The attention on small and medium-sized enterprises' (SMEs') CSR engagement in developing countries has been neglected, although SMEs play a vital role in socio-economic development in African countries like Kenya. This paper aims to conceptualize the relationship between the SME manager's values, ethics, emotional commitment to long-term socio-economic development and the firm's CSR practices.
Design/methodology/approach
The authors conducted seven semi-structured interviews with Kenyan and German SMEs located in Nairobi. A deductive-inductive analysis approach was chosen, confirming previous findings and contributing new ideas to the International Business (IB) literature.
Findings
This paper develops a concept linking the values and beliefs of the SME manager with the firm's CSR practices in developing countries via the manager's emotional commitment to local long-term socio-economic development. The Kenyan managers tend to show a higher degree of emotional commitment, which the authors explain by two drivers: (1) philanthropic, self-motivated driver and (2) expectation-based, environment-motivated driver. The authors' findings add to the literature on SMEs' CSR engagement in developing countries by looking at the individual level of analysis.
Originality/value
This paper develops a concept linking the values and beliefs of the SME manager with the firm's CSR practices in developing countries.
Environmental, social, and governance (ESG) has been prevalent over the past two decades and is a relatively new concept for investors and companies. Investors and companies increasingly prioritise ESG in their decision-making due to responsible investment and the growing social and environmental problems, such as modern slavery, unsustainable consumption, and climate change. Policymakers and regulators developed related policies and regulations to assist local companies align with ESG initiatives. The development of ESG practice in Asia is still at the initial stage compared to Western countries. Asian countries show different levels of ESG implementation due to heterogeneous institutional backgrounds. The policymakers, market regulators, and listed companies have taken a series of measures to incorporate ESG into corporate strategies, such as voluntary or mandatory ESG reporting standards, to create a transparent, accountable, and favourable market with low risk for different stakeholders. A number of theories are adopted to explain the motivations of ESG reporting. This chapter will provide a general overview of how ESG originated and evolved in investment decisions, introduce particular well-adopted global ESG reporting standards, and how regional regulators and listed companies in response to this global trend.KeywordsEnvironmental social and governance (ESG)SustainabilityMaterialityTask force on climate-related financial disclosures (TCFD)Global reporting initiatives (GRI)
Bài viết khảo sát thực trạng công bố thông tin trách nhiệm xã hội của các doanh nghiệp niêm yết trên thị trường chứng khoán Việt Nam dựa theo chỉ số minh bạch thông tin trách nhiệm xã hội được xây dựng theo chuẩn GRI về công bố thông tin trách nhiệm xã hội. Dựa trên mẫu nghiên cứu gồm 900 quan sát, bài viết đã đánh giá các nhân tố tác động đến thực trạng thông tin trách nhiệm xã hội trên thị trường chứng khoán Việt Nam, trong đó các nhân tố được khẳng định bao gồm đòn bẩy tài chính, quy mô doanh nghiệp, mức độ độc lập của Hội đồng quản trị, tỷ trọng sở hữu nhà nước , tính kiêm nhiệm của CEO và việc sử dụng kiểm toán độc lập Big 4. Đây là nghiên cứu đầu tiên đánh giá thực trạng công bố thông tin trách nhiệm xã hội của các doanh nghiệp niêm yết trên thị trường chứng khoán Việt Nam dựa trên chuẩn GRI thực hiện trên quy mô lớn; đồng thời, góp phần củng cố kết quả nghiên cứu trước đây liên quan đến các nhân tố ảnh hưởng đến việc công bố thông tin trách nhiệm xã hội trên thị trường trong bối cảnh các nền kinh tế đang phát triển, từ đó đề xuất các giải pháp thực tiễn cho các doanh nghiệp niêm yết và nhà đầu tư nhằm cải thiện tình trạng minh bạch thông tin trên thị trường.
Purpose
There is a growing interest in how firms respond to environmental degradation and societal challenges. Firms respond through their sustainability reports, but assurance of the reports gives confidence to the stakeholders. This study aims to identify the main research development in sustainability assurance which is rising in global studies.
Design/methodology/approach
This study uses a bibliometric analysis to assess the global trend in sustainability assurance studies. The methodology is based on descriptive, performance and science mapping. The set is based on 655 documents from the Scopus database, covering the period from 2005 to 2022.
Findings
The findings from the study suggest that sustainability studies are relevant, and the researcher's examination of the domain has dramatically increased from 2014 to date. This is due to the rise in the concerns expressed by stakeholders in satisfying themselves about the firm's responsibility to the Sustainable Development Agenda 2030. The findings also show that most research on sustainability assurance is from Spain, the USA, the United Kingdom (UK) and Australia. However, the UK has the most collaboration in terms of co-authorship. It is suggestive that the UK has more links than Spain, which is the most productive country with more publications. This may be attributed to the influx of more international students completing a second and third degree in the UK. The study highlights intellectual foundations and emerging trends and outlines avenues for future studies.
Research limitations/implications
This study is limited to the data obtained from the Scopus database.
Originality/value
This study is the first bibliometric study of the sustainability assurance domain.
Purpose
The purpose of this study is twofold: to examine the reliability of voluntary corporate social responsibility reporting (CSRR) to determine whether users can rely on the information released by corporations and to examine the determinants of CSRR reliability in a voluntary context.
Design/methodology/approach
This study analyses the information included in a sample of 190 standalone corporate social responsibility (CSR) reports issued by Canadian corporations listed on the Toronto Stock Exchange S&P/TSX Composite Index from 2016 to 2018.
Findings
The results of this study show that CSR reports lack reliability. The determinants identified (image, corporate governance and financialisation) partially explain the quality of the information disclosed. As well, the results suggest that corporations may attempt to manipulate users’ perception through their disclosures.
Practical implications
TThis study provides a greater understanding of the current state of CSRR in a voluntary context. It offers further insights into the strategies corporations use to manage impressions through CSR disclosures.
Social implications
This study provides further empirical data as to current shortcomings of voluntary CSRR and the potential benefits of further regulation.
Originality/value
Few studies have specifically focused on the reliability of CSRR and its determinants in a voluntary context.
This case study adopts a positivist perspective to examine how Petroleo Brasileiro S.A (“Petrobras”), a high-profile company in its native Brazil with multiple listings including in Brazil and the US, responded to a major corruption scandal arising in 2014. We consider Petrobras’s response both in terms of its visible activities – i.e. in relation to anti-corruption and compliance (“ACC”) disclosures in its annual report (AR) and sustainability report (SR), as well as actioned remedial policies that constitute the crisis plan – and how the company went about interacting with stakeholders during and after the immediate crisis period. We conducted a content analysis of ACC disclosures and assessed Petrobras’s remedial activities in the eight-year period 2010 – 2017 as disclosed in its ARs, SRs and press releases. We find firstly that, consistent with legitimacy theory, Petrobras responded by voluntarily and substantially increasing its relevant disclosures so as to regain legitimacy, a finding which mirrors those found elsewhere following corruption and environmental crises. Secondly, the unique corporate governance situation at Petrobras combined with the fact that leadership was allegedly implicated in the scandal, led the post-crisis management team to undertake a series of remedial actions that prioritised the need to take and maintain executive control and independence from the government, whilst at the same time carefully managing the relationship with this influential stakeholder: - actions which argue strongly in favour of stakeholder-agency theory and multiple agency theory interpretations of the nature of stakeholder interactions that transpired during the crisis period of disequilibrium, and which precluded the type of stakeholder dialogue seen in some previous environmental crisis situations. Finally, we show that Petrobras’s crisis management response actions align well with models of trust repair and legitimacy management, and suggest the company considered it had successfully regained legitimacy by 2017.
This study discusses competitive neutrality issues in light of government subsidies. We examine whether the engagement in overseas corporate social responsibility practices affect the ability of private multinational enterprises in emerging markets in order to compete with state-owned multinational enterprises for government subsidies. Using a sample of Chinese multinational enterprises operating between 2008 and 2018, our results indicate that the competitive advantage of state-owned multinational enterprises in obtaining government subsidies is offset when private multinational enterprises actively engage in overseas corporate social responsibility practices. Furthermore, institutional distance and the expectations set by the home country as they relate to sustainable development significantly affects the ability of multinational enterprises to receive subsidies.
This study of Chinese listed firms from 2008 to 2018 shows that research and development (R&D) expenditure is associated with increased audit fees. However, corporate social responsibility (CSR) disclosure can attenuate this fee increase, especially in firms with an opaque information environment, high risks, and non‐high‐ and new‐technology enterprises. These findings are robust to the use of proxies and instrumental variables, propensity score matching, and controlling for firm fixed effects and CSR performance. This study contributes to the understanding of the economic consequences of R&D activities, determinants of audit fees, and CSR disclosure.
This book discusses the role of business models in corporate reporting. It illustrates the evolution of non-financial reporting, the importance of business model reporting, and the main conceptualisations of business models. It also offers a methodological contribution to the assessment of business model reporting. Finally, it discusses the main implication of business model reporting for different categories of subjects and some challenges related to this kind of disclosure.
Readers will understand the role of business models in the non-financial reporting landscape. They will also gain an understanding of how business models can help users of the annual report contextualise other non-financial items disclosed. However, effective business model reporting implies paying attention to certain features that define its quality. This theme is discussed in the empirical part of the book and in the section devoted to implications for preparers, users, and regulators.
As large companies in the EU and the UK have to disclose the business model in the annual report, this book will be of interest to preparers and users of financial statements, regulators involved in the ongoing non-financial regulatory process, and professional bodies. It will also be of interest to academics interested in the investigation of non-financial reporting.
This study investigates the need for SMEs to practice corporate social responsibility (CSR) in building their brand image in Ghana. The study aims at exploring the role impact of Corporate Social Responsibility (CSR) in building small and medium enterprises (SMEs) brand image in Ghana. Evaluating the role of CSR in building the brand image of SMEs adopted research designs/methods and approached to solicit both secondary and primary data. To identify the perceptions held by SMEs, motives for CSR practices, benefits associated with CSR practices, and the impact of Corporate Social Responsibility on SMEs' Brand Image, questionnaires and interviews were conducted with SMEs operators and Environmental Protection Agency officials in the Kumasi metropolis. The findings show that SMEs perceived CSR as a means of paying back to society what has been received as profit and also as a means of protecting and improving the quality of the natural environment as well as spending revenue to the state. It was noted that organizations practice Corporate Social Responsibility (CSR) to project the right corporate image, used as a marketing strategy, and to make employees happy and satisfied Benefits from CSR regarding customer loyalty, gaining goodwill from the community, enhanced government relations, and building client relations was also ascertained. Despite the numerous benefits associated with CSR activities, other challenges were also identified as free giveaway products and the high cost of CSR programs. Some suggestions such as the honest provision of accurate information about the SMEs products, organizing programs to suit students, a regular donation to the societies, and total collaboration between SMEs and their communities were made to promote firms' image through CSR practices.
This study explores the impact of the implementation of Directive 2014/95/EU on the comparability of non-financial information across listed European firms, focusing on the usage of non-financial reporting (NFR) frameworks–those developed by the SASB, IIRC, OECD, EFFAS, GRI, UNGC, ISO, AA, and FEE. Using computer-aided text-analysis software (MAXQDA 2022), we analysed the annual reports and stand-alone non-financial (sustainability) reports from listed firms in the STOXX Europe 600 Index covering 2012–2020. The results showed that the implementation of the Directive led to an increase in the use of investor-oriented NFR frameworks (e.g. that of the SASB); frameworks oriented towards a wide range of stakeholders (e.g. GRI) are predominantly used by voluntary adopters. Furthermore, although disclosures by resisters (mandatory adopters) indicate a stronger focus on investors, the disclosure of non-financial information exacerbated information asymmetry for resisters, whereas NFR mitigated information asymmetry for voluntary adopters.
Purpose – This paper develops a conceptual framework for extended external reporting (EER) influences (EERI), including Sustainability, Non-Financial, Integrated, and Value Reporting. Using the Environmental Legitimacy, Accountability, and Proactivity (ELAP) framework as the base, we modify its proposed concepts and linkages using relevant conceptual models, prior reviews, and findings of recent studies on EER. The paper presents contributions of the special issue on “non-financial and integrated reporting, governance and value creation” and avenues for future research.
Design/methodology/approach – Drawing on relevant conceptual models, prior reviews, and recent EER studies, we reframed the ELAP framework into a framework that theorises the factors that affects, or are affected by, EER.
Findings – The EERI framework poses relationships between and within proactivity, external verification, accountability, and legitimacy. It also consolidates possible determinants and consequences of EER. The papers published in this special issue contribute further insights on factors that influence reporting practices, processes and suggestions for capturing and communicating value creation information, and the value of integrated reports and assurance to capital providers.
Originality/value – Along with the insights provided by papers in this special issue, the conceptual framework can be used to theorise influences of EER and guide future research.
This study investigates voluntary sustainability reporting by U.S. universities. Using a structural equation modeling approach and Poisson regression, this analysis explores the relevant motivations for and obstacles in disclosing sustainability information through the Sustainability Tracking, Assessment & Rating System (STARS). The preparation of sustainability reports on a voluntarily basis involves significant financial costs for universities that typically grapple with tight budgets. However, universities may want to inform their stakeholders about relevant developments at the university. The results show that the fulfillment of societal expectations is one of the most relevant motivations, whereas a lack of reporting-related organizational structures represents the most important obstacle.
The study provides important theoretical and practical contributions to the literature, including scales that measure the level of motivations and obstacles to reporting sustainability information. Furthermore, the findings can improve universities’ sustainability reporting and assessment frameworks.
Purpose
This paper aims to study companies’ strategic responses to regulative institutional pressures on sustainability reporting. Particularly, it investigates the role of multiple stakeholder demands in shaping corporate responses to Law 11/2018 that transposes the EU Non-Financial Reporting Directive in Spain.
Design/methodology/approach
Informed by Oliver’s framework, the study analyzes the 2018 non-financial information of Spanish listed companies mandated to report under Law 11/2018 to explore the relationship between adopting a particular strategic response and companies’ stakeholder configuration.
Findings
Companies facing multiple stakeholder pressures tend to use a compromise strategy favoring the disclosure of relevant topics to a specific stakeholder type. Specifically, environmentalists are the most influential stakeholder in determining the coverage of sustainability topics to the detriment of other stakeholders when companies suffer from regulatory pressures.
Research limitations/implications
The study contributes to disentangling the factors determining how companies respond to sustainability reporting regulation. Future research could perform longitudinal and large multinational analyses to study the evolutionary process of corporate responses.
Practical implications
The study is relevant to managers and policymakers as it highlights that sustainability reporting regulation should promote the coverage of relevant topics to less influential stakeholders.
Social implications
The study explores the extent to which current sustainability reporting regulation can increase transparency on sustainability issues for all stakeholders.
Originality/value
In contrast to previous literature exploring the extent to which firms comply with regulation, the study considers that companies can respond more actively to mandatory sustainability reporting requirements.
Offered here is a conceptual model that comprehensively describes essential aspects of corporate social performance (CSP). The three dimensional model address major questions of concern: (1) What is included in the definition of CSR? (2) What are the social/stakeholder issues the firm must address? and (3) What is the organization's strategy/mode/philosophy of social responsiveness.
The first dimension is the source of the original four-part definition of CSR originated: economic, legal, ethical, and discretionary (later termed philanthropic). It was later presented at the CSR Pyramid (1991).
This paper analyzes how national institutional factors affect the adoption of the international environmental management standard ISO 14001, using a panel of 139 countries from 1996 to 2006. The analysis emphasizes that during the emerging phase of the standard, the potential lack of consensus within the constituents of the national institutional environment concerning the value of a new standard could send mixed signals to firms about the standard. The results show that in the early phase of adoption, regulative and normative forces within the institutional environment can work against each other. Results also show that regulative or coercive forces play a relatively more important role in the early phase of adoption of the standard than in the subsequent phases of diffusion. In the later phases of diffusion of ISO 14001, normative forces, such as the diffusion of other management standards, as well as factors related to trade, play a more important role. Because of the similarities between environmental management standards and corporate social responsibility standards, this study can help identify some of the challenges for diffusion of ISO management standards in the area of social responsibility.
Management system standards, also called meta‐standards, have been adopted by an increasing number of organizations across the world. Although these management system standards are based on the same type of management principles and institutional arrangements, the literature remains scattered, with diverse studies focused on specific standards and published in various journals. The main objective of this paper is to analyse the academic research on meta‐standards through an integrative review intended to shed light on the main conclusions and substantial advances made in this area. This integrative review focuses more specifically on the two main meta‐standards which have been adopted by more than 1.3 million organizations worldwide: ISO 14001 and ISO 9001. The paper contributes insights into the main streams of the literature and current knowledge gaps to be addressed in future research on the various issues related to meta‐standards: global governance, diffusion processes, motivations, benefits of adoption and impacts on performance, internalization, integration, consultancy and auditing.
Forty-five percent of the Fortune global top 250 companies (GFT250) are now issuing environmental, social or sustainability reports in addition to their financial reports. Globally, more companies than ever are publishing reports on their environmental, social and sustainability performance and an increasing number are having these reports independently verified. These are some of the findings of a comprehensive survey of corporate sustainability reports by KPMG's Global Sustainability Services, in collaboration with the Graduate Business School of the University of Amsterdam. Similar surveys were held in 1993, 1996 and 1999. The 2002 survey also reveals that: Of the GFT250 companies surveyed, 45 percent published a separate corporate report on their performance, compared to 35 percent in 1999. Of the top 100 companies in each of the 19 countries surveyed, Japan has the highest percentage (72 percent) of companies producing corporate reports, followed by the UK (49 percent), USA (36 percent), Netherlands (35 percent), Finland (32 percent) and Germany (32 percent). Health, Safety and Environment (HSE) are still the most common types of report, but others are emerging including sustainability and social reports.
This article extends earlier research concerning the relationship between corporate social performance and corporate financial performance, with particular emphasis on methodological inconsistencies. Research in this area is extended in three critical areas. First, it focuses on a particular industry, the chemical industry. Second, it uses multiple sources of data-two that are perceptual based (KLD Index and Fortune reputation survey), and two that are performance based (TRI database and corporate philanthropy) in order to triangulate toward assessing corporate social performance. Third, it uses the five most commonly applied accounting measures in the corporate social performance and corporate financial performance (CSP/CFP) literature to assess corporate financial performance. The results indicate that the a priori use of measures may actually predetermine the CSP/CFP relationship outcome. Surprisingly, Fortune and KLD indices very closely track one another, whereas TRI and corporate philanthropy differentiate between high and low social performers and do not correlate to the firm's financial performance.
Over the last years, sustainable development has become one of the major issues that all global organizations are facing. The Global Reporting Initiative, located in the Netherlands and considered the leading authority world-wide, has developed what is currently considered the "common framework for sustainability reporting". The latest version of their reporting guidelines called G3 contains detailed instructions and standards on how to prepare sustainability reports. By using G3 guidelines, corporations show a strong commitment of continuous improvement of their sustainability reporting practices. The G3 guidelines are increasingly adopted by many global corporations and organizations. At present, more than 700 organizations voluntarily publish a sustainability report according to G3 guidelines . For the first time, this empirical study
investigates if the better performing and/or governed corporations prepare their sustainability reports according to the G3 guidelines. The goal of this study is to determine if there are significant differences with regard to size, financial performance, capital structure, and corporate
governance between firms that publish a G3 sustainability report to those that don't. Therefore, quantitative and qualitative variables of 124 randomly selected G3 reporting and non-G3 reporting corporations from 25 countries were analyzed. The results of this analysis show that corporations with the characteristics of being located in Europe, and/or being active in the energy or producing sector, and/or with a higher profit margin are more likely to produce high quality sustainability reports. Corporations with a higher long-term growth rate, on the other hand, are less likely to produce sustainability reports. The results of this unique study contribute directly to the knowledge of corporations providing voluntary CSR information in form of high quality sustainability reports and the importance of the development of globally accepted sustainability reporting standards.
Offered here is a conceptual model that comprehensively describes essential aspects of corporate social performance. The three aspects of the model address major questions of concern to academics and managers alike: (1) What is included in corporate social responsibility? (2) What are the social issues the organization must address? and (3) What is the organization's philosophy or mode of social responsiveness?
This chapter empirically examines factors associated with the environmental disclosures made by Canadian manufacturing firms in their 1993 annual reports. Existing studies suggest that corporate environmental information is value-relevant and that firms may disclose such information in a strategic fashion. This study examines the extent to which voluntary disclosure theory can explain corporate disclosure of general and financial environmental information. We find that firms with more news media coverage of their environmental exposure, higher pollution propensity, and more political exposure are more likely to disclose general environmental information. These findings are consistent with the predictions of the voluntary disclosure literature. We also find that disclosure of financial information about corporate environmental impact is influenced less by voluntary disclosure factors than is general disclosure.
In this paper we explore how multinational corporations (MNCs) adopt assurance practices to develop and sustain organizational accountability for sustainability. Using a panel of Fortune Global 250 firms over a period of ten years, we document the diffusion patterns of third-party assurance of sustainability reports. We specifically investigate how evolving auditing practices, namely diversity of assurance standards and type of assurance providers, shape the quality of sustainability assurance statements. The results illustrate great variability in the adoption of assurance practices in the formative stages of this novel market. Our descriptive analysis indicates the relevance of external institutional pressures as well as internal resources and capabilities as underlying factors driving the adoption of assurance. Our evidence also suggests that several MNCs project a decoupled or symbolic image of accountability through assurance, thereby undermining the credibility of these verification practices. The paper contributes to the emerging literature on international accountability standards and emphasizes the need to enhance theory-based, cross-disciplinary knowledge related to auditing and accountability processes for sustainability.
Offered here is a conceptual model that comprehensively describes essential aspects of corporate social performance. The three aspects of the model address major questions of concern to academics and managers alike: (1) What is included in corporate social responsibility? (2) What are the social issues the organization must address? and (3) What is the organization's philosophy or mode of social responsiveness?
This paper investigates the extent to which certification auditing can contribute to the realization of organizational accountability for sustainable development. A theoretical framework based on a critical analysis of financial and ISO auditing practices is proposed to shed light on the misconceptions, paradoxes and rational myths underlying the institutionalization of auditing practices in the area of corporate sustainability. As such, this paper casts doubt on the imagery of impartiality, rigor and accountability projected by organizations through discourses of certification. It also illustrates the pertinence of studying the auditing function from a cross-disciplinary viewpoint, and of paying attention to the processes by which auditing travels from one discipline to another. Copyright © 2010 John Wiley & Sons, Ltd and ERP Environment.
The aim of this study is to illustrate what and how stand-alone Corporate Social Responsibility (CSR) reports and web information provide to readers. These characteristics are recorded in predetermined schemes. The study focuses on the telecommunication sector, especially on fixed and mobile telephony and internet access providers in the Greek market. In all, five companies that provide CSR reports are identified. Their characteristics are categorized by four main predetermined dimensions, namely: type of communication, context, indicators and distinctions. The content analysis technique is selected as it is widely accepted and used in the field of CSR report research. The analysis indicates that three annual reports are almost similar in all dimensions and sub-dimensions. All of the companies publish their management systems certifications and awards and both Greek and English information versions exist; however, there are contradictory results in the dimension of indicators, the sub-dimensions of report guidelines and stand-alone reports. The value of the paper is to promote the standardization of CSR report.
We address the question of how and why corporate social responsibility (CSR) differs among countries and how and why it changes. Applying two schools of thought in institutional theory we conceptualize, first, the differences between CSR in the USA and Europe and, second, the recent rise of CSR in Europe. We also delineate the potential of our framework for application to other parts of the global economy.
A broad literature has emerged over the past decades demonstrating that firms’ environmental strategies and practices are influenced by stakeholders and institutional pressures. Such findings are consistent with institutional sociology, which emphasizes the importance of regulatory, normative and cognitive factors in shaping firms’ decisions to adopt specific organizational practices, above and beyond their technical efficiency. Similarly, institutional theory emphasizes legitimation processes and the tendency for institutionalized organizational structures and procedures to be taken for granted, regardless of their efficiency implications. However, the institutional perspective does not address the fundamental issue of business strategy necessary to explain the persistence of substantially different strategies among firms that are subjected to comparable levels of institutional pressures. In this chapter, we present current research arguing that such firms adopt heterogeneous sets of environmental management practices despite facing common institutional pressures because organizational characteristics lead managers to interpret these pressures differently.
This article assesses the proliferation of international accountability standards (IAS) in the recent past. We provide a comprehensive overview about the different types of standards and discus their role as part of a new institutional infrastructure for corporate responsibility. Based on this, it is argued that IAS can advance corporate responsibility on a global level because they contribute to the closure of some omnipresent governance gaps. IAS also improve the preparedness of an organization to give an explanation and a justification to relevant stakeholders for its judgments, intentions, acts and omissions when appropriately called upon to do so. However, IAS also face a variety of problems impeding their potential to help address social and environmental issues. The contribution of the four articles in this Special Issue is discussed in the context of standards’ problems and opportunities to foster corporate responsibility. The article closes by outlining a research agenda to further develop and extend the scholarly debate around IAS.
Globally, companies increasingly publish separate general purpose, non-financial (sustainability) reports. Some of these are independently assured and assurers may or may not be from the auditing profession. We seek to understand this emerging voluntary assurance market. Using a sample of 2,113 companies (from 31 countries) that produced sustainability reports between 2002-2004, we use sequential logit analysis to identify the factors associated with the decision to voluntarily purchase assurance and the choice of assurance provider. We hypothesize that a company's need to enhance credibility through assurance and choice of assurance provider will be a function of company, industry and country-related factors. Our results support the argument that companies seeking to enhance the credibility of their reports and build their corporate reputation are more likely to have their sustainability reports assured, although it does not matter whether the assurance provider comes from the auditing profession. We also find that companies operating in stakeholder orientated countries are more likely to choose the auditing profession as an assurer.
Purpose
– This paper aims to analyze so‐called sustainability, corporate social responsibility or citizenship reports, as artefacts of a compromise between an institutional entrepreneur (IE), the Global Reporting Initiative (GRI), and companies. Some companies take on this invitation but to which extent the information they produce as a result corresponds to the ideal promoted by the IE?
Design/methodology/approach
– A sample of ten reports from Canadian companies were analyzed using a combination of deductive and inductive coding techniques. The discourse and pictures were analyzed to identify whether they represent path creation (adherence to the sustainability ideal) or path dependence (the expression of traditional business interests and practices).
Findings
– The study findings show that companies adopt the sustainability reporting guideline and ideal promoted by IE, but only partially. Path dependence and path creation are in tension, a condition typical of innovative processes according to the actor network theory (ANT) framework. It suggests that the market for sustainability information is under construction.
Originality/value
– The value of the paper is that it examines voluntary disclosure of social and environmental performance by companies, using the notion of IE from the neo‐institutionalist theory, as well as the innovation model from the ANT. The originality of the paper also lies in its methodology – particularly the use of a mixed method—including the composition of “poems” with “verses” extracted from the corporate reports.
Purpose
The purpose of this paper is to explore the proposition that corporate social responsibility reporting could be viewed as both an outcome of, and part of reputation risk management processes.
Design/methodology/approach
The paper draws heavily on management research. In addition, an image restoration framework is introduced.
Findings
The concept of reputation risk management could assist in the understanding of corporate social responsibility reporting practice.
Originality/value
This paper explores the link between reputation risk management and existing theorising in social accounting.
ISO 14001, released in 1996, provides the basic framework for the establishment of an Environmental Management System (EMS) that can be audited and certified. ISO is not only an acronym for the International Organization for Standardization, but is also a term that refers to its Greek meaning: ‘equal.’ The main rationale for the creation of ISO 14001 was that its worldwide acceptance should facilitate international trade by harmonizing otherwise diffuse environmental management standards and by providing an internationally accepted blueprint for sustainable development, pollution prevention, and compliance assurance.
However, the implementation of ISO 14001 varies significantly across the globe. A significant number of firms have adopted ISO 14001 in Western Europe and Asia. In December 1999, 52% of the 14,106 ISO 14001 certified facilities were located in Western Europe and 36% in Asia. On the contrary, very few American companies have adopted this voluntary standard. U.S. certified facilities accounted for only 4.5% of the total of ISO 14001 certified facilities in the world in December 1999.
The U.S. institutional environment seems acting as a deterrent to ISO 14000 adoption as U.S. companies are fearful of the certification process which lays their performance open to public scrutiny. The opposite is true in Europe, where governments have encouraged the adoption of environmental management standards by setting up a trusted certification system and providing technical assistance to potential adopters.
This paper offers a conceptual framework to analyze this variation in adoption rates. It is proposed that the regulatory, normative and cognitive aspects of a country's institutional environment greatly impact the costs and potential benefits of ISO 14001 adoption and therefore explain the differences in adoption across countries. The analysis is supported by data collected from a phone questionnaire to 140 firms in Europe and a questionnaire mailed to 152 firms in the U.S.
Researchers have reported a positive, negative, and neutral impact of corporate social responsibility (CSR) on financial performance. This inconsistency may be due to flawed empirical analysis. In this paper, we demonstrate a particular flaw in existing econometric studies of the relationship between social and financial performance. These studies estimate the effect of CSR by regressing firm performance on corporate social performance, and several control variables. This model is misspecified because it does not control for investment in R&D, which has been shown to be an important determinant of firm performance. This misspecification results in upwardly biased estimates of the financial impact of CSR. When the model is properly specified, we find that CSR has a neutral impact on financial performance. Copyright © 2000 John Wiley & Sons, Ltd.
The globalization process has foregrounded ethnic discrimination as an increasingly important area of law around the world. Allowing a better understanding of the issue of ethnic discrimination and inequality, this book offers a comparative analysis of legislation impacting ethnic equality in various Anglophone countries. It demonstrates that it is possible to achieve equality at both national and international levels. A compelling historical analysis of the North American Free Trade Agreement and the European Union Treaty is provided together with a detailed examination of diversity and the law. The book will interest practitioners and others interested in ethnic legal issues.
This study reports the results of a behavioral experiment examining whether financial analysts from Australia, the United States, and the United Kingdom perceive a difference in the credibility of stand-alone corporate social responsibility (CSR) reports depending on whether they are assured, and the type of assurance provider (professional accountants versus sustainability consultants). We further examine whether the perceived credibility differs for financial analysts from the different countries and whether results hold for companies from different industries. The overall results show the credibility of a CSR report is greater when it is assured and when the assurer is a professional accountant. While assurance increases the credibility of the information in each of the three countries included, the relative impact is context-specific. Information is perceived to be more credible when a company is from an industry where assurance is more commonplace, and by financial analysts from the United States when the assurer is a professional accountant. Financial analysts from Australia and the United Kingdom perceive little difference in the enhanced credibility provided by the different assurance providers.
Data Availability: Contact the first author about the availability of the data.
While many sociologists have noted that organizational legitimacy is important for organizational survival, legitimacy has been infrequently empirically examined. This paper presents a conceptual framework in which organizational legitimacy is defined as the congruence between the values associated with the organization and the values of its environment. Challenges to organizational legitimacy and responses to these challenges are illustrated in a discussion of the American Institute for Foreign Study. Corporate philanthropic contributions, the composition and size of boards of directors, and the content of annual reports and other organizational communications are presented as efforts on the part of organizations to achieve legitimacy. The focus on processes of organizational legitimation can be used in analyzing a variety of organizational behaviors that are components of organization-environment interaction.
The main purpose of this exploratory analysis is to understand whether, based on evidence gathered from international best practices selected among corporations which adopt the Global Reporting Initiative guidelines in sustainability reporting (SR), stakeholders are significantly consulted and involved—as international literature would indicate—by assurance providers, during assurance processes of SR. We aim at verifying if this practice—known as stakeholder assurance—is in fact widespread in SR assurance by carrying out empirical research, through content analysis, into a sample of 161 assurance statements of international corporations, in order to test characteristics of any stakeholder assurance implemented.
Various rationales have been advanced to explain the phenomenon of corporate social reporting. Among these has been legitimacy theory which posits that corporate disclosures are made as reactions to environmental factors and in order to legitimise corporate actions. This paper reports the results of an historical analysis of social disclosures in 100 years of annual reporting by a dominant corporation in the Australian mining/manufacturing industry. A variable but significant pattern of social reporting is identified and compared with an earlier study of social reporting by US Steel. The results of this study fail to confirm legitimacy theory as the primary explanation for social reporting in the Australian case.
The decision to disclose social information in annual reports is a
voluntary one. A positive model of the factors that may influence firms'
decisions to disclose social information is proposed. It is hypothesised
that the decision may be affected by (a) social performance, (b)
political visibility, (c) financial variables, and (d) economic
performance. It is found that the decision to disclose social
information is well explained by the model and that the key explanatory
variables are social performance and political visibility.
Purpose
The paper attempts to determine whether market participants see value in the corporate choice to begin publishing a standalone sustainability report. It also seeks to investigate whether differences in market reactions are associated with the quality of the sustainability report.
Design/methodology/approach
The paper uses standard market model methods to isolate the unexpected change in market returns in the period surrounding the announcement of the release of a first‐time sustainability report.
Findings
The paper finds, on average, no significant market reaction to the announcement of the release of the sustainability reports. However, in cross‐sectional analyses, it is found that companies with the highest quality reports exhibited significantly more positive market reactions than companies issuing lower quality reports. These results hold when we control for firm size and membership in socially exposed industries.
Research limitations/implications
The paper examines only the US firms and the measure of quality is based on an assessment of the extent to which reports provide disclosures recommended by the Global Reporting Initiative. The sample is also relatively small. Finally, the analysis examines perceived value for only one potential stakeholder group – shareholders. Future research could address any of these shortcomings.
Practical implications
The evidence suggests that companies seeking value from their sustainability reporting need to carefully consider the quality of their presentations.
Originality/value
The finding that quality of sustainability reporting is important to investors provides valuable evidence to support improvements in the implementation of sustainability accounting and reporting.
Takes as its departure point the criticism of Guthrie and Parker by
Arnold and the Tinker et al. critique of Gray et al.
Following an extensive review of the corporate social reporting
literature, its major theoretical preoccupations and empirical
conclusions, attempts to re-examine the theoretical tensions that exist
between “classical” political economy interpretations of
social disclosure and those from more “bourgeois”
perspectives. Argues that political economy, legitimacy theory and
stakeholder theory need not be competitor theories but may, if analysed
appropriately, be seen as alternative and mutually enriching theories
from alternative levels of resolution. Offers evidence from 13 years of
social disclosure by UK companies and attempts to interpret this from
different levels of resolution. There is little doubt that social
disclosure practice has changed dramatically in the period. The
theoretical perspectives prove to offer different, but mutually
enhancing, interpretations of these phenomena.
This paper serves as an introduction to this special issue of Accounting, Auditing & Accountability Journal; an issue which embraces themes associated with social and environmental reporting (SAR) and its role in maintaining or creating organisational legitimacy. In an effort to place this research in context the paper begins by making reference to contemporary trends occurring in social and environmental accounting research generally, and this is then followed by an overview of some of the many research questions which are currently being addressed in the area. Understanding motivations for disclosure is shown to be one of the issues attracting considerable research attention, and the desire to legitimise an organisation’s operations is in turn shown to be one of the many possible motivations. The role of legitimacy theory in explaining managers’ decisions is then discussed and it is emphasised that legitimacy theory, as it is currently used, must still be considered to be a relatively under-developed theory of managerial behaviour. Nevertheless, it is argued that the theory provides useful insights. Finally, the paper indicates how the other papers in this issue of AAAJ contribute to the ongoing development of legitimacy theory in SAR research.
Researchers have reported a positive, negative, and neutral impact of corporate social responsibility (CSR) on financial performance. This inconsistency may be due to flawed empirical analysis. In this paper, we demonstrate a particular flaw in existing econometric studies of the relationship between social and financial performance. These studies estimate the effect of CSR by regressing firm performance on corporate social performance, and several control variables. This model is misspecified because it does not control for investment in R&D, which has been shown to be an important determinant of firm performance. This misspecification results in upwardly biased estimates of the financial impact of CSR. When the model is properly specified, we find that CSR has a neutral impact on financial performance. Copyright © 2000 John Wiley & Sons, Ltd.
The decision to disclose information concerning a firm's environmental liabilities is modeled as a sequential game involving the firm, a capital market, and outside stakeholders who can impose proprietary (political) costs on the firm. A partial disclosure equilibrium is derived in which firms reveal information strategically, maximizing the share‐value net of expected political costs. Inherent uncertainty regarding the existence and size of the liabilities creates a setting where outsiders are uncertain if management is informed about these liabilities, so firms can plausibly withhold “bad news”, that is, they do not disclose liabilities that exceed a threshold level. Three novel hypotheses are that a firm is more likely to disclose as (1) its pollution propensity increases, (2) outsiders' knowledge of its environmental liabilities increases, and (3) the risk of incurring proprietary costs decreases. Empirical support is found for the hypotheses, based on the accounting disclosures made by sample firms selected from the records of the Ontario Ministry of the Environment and Energy.
Improved accounting and auditing standards for environmental disclosure would build on at least three implications of the study:
To the extent that inherent uncertainty leaves managers with discretion as to what to disclose, the partial disclosure equilibrium result suggests that not all firms will comply with disclosure standards.
Publishing broad environmental performance indicators for companies in nonaccounting outlets would increase public awareness of a manager's private information endowment, making voluntary accounting disclosures of the liabilities more likely.
If a significant decline in stakeholder tolerance of pollution occurs, the expected proprietary costs of disclosing increase, and companies become less likely to disclose.
Firms are increasingly under pressure from stakeholders to incorporate the triple-bottom line of social, environmental and economic responsibility considerations into operations and supply chain management strategies. This research uses content analysis software that performed centering resonance analysis to examine corporate communication to stakeholders through corporate social responsibility (CSR) reports. The intent is to determine how supply chain strategies factor in to the triple-bottom line of 100 socially and environmentally responsible global companies. This research compares and contrasts the influential words in the CSR reports of firms from a range of industries, sizes and geographical regions. The content analysis revealed ten themes that provide a snapshot of how top global companies integrate and improve the triple-bottom line in internal operations and external supply chains. Findings indicated that while institutional pressure is the major driving force behind strategy development for all of the industries studied, companies emphasize different facets of social, environmental and economic responsibility upstream and downstream in supply chains based on industry, size and geographic location. The analysis revealed unique insights regarding corporate communications that other methodologies would not find.
This paper explores the factors associated with voluntary decisions to assure social, environmental and sustainability reports. Since the market for assurance services in this area is in its formative stages, there is a limited understanding of the demand for this emergent non-financial auditing practice, which is evolving rapidly across different countries. Drawing from extant literature in international auditing and environmental accounting, we focus on a set of country-level institutional factors to explain the adoption of sustainability assurance statements among an international panel of 212 Fortune Global 250 companies for the years 1999, 2002 and 2005. Consistent with our expectations, our results provide evidence that companies operating in countries that are more stakeholder oriented and have a weaker governance enforcement regime are more likely to adopt a sustainability assurance statement. Further, the demand for assurance is higher in countries where sustainable corporate practices are better enabled by market and institutional mechanisms. Our exploratory findings also indicate that the likelihood of choosing a large accounting firm as assurance provider increases for companies domiciled in countries that are shareholder oriented and have a lower level of litigation. We conclude the paper by suggesting three directions of research in the area of sustainability assurance that have relevant academic and practical implications. Copyright © 2008 John Wiley & Sons, Ltd and ERP Environment.
This study examines how both the level and the nature of environmental information voluntarily disclosed by Australian firms relate to their underlying environmental performance. Disclosure is scored using an index developed by Clarkson et al. (2008) based on Global Reporting Initiative (GRI) Guidelines and the environmental performance measure is based on emission data available from the National Pollutant Inventory (NPI). The sample consists of 51 firms that reported to the NPI in both 2002 and 2006. The findings are as follows. First, descriptive statistics indicate that while there was modest improvement in disclosure between 2002 and 2006, the highest disclosure score obtained was just slightly in excess of 50% of the maximum available based on the GRI Guidelines. Second, the results consistently indicate that not only do firms with a higher pollution propensity disclose more environmental information; they also rely on disclosures that the GRI views as inherently more objective and verifiable. Taken together, these results suggest that concerns regarding the reliability of voluntary environmental disclosures in the Australian context remain valid and thereby potentially signal a need for both enhanced mandatory reporting requirements and improved enforcement. In this regard, our study also informs regulatory policy on mandatory disclosures of environmental performance.
Corporate Social Responsibility (CSR) has existed in name for over 70years. It is practiced in many countries and it is studied
in academia around the world. However, CSR is not a universally adopted concept as it is understood differentially despite
increasing pressures for its incorporation into business practices. This lack of a clear definition is complicated by the
use of ambiguous terms in the proffered definitions and disputes as to where corporate governance is best addressed by many
of the national bodies legislating, mandating, or recommending CSR. This article explores the definitions of CSR as published
on the Internet by governments in four countries (United Kingdom (UK), France, the United States, and Canada). We look for
a consensus of understanding in an attempt to propose a more universal framework to enhance international adoption and practice
of CSR using the triple bottom line. Our results concur with the findings of both national and international bodies and suggest
that both within and among the countries in our study there exists no clear definition of the concept of CSR. While there
are some similarities, there are substantial differences that must be addressed. We present a number of proposals for a more
universal framework to define CSR.
Keywordscorporate social responsibility–definition–United Kingdom–France–United States–Canada
This article contributes to the growing scholarship on the topic of assurance services for sustainability reports. We first
synthetically illustrate the main international standards for the implementation of assurance services regarding the subject
documents. The second part of our article is an empirical analysis of reports drawn up on the basis of the current Global
Reporting Initiative 2006 guidelines, and looks at how effectively these standards have been implemented, analyzing the different
typologies of assurance statement.
This paper traces the development of corporate citizenship as a way of framing business and society relations, and critically examines the content of contemporary understandings of the term. These conventional views of corporate citizenship are argued to contribute little or nothing to existing notions of corporate social responsibility and corporate philanthropy. The paper then proposes a new direction, which particularly exposes the element of "citizenship". Being a political concept, citizenship can only be reasonably understood from that theoretical angle. This suggests that citizenship consists of a bundle of rights conventionally granted and protected by governments of states. However, the more that governmental power and sovereignty have come under threat, the more that relevant political functions have gradually shifted towards the corporate sphere – and it is at this point where "corporate" involvement into "citizenship" becomes an issue. Consequently, "corporate citizens" are substantially more than fellow members of the same community who cosily rub shoulders with other fellow citizens while bravely respecting those other citizens'' rights and living up to their own responsibility as corporations – as the conventional rhetoric wants us to believe. Behind this relatively innocuous mask then, the true face of corporate citizenship suggests that the corporate role in contemporary citizenship is far more profound, and ultimately in need of urgent reappraisal.