Corporate social reporting in the banking industry of Bangladesh: a test of legitimacy theory

Abstract

Purpose The purpose of this study is to test the legitimacy theory (LT) argument in the context of the banking industry of a developing country, taking Bangladesh as a case by interpreting the bank managers’ perceptions in legitimizing corporate social (CS) reporting. Design/methodology/approach This study uses the Dhaka Stock Exchange (DSE) listed banks data during a 10-year period (2004–2013) and uses Islam and Kokubu (2018) CS reporting index. The LT variables are tested by using multiple regression method. A mixed-method of research with “triangulation design” has been used in this study for a comprehensive understanding of LT variables. In addition, a total number of 28 interviews (ranges from Corporate Social Responsibility Operational Manager to Managing Director/Chief Executive Officer) from 24 listed banks have been conducted to interpret bank managers’ legitimate perception in CS reporting. Findings This study supports the applicability of the broader thrust of LT for the banking industry of the developing economies in three ways. First, for companies with lower “proximity to end-users” by density in population disclose more social information than the companies with higher ones to gain/regain/maintain market legitimacy. Second, newer banks with less scope to reach proximity to end-users disclose more social information to fill proximity to tertiary clients’ gap to meet community expectation. Third, companies disclose more social information in their annual reports to legitimize corporate actions in response to the CS reporting initiatives taken by the stakeholders, particularly regulators. Research limitations/implications The main implication of this study is that it extends the applicability of the LT for the developing country, in general, and for the banking industry, in particular. Originality/value The study enriches the existing LT literature of the developing economies’ banking industry by providing empirical evidence from the banking system in Bangladesh.

CSR Disclosure: Effects of Political Ties, Executive Turnover and Shareholder Equity. Evidence from China

“…Most control variables had an insignificant relationship with the quality of CSR disclosure. The result of the control variables is also consistent with the previous [71,[104][105][106][107].…”

“…Hypothesis (H3) the results of model 3 demonstrate a positive linkage of shareholding with executive turnover influence on the quality of CSR disclosure (t = 21.03, p < 0.000) consistent with H3 [99,100]. Hypothesis (H1) in the model ( 4), the interaction is observed between the quality of CSR disclosure and executive turnover whereby the coefficient of the interaction term resulted in being significantly negative (t = −22.03, p < 0.000), depicting that ensuring quality of CSR disclosure decrease the effect of executive turnover, which supports H1 [71,101]. Hypothesis (H2) in the model ( 5), the interaction is observed between the quality of CSR disclosure and political ties whereby the coefficient of the interaction term resulted to be significantly negative (t = −6.36, p < 0.000) which shows that ensuring the quality of CSR disclosure decreases the impact of political ties [71,102,103].…”

“…Hypothesis (H1) shown in the results of Model 1, executive turnover is connected significantly negatively with the quality of CSR disclosure (t = −18.44, p < 0.000), consistent with [97]. Hypothesis (H2) results of model 2 show that political ties are also connected significantly negatively with the quality of CSR disclosure (t = −4.22, p < 0.000), consistent with H2 [71,98]. Hypothesis (H3) the results of model 3 demonstrate a positive linkage of shareholding with executive turnover influence on the quality of CSR disclosure (t = 21.03, p < 0.000) consistent with H3 [99,100].…”

“…In tandem with this background, it can be claimed that politically ties firms have already an advantage of political legitimacy and are therefore disincentivized for the compliance of quality of CSR disclosure per se. Notwithstanding, a control-oriented perspective contradicts the above proposition in the sense that it promotes the view of the behavior of firms to be dependent upon regulatory pressure from the government [70,71]. In the case of China, this view is of importance in the sense that firms with political ties are considered to be the nurturers of governmental policies [72].…”

“…To control for potential variables which might influence the quality of CSR disclosure, a variety of control variables are used in this study [71,94]. Board size is regarding the number of directors on the board of directors.…”