The effect of award on CSR disclosures in annual reports of Malaysian PLCs

Abstract

Purpose – The paper aims to examine the determinants of corporate social responsibility (CSR) disclosures in the annual reports of Malaysian public listed companies (PLCs). In 2006, Bursa Malaysia Berhad (BMB) launched its CSR Framework (effective in 2007) which is supposed to guide the Malaysian PLCs’ CSR disclosures. It is believed that this CSR framework may influence CSR disclosures to be more systematic, yet there is no evidence whether this framework influences the extent and quality of CSR disclosures. Thus, this study examines this area of research. The study also tests the influence of award on CSR disclosures. Design/methodology/approach – CSR disclosure checklist was developed to analyse the extent and quality of CSR information disclosures in the year 2008 annual reports of the Malaysian PLCs. Findings – Malaysian PLCs disclose more CSR information related to community and environment than workplace and marketplace CSR themes. On the other hand, the quality of disclosure practices was minimal when it is compared to the extent of disclosure practices. Finally, the study also found that the award’s variable has a significant positive relationship with both the extent and quality of CSR disclosure practices of the Malaysian PLCs. Research limitations/implications – The recently developed BMB’s CSR framework seems to have impact on the level and systematic CSR reporting practices of Malaysian PLCs. However, the quality of CSR disclosures is considered minimal. Practical implications – The results of the study bring some practical implications to the regulators, particularly Bursa Malaysia. First, it is good to observe that most companies have practiced specific disclosure in a separate statement with regard to CSR. However, the format of presentation and the extent of disclosure vary among the firms. Second, further guidelines need to be developed to provide a clearer framework of disclosure for CSR information. At the moment, Bursa Malaysia only listed down general principles of CSR themes. In addition, the regulators should also look into the evolving issues in CSR, such as the issue of climate change reporting. For example, the Climate Disclosure Standards Board has issued a voluntary Climate Change Reporting Framework. Originality/value – This study examined both the traditional (i.e. firm size and profitability) and non-traditional (i.e. award) factors influencing management’s decision to disclose CSR information in the annual reports of the Malaysian PLCs. Furthermore, the study reported how Malaysian PLCs comply with the recently implemented CSR framework issued by BMB.

Does context matter for sustainability disclosure? Institutional factors in Southeast Asia

“…Extant SD literature focusing on why companies disclose sustainability information (De Villiers & Alexander, ), have investigated its nature, patterns (e.g., Buhr & Freedman, ), and determinants (e.g., Chakroun & Matsoussi, ; El‐Halaby & Hussainey, ; Ghazali, ). In this regard, factors such as organisational characteristics, such as firm size (See Esa & Ghazali, ; Mio & Venturelli, ; Rahman, Zain, & Al‐Haj, ), profitability (See Anas, Rashid, & Annuar, ; Cowen, Ferreri, & Parker, ; El‐Halaby & Hussainey, ), industry type (See Chan, Watson, & Woodliff, ; Naser & Hassan, ; Parsa & Kouhy, ), and corporate governance mechanisms (See Haji, ; Jizi, Salama, Dixon, & Stratling, ; Khan, Muttakin, & Siddiqui, ), have been identified as key determinants of SD . Nevertheless, national institutional environmental influences upon SD , have received much less attention (Jackson & Apostolakou, ; Martínez‐Ferrero & García‐Sánchez, ).…”

Stakeholder Power towards Corporate Social and Environmental Responsibility Disclosure: Evidence from Malaysia

“…Research on CSER disclosure has gained wide attention in developed countries, such as Europe and the United States. However, the level of CSER of public listed companies in Malaysia is still generally low (Anas et al 2015;Saleh et al 2010;Zainal et al, 2013). In Malaysia, CSER disclosure is a voluntary initiative mainly focused on the social and environmental aspects of companies presented in companies' annual reports to increase good governance, accountability and transparency.…”

“…The level of CSER of public listed companies in Malaysia is still generally low (Anas et al 2015;Saleh et al 2010;Zainal et al 2013). Most previous studies on CSER by public listed companies in Malaysia found that reporting appeared to be low and restricted to general and ad-hoc statements on environmental matters (Saleh et al 2010;Zainal & Zainudin 2013).…”

“…Disclosures on the social and environmental practices of companies from stakeholders' perspective are quite new for South East Asian companies. Most previous research on corporate social and environmental responsibility (CSER) has been conducted by examining companies' annual reports through content analysis methodology from the reporting companies' perspective or a managerial perspective (Anas et al 2015;Deegan 2017). However, limited studies have explored stakeholders' perspective on CSER and whether CSER can potentially influence stakeholders in making decisions.…”

Corporate Social Responsibility Awards and Performance: Some Malaysian Evidence

“…The insignificant results of the board size, board gender and board educational confirm with prior literatures (see for example Haniffa and Hudaib 2006;Adams and Ferreira 2009;Christy, Matolcsy, Wright, & Wyatt, 2010). Additionally, the result of awards also might be inconsistent with prior studies (Anas et al, 2015;Boesso & Kumar, 2007) which revealed a significant relationship between awards and the extent of the CSR disclosure as these studies used different indices.…”