The evolution and determinants of corporate social responsibility (CSR) disclosure in a developing country: extent and quality

Abstract

PurposeThis paper examines the evolution and determinants of the extent and quality of corporate social responsibility (CSR) disclosure in a developing country (Mauritius).Design/methodology/approachCSR disclosures from annual reports of all listed companies were hand-collected for a 12-year period (2007–2018). The extent of disclosure was measured using a dichotomous index (41 items) while the quality of each disclosure item was assessed on a three-point scale. We rely on organisational legitimacy and resource dependence theories to investigate (1) trends in CSR disclosure extent and quality (2) the role of selected board and firm characteristics, namely the business qualifications of board members, extent of cross-directorships and the firm’s use of employee volunteering scheme, on CSR disclosure.FindingsCSR disclosure extent, notably in relation to environment and human resources, gradually increased to an overall score of 45%. Comparatively, the quality of disclosures was low, with an average score of 20%. The proportion of business-qualified directors is only positively associated with CSR disclosure extent. The extent of cross-directorships is negatively associated with CSR disclosure quality while employee volunteering is positively associated with disclosure extent and quality.Originality/valueThe findings reveal the relatively low quality of information being disclosed, and in spite of CSR and governance reforms, there seems to be limited influence from the board of directors and their networks; prompting a call to foster greater board engagement on CSR matters. The results also highlight the need for a multi-dimensional assessment of CSR disclosure.

Board attributes and corporate social responsibility disclosure quality based on information typology

“…Results under Difference GMM for CSRXQ2 also support this hypothesis. These results are consistent with previous studies (Alnabsha et al , 2018; Soobaroyen et al , 2022), indicating that board size is negatively related to CSRDQ. This negative relationship may be explained by disagreement and communication problems among many board members regarding CSRDQ, resulting in poor disclosure practices (Htay et al , 2012; Alnabsha et al , 2018).…”

“…It introduced a new measure for CSRDQ for a developing country, and it also focuses on verifiability as a proxy for CSRDQ following the IASB Conceptual Framework for Financial Reporting. Using two different measures of CSRDQ complements the recent work of Soobaroyen et al (2022). It offers us an opportunity to test the sensitivity of the board attributes-CSRDQ relationship to the measurement of disclosure quality.…”

“…We are motivated to measure CSRDQ in the context of Mauritius, an African developing country, in light of the country’s various experiments with policies aimed at pressuring companies to engage in more extensive and strategic CSR initiatives with a “social” agenda (Soobaroyen et al , 2022). In 2004, a stakeholder-led corporate governance code was published per the South African King reforms.…”

“…However, it is worth noting that there is no mandatory model for CSR disclosure, and the use of international disclosure frameworks (e.g. global reporting initiative [GRI]) remains limited (Soobaroyen et al , 2022).…”

“…Finally, we offer a methodological contribution. We use different proxies of CSRDQ and complement Soobaroyen et al (2022) and examine whether CSRDQ measurement drives the board attributes-CSRDQ relationship. We use system-generalized method of moments (GMM) to deal with the endogeneity caused by reverse causality.…”