Factors Impacting Corporate Social Responsibility of Top Firms Listed in India
DOI:
https://doi.org/10.17010/ijf/2023/v17i6/171974Keywords:
corporate social responsibility
, financial and non-financial variables, fixed effects, ownership structureJEL Classification Codes
, D21, D22, G32, L21Paper Submission Date
, August 25, 2022, Paper sent back for Revision, March 27, 2023, Paper Acceptance Date, April 20, Paper Published Online, June 15, 2023Abstract
Purpose : The present research work examined the sample of Indian firms to determine the factors impacting top organizations’ corporate social responsibility (CSR) across selected industrial sectors. The objective of this study was to find out the significant determinants of CSR disclosure using financial and non-financial variables.
Methodology : Data sources used included annual reports, CSR reports, the company website, and other available public sources. Fixed-effect regression was applied to 708 data observations for the period from 2014–2015 to 2019–2020. The study has developed a total of four regression models for individually testing the influence of promoters’ ownership, institutional ownership, company popularity, and innovation on CSR disclosure.
Findings : The findings of this study reported that firm size, firm age, and leverage (gearing) are strong determinants that positively influence CSR reporting. Apart from that, ownership of promoters showed a weak negative effect on CSR disclosure of Indian firms, but profitability does not appear to have any impact on CSR score. However, institutional ownership and innovation are not significant determinants of CSR disclosure.
Practical Implications : Larger firms are more accountable and hold a prominent place in society and the community as a whole, therefore, they are supposed to disclose greater CSR information. Furthermore, Indian companies with greater promoter ownership stakes make lesser CSR reporting due to lower information asymmetry and agency conflicts.
Originality : The present research on factors affecting CSR, which is under-researched in India, has offered an extensive range of variables by developing advanced regression models.
Downloads
Downloads
Published
How to Cite
Issue
Section
References
Al-Janadi, Y., Rahman, R. A., & Omar, N. H. (2013). Corporate governance mechanisms and voluntary disclosure in Saudi Arabia. Research Journal of Finance and Accounting, 4(4), 25–35. https://core.ac.uk/download/pdf/234629454.pdf
Alsaeed, K. (2006). The association between firm-specific characteristics and disclosure: The case of Saudi Arabia. Managerial Auditing Journal, 21(5), 476–496. https://doi.org/10.1108/02686900610667256
Alturki, K. H. (2014). Voluntary disclosure by Saudi companies. Research Journal of Finance and Accounting, 5(20), 77–94. https://core.ac.uk/download/pdf/234630218.pdf
Aly, D., Simon, J., & Hussainey, K. (2010). Determinants of corporate internet reporting: Evidence from Egypt. Managerial Auditing Journal, 25(2), 182–202. https://doi.org/10.1108/02686901011008972
Basuony, M. A., & Mohamed, E. K. (2014). Determinants of internet financial disclosure in GCC countries. Asian Journal of Finance & Accounting, 6(1), 70–89. https://www.macrothink.org/journal/index.php/ajfa/article/viewFile/5085/4232
Bayoud, N. S., Kavanagh, M., & Slaughter, G. (2012). Factors influencing levels of corporate social responsibility disclosure by Libyan firms: A mixed study. International Journal of Economics and Finance, 4(4), 13–29. https://doi.org/10.5539/ijef.v4n4p13
Behal, V., & Gupta, M. (2022). Reporting of corporate social responsibility practices: An evidence from Indian BSE-listed companies. Prabandhan: Indian Journal of Management, 15(3), 42–58. https://doi.org/10.17010/pijom/2022/v15i3/165633
Belkaoui, A., & Karpik, P. G. (1989). Determinants of the corporate decision to disclose social information. Accounting, Auditing & Accountability Journal, 2(1). https://doi.org/10.1108/09513578910132240
Bhattacharyya, S. S., Singh, A., & Naik, M. R. (2012). Exploring the factors influencing the corporate social responsibility ratings of Indian organizations, 1–10. https://www.crrconference.org/Previous_conferences/downloads/crrc2012bhattacharyyaet al.pdf
Bidari, G., & Djajadikerta, H. G. (2020). Factors influencing corporate social responsibility disclosures in Nepalese banks. Asian Journal of Accounting Research, 5(2), 209–224. https://doi.org/10.1108/AJAR-03-2020-0013
Branco, M. C., & Rodrigues, L. L. (2008). Factors influencing social responsibility disclosure by Portuguese companies. Journal of Business Ethics, 83(4), 685–701. https://doi.org/10.1007/s10551-007-9658-z
Chan, M. C., Watson, J., & Woodliff, D. (2014). Corporate governance quality and CSR disclosures. Journal of Business Ethics, 125(1), 59–73. https://doi.org/10.1007/s10551-013- 1887-8
Charumathi, B., & Ramesh, L. (2017). Do social and environmental disclosures increase firm value? Evidence from Indian companies. Indian Journal of Finance, 11(4), 23–38. https://doi.org/10.17010/ijf/2017/v11i4/112628
Chiu, T.-K., & Wang, Y.-H. (2015). Determinants of social disclosure quality in Taiwan: An application of stakeholder theory. Journal of Business Ethics, 129(2), 379–398. https://doi.org/10.1007/s10551-014-2160-5
Edward Freeman, R., & Phillips, R. A. (2002). Stakeholder theory: A libertarian defense. Business Ethics Quarterly, 12(3), 331–349. https://doi.org/10.2307/3858020
Elfeky, M. I. (2017). The extent of voluntary disclosure and its determinants in emerging markets: Evidence from Egypt. The Journal of Finance and Data Science, 3(1–4), 45–59. https://doi.org/10.1016/j.jfds.2017.09.005
Eng, L. L., & Mak, Y. T. (2003). Corporate governance and voluntary disclosure. Journal of Accounting and Public Policy, 22(4), 325–345. https://doi.org/10.1016/S0278- 4254(03)00037-1
Fahad, P., & Nidheesh, K. B. (2021). Determinants of CSR disclosure: An evidence from India. Journal of Indian Business Research, 13(1), 110–133. https://doi.org/10.1108/JIBR-06-2018-0171
Fama, E. F., & Jensen, M. C. (1983). Separation of ownership and control. The Journal of Law & Economics, 26(2), 301–325. https://www.jstor.org/stable/725104
Golda, A. J. (2020). Driving factors of corporate social responsibility in Indian companies. Journal of Critical Reviews, 7(6), 83–85.
Govindasamy, V., Suresh, K., & Gunasekar, S. (2018). Textile industry CSR disclosure trends: Reflections from India and Malaysia. Prabandhan: Indian Journal of Management, 11(12), 35–50. https://doi.org/10.17010/pijom/2018/v11i12/139989
Gujarati, D. N., Porter, D. C., & Gunasekar, S. (2017). Basic econometrics (5th ed.). Tata McGraw-Hill Education Private Limited.
Habbash, M., Hussainey, K., & Awad, A. E. (2016). The determinants of voluntary disclosure in Saudi Arabia: An empirical study. International Journal of Accounting, Auditing and Performance Evaluation, 12(3), 213–236. https://doi.org/10.1504/IJAAPE.2016.077890
Haniffa, R. M., & Cooke, T. E. (2005). The impact of culture and governance on corporate social reporting. Journal of Accounting and Public Policy, 24(5), 391–430. https://doi.org/10.1016/j.jaccpubpol.2005.06.001
Huafang, X., & Jianguo, Y. (2007). Ownership structure, board composition and corporate voluntary disclosure: Evidence from listed companies in China. Managerial Auditing Journal, 22(6), 604–619. https://doi.org/10.1108/02686900710759406
Hussainey, K., Elsayed, M., & Razik, M. A. (2011). Factors affecting corporate social responsibility disclosure in Egypt. Corporate Ownership & Control, 8(4–4), 432–443. https://doi.org/10.22495/cocv8i4c4art5
Issa, A. I. (2017). The factors influencing corporate social responsibility disclosure in the Kingdom of Saudi Arabia. Australian Journal of Basic and Applied Sciences, 11(10), 1–19. https://philarchive.org/archive/ISSTFI
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://www.sfu.ca/~wainwrig/Econ400/jensen-meckling.pdf
Kamel, H., & Awadallah, E. (2017). The extent of voluntary corporate disclosure in the Egyptian Stock Exchange: Its determinants and consequences. Journal of Accounting in Emerging Economies, 7(2), 266–291. https://doi.org/10.1108/JAEE-05-2015-0037
Kansal, M., Joshi, M., & Batra, G. S. (2014). Determinants of corporate social responsibility disclosures: Evidence from India. Advances in Accounting, 30(1), 217–229. https://doi.org/10.1016/j.adiac.2014.03.009
Kumar, N., Kumar, P., & Nigam, D. (2021). A study of interaction effect of financial performance on the relationship of board gender diversity and corporate social responsibility. Prabandhan: Indian Journal of Management, 14(8), 8–24. https://doi.org/10.17010/pijom/2021/v14i8/165676
Kumari, S., Sehrawat, A., & Sharma, T. (2017). Corporate social responsibility practices and their impact on the community: A case study of Ambuja Cement Ltd. Prabandhan: Indian Journal of Management, 10(1), 54–66. https://doi.org/10.17010/pijom/2017/v10i1/109103
Kumari, S., Sharma, T., & Sehrawat, A. (2017). Community perception and expectations on corporate social responsibility: A comparative case study on Ambuja and ACC Limited. Prabandhan: Indian Journal of Management, 10(5), 37–48. https://doi.org/10.17010/pijom/2017/v10i5/114255
Li, F., Morris, T., & Young, B. (2019). The effect of corporate visibility on corporate socials responsibility. Sustainability, 11(13), 3698. https://doi.org/10.3390/su11133698
Malagatti, V. D. (2017). Holistic framework and its dimensions for egalitarian implementation of corporate social responsibility. Prabandhan: Indian Journal of Management, 10(4), 49–59. https://doi.org/10.17010/pijom/2017/v10i4/112771
Masoud, N., & Vij, A. (2021). Factors influencing corporate social responsibility disclosure (CSRD) by Libyan state-owned enterprises (SOEs). Cogent Business & Management, 8(1), Article 1859850. https://doi.org/10.1080/23311975.2020.1859850
Mitchell, R. K., Agle, B. R., & Wood, D. J. (1997). Toward a theory of stakeholder identification and salience: Defining the principle of who and what really counts. The Academy of Management Review, 22(4), 853–886. https://doi.org/10.2307/259247
Modugu, K. P., & Eboigbe, S. U. (2017). Corporate attributes and corporate disclosure level of listed companies in Nigeria: A post-IFRS adoption study. Journal of Finance and Accounting, 5(2), 44–52. https://doi.org/10.12691/jfa-5-2-3
Nguyen, T. H., Vu, Q. T., Nguyen, D. M., & Le, H. L. (2021). Factors influencing corporate social responsibility disclosure and its impact on financial performance: The case of Vietnam. Sustainability, 13(15), 8197. https://doi.org/10.3390/su13158197
Nurleni, N., Bandang, A., Darmawati, & Amiruddin. (2018). The effect of managerial and institutional ownership on corporate social responsibility disclosure. International Journal of Law and Management, 60(4), 979–987. https://doi.org/10.1108/IJLMA-03-2017-0078
Patro, B., & Pattanayak, J. K. (2017). Association of CSR disclosure with accounting conservatism: A study of select Indian mining firms. Indian Journal of Finance, 11(3), 7–25. https://doi.org/10.17010/ijf/2017/v11i3/111646
Prado-Lorenzo, J., Gallego-Ãlvarez, I., GarcÃa-Sánchez, I., & RodrÃguez-DomÃnguez, L. (2008). Social responsibility in Spain: Practices and motivations in firms. Management Decision, 46(8), 1247–1271. https://doi.org/10.1108/00251740810901417
Ramesh, G., & Peswani, S. (2017). An analytical study of corporate social responsibility spending by companies based on Government of India’s CSR mandate. Prabandhan: Indian Journal of Management, 10(3), 35–52. https://doi.org/10.17010/pijom/2017/v10i3/111425
Ratajczak, P., & Szutowski, D. (2016). Exploring the relationship between CSR and innovation. Sustainability Accounting, Management and Policy Journal, 7(2), 295–318. https://doi.org/10.1108/SAMPJ-07-2015-0058
Samaha, K., & Dahawy, K. (2011). An empirical analysis of corporate governance structures and voluntary corporate disclosure in volatile capital markets: The Egyptian experience. International Journal of Accounting, Auditing and Performance Evaluation, 7(1–2), 61–93. https://doi.org/10.1504/IJAAPE.2011.037726
Singh, A., & Verma, P. (2017). Investigating the nexus of corporate social responsibility and brand equity: A systematic review. Prabandhan: Indian Journal of Management, 10(2), 7–25. https://doi.org/10.17010/pijom/2017/v10i2/110625
Viet Ha, H. T., Thuy Van, V. T., & Hung, D. N. (2019). Impact of social responsibility information disclosure on the financial performance of enterprises in Vietnam. Indian Journal of Finance, 13(1), 20–36. https://doi.org/10.17010/ijf/2019/v13i1/141017
Wuttichindanon, S. (2017). Corporate social responsibility disclosure—choices of report and its determinants: Empirical evidence from firms listed on the Stock Exchange of Thailand. Kasetsart Journal of Social Sciences, 38(2), 156–162. https://doi.org/10.1016/j.kjss.2016.07.002