Article2018

Revisiting the relationship between corporate governance and corporate social and environmental disclosure practices in Pakistan

66 citations0/0 files storedSocial Responsibility Journal

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Corporate Social Responsibility Reporting Auditing, Earnings Management, Governance Corporate Governance and Financial Management

Abstract

Purpose This study aims to revisit the corporate social and environmental disclosure (CSED) practices of Pakistani companies using unique CSED index which measures the CSED through three dimensions such as theme, news type and nature of information. In addition, the effect of board composition, ownership structure and corporate characteristics on CSED was tested through performing multiple regression analysis. Design/methodology/approach For this purpose, data were collected from annual reports of top 120 companies’ selected based on market capitalization for three years period of 2013-2015. Findings Based on the descriptive statistics, the results found that overall level of CSED in Pakistan is moderate. However considering CSED using three dimensions, the results demonstrate that highest level of disclosure on the basis of theme is reported in terms of human resource category as compared to other categories where, as in terms of news type and nature of information, analysis shows that companies in Pakistan feel resistant to disclose bad news, monetary and non-monetary aspect of CSED information. Using multiple regression analysis, the results found that all the variables have hypothesized relationship with CSED except government and institutional ownership. The variables such as chairman as non-executive director, board diversity, appointment of independent director as audit committee chairman, CSR committee, industry type and firm size are found to have significant influence on the CSED practices in Pakistan. Research limitations/implications These results imply that the CSED phenomenon is still lacking behind. Under individual categories of CSED, descriptive statistics found that environment is still not a matter of concern for companies operating in Pakistan. In addition, the results demonstrate that CSED practices are only performed by very few companies in Pakistan based on standard deviation. In addition, appointment of non-executive and independent director as chairman of board and audit committee and representation of foreigners on the board should be encouraged in order to improve CSED practices in Pakistan. Originality/value This study contributes to the existing literature in developing country like Pakistan through using unique CSED index and also making comparison of financial versus non-financial sectors. The author suggests that regulatory authorities in Pakistan must take reasonable steps to make the company’s operations environment-friendly.

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References

1983Separation of Ownership and Control 1995Corporate social and environmental reporting 1996Some determinants of social and environmental disclosures in New Zealand companies 2005The impact of culture and governance on corporate social reporting 2002Culture, Corporate Governance and Disclosure in Malaysian Corporations 1989Corporate Social Reporting: A Rebuttal of Legitimacy Theory 2005Corporate Social Responsibility (CSR) in Asia 2002Internal organisational factors influencing corporate social and ethical reporting

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