business ethics unit VI case study and DQ Question

Corporate governance and financial characteristic effects on the extent of corporate social responsibility disclosure

Grigoris Giannarakis

Grigoris Giannarakis is a Lecturer based at Department of Financial Applications, Technological Education Institute (TEI) of West Macedonia, Kozani, Greece.

Abstract Purpose – This study aims to investigate the relationship between corporate governance and financial characteristics and the extent of corporate social responsibility (CSR) disclosure in the USA. These corporate governance and financial characteristics are the board meetings, average age of board members, presence of women on the board, the board’s size, chief executive officer duality, financial leverage, profitability, company’s size, board composition and board’s commitment to CSR. Design/methodology/approach – The sample consists of 100 companies from the Fortune 500 list for 2011. The environmental, social and governance disclosure score calculated by Bloomberg is used as a proxy for the extent of CSR disclosure. A multiple linear regression was incorporated to investigate the association of corporate characteristics with CSR disclosure. Findings – Results indicate that the company’s size, the board commitment to CSR and profitability were found to be positively associated with the extent of CSR disclosure, while financial leverage is related negatively with the extent of CSR disclosure. Research limitations/implications – The research is based only on the presence or absence of CSR items in CSR disclosure, and it ignores the quality dimension which can lead to misinterpretation. The results should not be generalized as the sample was based on US companies for 2011. Originality/value – The study assists stakeholders to identify US companies through the extent of CSR disclosures which contributes to the understanding of determinants of CSR disclosure to improve the implementation of disclosure guidelines.

Keywords Corporate governance, Disclosure, Determinants, Corporate social responsibility

Paper type Research paper

1. Introduction

This study investigates the relationship of corporate governance and financial characteristics on the extent of CSR disclosure in the USA. Bhimani and Soonawalla (2005) noted that the concepts of corporate governance and CSR are two sides of the same coin, while Esa and Mohd Ghazali (2012, p. 293) pointed out that both “CSR and corporate governance also stress on the importance of achieving long-term value which in turn will assist in promoting a business continued acceptance and existence”. The concept of CSR and CSR disclosure have emerged together, ensuring better governance (Adam and Shavit, 2009; Perrini, 2005). In addition, Shavit and Adam (2011) stated that the need for disclosure and transparency can insure better governance, and the choice of investment on CSR criteria may increase the long-term owner value; however, in the short term, the gains may lessen for investors. Baldarelli and Gigli (2011) noted that the development of CSR initiatives concerns the corporate governance level and can contribute to persistent profitability and superior performance.

Regarding the definition Figure of CSR, it “[. . .] means not only fulfilling legal expectations, but also going beyond compliance and investing ‘more’ into human capital, the environment and the relations with stakeholders” (Commission of the European Communities, 2001, p. 6). As far as CSR reporting is concerned, an

DOI 10.1108/SRJ-02-2013-0008 VOL. 10 NO. 4 2014, pp. 569-590, © Emerald Group Publishing Limited, ISSN 1747-1117 SOCIAL RESPONSIBILITY JOURNAL PAGE 569

increasing number of companies have realized the importance of social awareness of their corporate operations. Thus, companies have developed different communication tools to publish their CSR initiatives, with the most important method being social disclosure (Gray et al., 1996; Birth and Illia, 2008; CSR Europe, 2000a, 2000b). CSR disclosure is referred to as “a public report by companies to provide internal and external stakeholders with a picture of the corporate position and activities on economic, environmental and social dimensions” (World Business Council for Sustainable Development, 2002).

The main motive for the publishing of sustainable disclosure is to legitimize the companies’ operations, thus, justifying its continuous existence (Guthrie and Parker, 1989; Daub, 2007) and gain higher levels of citizen trust. According to Mathews (1995), reputation management and brand protection can be considered as important motives for the elaboration of CSR disclosure (Kolk, 2005), while Baldarelli and Gigli (2011) described the concept of corporate responsibility as an intrinsic component of reputation. An increasing number of investors are showing interest in CSR development and are adopting CSR policies which lead to rapid changes in stock market investments (Cowton, 1999; Cox et al., 2004). Adam and Shavit (2008) pointed out that a rating-based method assessing CSR can probably be an incentive to companies excluded from Socially Responsible Investments (SRI) indices to invest in CSR initiatives. Therefore, when companies are ranked publicly by SRI index criteria, the market forces an incentive on companies to invest in improving their SRI index ranking.

Different approaches have been developed to assess CSR performance. Some of these are single and multiple indicators, expert assessments, surveys of managers and content of corporate disclosures (Turker, 2009; Maignan and Ferrell, 2004). Gelb and Strawser (2001) showed that companies which implement CSR initiatives provide high levels of CSR disclosure performance. CSR disclosure can be used as a proxy for CSR implementation; however, this does not necessarily mean that companies provide the actual performance but the one that the company wants to present to stakeholders. It can be used as an indication for the company’s intention (Ullmann, 1985; Alon et al., 2010; McGuire et al., 1988; Daub, 2007).

According to EIRIS assessment of sustainability performance in over 2,000 large-cap global companies, no USA company is in the top 10 and only 9 per cent of them are assessed with high sustainable performance (EIRIS, 2012) because in the USA, companies develop CSR disclosure on a voluntary basis (Rodríguez and LeMaster, 2007; Tschopp, 2005). They tend to publish more CSR initiatives for corporate discretion than their competitors, as the US market gives more incentives and opportunities to companies to assume comparatively explicit responsibility (Matten and Moon, 2008; Gamerschlag et al., 2010). In addition, the European companies that are cross-listed on the US Stock Exchange provide more non-financial information, pointing the importance of the business environment on reporting (Bancel and Mittoo, 2001). In 2011, 83 per cent of the US companies participated in CSR reporting compared to 74 per cent in 2008 (KPMG, 2011); however, only 140 of the US companies in 2009 and 140 US companies in 2010 developed CSR disclosures according to the Global Reporting Initiatives (GRI) (2012) requirements. The growing popularity of SRI in the USA in 1980s (Escrig-Olmedo et al., 2010) has contributed to the formation of SRI indices such as, Dow Jones Sustainability Index and KLD index. They have integrated the dimension of reporting into their assessment performance procedure based on international CSR reporting standards such as GRI, promoting business transparency (Escrig-Olmedo et al., 2010). In the USA, SRI assets are a significant part of the financial market, reaching $3.74 trillion (Voorhes et al., 2012). Thus, the companies are motivated to integrate CSR disclosure initiatives to be assessed by SRI indices and attract the interest of sustainable and responsible investors.

The aim of this study is to investigate the association between corporate characteristics and the extent of CSR disclosure by companies listed on Fortune 500 list, for 2011. More

PAGE 570 SOCIAL RESPONSIBILITY JOURNAL VOL. 10 NO. 4 2014

specifically, ten corporate characteristics are used, namely, the number of board meetings, average age of the board of directors, presence of women on board, board size, chief executive officer (CEO) duality, financial leverage, profitability, size, board composition and board’s commitment to CSR.

While previous empirical studies were based on content analysis depending on selected criteria to assess CSR disclosures, websites and other reporting means, this paper incorporates the environmental, social and governmental (ESG) disclosure score index calculated by Bloomberg as a proxy for corporate willingness to publish CSR initiatives and intention for CSR initiatives. Regression analysis is used to test hypotheses that link the extent of CSR disclosure and specific-related corporate determinants using Eviews software. This study adds to the international literature by providing evidence of corporate characteristics that affect the extent of CSR disclosure to improve the development of CSR disclosure guidelines.

The paper is organized as follows. Section 2 presents a recent literature review of the relationship of corporate characteristics and the extent of CSR disclosure, while in Section 3, the hypothesis development is recorded. Section 4 describes the methodological approach along with a discussion of the results in Section 5. Finally, in Section 6, some conclusions are stated along with suggestions for further research in Section 7.

2. Literature review

This section presents a review of recent academic literature as regards the effects of corporate governance and financial characteristics on the extent of CSR disclosure. Previously published empirical studies assess CSR disclosure on a quantitative basis, neglecting the quality approach, probably, because companies are able to select the way by which they present their information, increasing the difficulty of assessing the CSR disclosure quality (Morhardt et al., 2002). Companies publicize CSR information with the intention of enhancing public respect or to legitimize their business operations (Deegan, 2002). In general, three main approaches exist regarding the type of CSR/ non-financial disclosures that are examined in relation to corporate governance characteristics. The first approach concerns disclosures which incorporate multiple dimensions of the CSR concept. The second approach extends the first approach by comparing the effects of corporate characteristics with different types of disclosures, such as environmental and social ones to record differences between those disclosures. The last one focusses only on a specific dimension of CSR, the environmental disclosure.

Gamerschlag et al. (2010) incorporated GRI guidelines as a data source for the creation of CSR disclosure index through a content analysis methodology by 130 German companies. An ordinary least squares regression was applied to assess the association between corporate characteristics and the extent of CSR disclosure. It was found that visibility, relationship with the USA stakeholders and shareholder structure were positively related to the extent of CSR disclosures, while profitability is an important determinant only to environmental disclosure.

Rahman et al. (2011) assessed the impact of size, age, profitability and leverage on the level of CSR disclosure. The study was based on 44 government-linked companies listed on Bursa Malaysia for 2005 and 2006. The CSR disclosure was divided into four main sub-categories, namely, human resource, community, marketplace and environment. The development of CSR index was based on a quantity procedure, while a number of sentences were chosen as a unit analysis. Using a multiple regression model, only corporate size was found significant to the extent of CSR disclosure for both years.

Khan (2010) investigated the annual extent of CSR disclosures and corporate governance elements of listed private commercial banks in Bangladesh for the period of 2007-2008

VOL. 10 NO. 4 2014 SOCIAL RESPONSIBILITY JOURNAL PAGE 571

using content analysis. The CSR disclosure index was based on 60 items which belonged to six areas, namely:

1. contribution to health sector;

2. education sector;

3. action for natural disaster;

4. other donations;

5. activities for employees; and

6. environmental issues.

The results of multiple regressions indicated that size, profitability, non-executive directors and existence of foreign nationalities on the board are positively associated to the extent of CSR disclosure.

Siregar and Bachtiar (2010) used a content analysis on six areas, namely, environment, energy, labour, product, community and others, modifying the Haniffa and Cooke (2005) CSR checklist to develop two types of independent variables. The first type concerned corporate social disclosure index, while the second one concerned corporate social disclosure length. The study consisted of 87 public firms listed in the Indonesian Stock Exchange, in 2003. It was found that the determinants of board and firm size had a positive association with the extent of CSR disclosure.

Hossain and Reaz (2007) focussed on the companies listed on the Bombay Stock Exchange and the National Stock Exchange for 2002-2003. The CSR disclosure index for each company was based on a dichotomous and unweighted approach for the 65 CSR items information which was categorized into nine CSR disclosure dimensions. The ordinary least square regression model was selected to investigate the association between corporate characteristics and CSR disclosure. Two explanatory variables were found statistically related to the level of CSR disclosure, namely, company size and assets in-place.

Said et al. (2009) examined the relationship between corporate governance characteristics and CSR disclosure of 150 listed Malaysian companies. Based on the previous academic studies, a content analysis procedure was developed for the creation of CSR disclosure index for each company taking into account annual disclosures and corporate websites. A hierarchical regression analysis was used to develop the two separate models. The first model investigated the relation of the extent of CSR disclosure to corporate size and profitability, while the second model introduced eight governance characteristics as control variables. Regarding the results of the first model, both size and profitability were positively related to the level of CSR disclosure, while in the second model, only two control variables were significantly related, namely, government ownership and audit committee.

Reverte (2009) developed a CSR disclosure index in accordance with observation of CSR requirements. It publishes annually a report of CSR disclosures initiatives for Spanish companies listed in IBEX35 index. A linear regression was used to analyze the relationship between explanatory variables and the extent of CSR disclosure. CSR disclosure index is higher for large companies, higher media exposure and industry environmental sensitive companies.

Tagesson et al. (2009) examined the extent and the content of social disclosure information on official corporations’ websites by 169 companies on Stockholm Stock Exchange and all State-owned corporations for 2007. The findings showed a positive association between size and profitability with the content of social disclosure information on corporate websites and state-owned corporations which disclosed more social information on their websites than privately owned corporations, while there were significant differences between industry and corporate characteristics.

PAGE 572 SOCIAL RESPONSIBILITY JOURNAL VOL. 10 NO. 4 2014

Branco and Rodrigues (2008) assessed the relationship of a number of corporate specifications to the extent of CSR disclosure based on annual disclosure and disclosure of corporate websites, and examined if there were differences or similarities between the two different types of voluntary disclosures. A content analysis was established and elaborated to measure the level of CSR disclosure focussing on 49 companies listed on Portuguese Stock Exchange. According to the multiple regression analysis, the dimension of corporate size has a positive coefficient which suggests that larger companies include more information on both types of disclosures; media exposure is positively associated only with annual disclosure; financial leverage has a negative relation website disclosure; while the dimension of profitability is positively related only to products and consumers disclosure.

Ho and Taylor (2007) analyzed the relationship of six corporate governance and financial characteristics on total CSR disclosure index comparing 50 of the largest US and Japan companies. Results revealed that the extent of CSR disclosure was associated with the corporate size, profitability, liquidity, industry type and the country’s profile, with the Japanese companies presenting higher extent of CSR disclosure than the US companies. Furthermore, slight differences existed among the sub-dimensions of CSR disclosure.

Mohd Ghazali (2007) focussed on the influence of ownership structure to the extent of CSR disclosure of companies listed in Brusa Malaysia Composite Index. The extent of CSR disclosure index was based on 22 items of information equally weighted. Two corporate characteristics were positively related: the first characteristic concerned the corporate size, while the second one concerned companies in which government was a substantial shareholder. These companies tended to publish more CSR information in their disclosures. It also showed that director ownership was negatively related to the extent of CSR disclosure.

Haniffa and Cooke (2005) examined culture and corporate governance characteristics on social disclosures for 139 non-financial companies listed on the Kuala Lumpur Stock Exchange of Malaysia for 1996 and 2002. Two different types of dependent variables were used: corporate social disclosure index and corporate social disclosure length. Both indices were based on the content analysis approach, whereas their criteria depended on previous research studies. It was found that boards dominated by Malay directors, composition of non-executive directors, chairperson with multiple directorships, ownership by foreign shareholders, size and profitability and multiple listing related positively to the two types of CSR disclosures both in 1996 and in 2002. Table I presents the most important aspects of the literature review mentioned above.

Recent literature reviews have been conducted both on developed and developing countries; however, empirical studies regarding the USA companies are limited. The size of the samples ranges from 30 to 169 companies incorporating stock exchange indices, probably because they are more possible to integrate CSR policies than others, and it is easier to find corporate governance and financial data through annual corporate disclosures and Internet-based databases. Regarding the significance of explanatory variables, various corporate governance and financial characteristics are considered with the most vital being firm size, profitability and industry profile. It is obvious that few things have been recorded as regards the effects of corporate governance and financial characteristics on the extent of CSR disclosure by the US companies. The global financial crisis has led companies to reassess their policies and strategies to survive; thus, it is important to investigate the reaction of these companies in business operations, such as CSR which is related to corporate economic performance, stakeholders’ expectations and global sustainability.

3. Hypothesis development

Figure 1 presents the research model on which the hypothesis development is based. In total, ten hypotheses are elaborated to justify the extent of CSR disclosure variables,

VOL. 10 NO. 4 2014 SOCIAL RESPONSIBILITY JOURNAL PAGE 573

Table I Main aspects of the recent literature review

Authors Country Sample Size Year of reference Significance explanatory variables

Gamerschlag et al. (2010)

Germany 130 largest companies (DAX, MDAX and SDAX)

2008 considering four reporting periods between 2005 and 2008

Visibility Relationship to US stakeholders Shareholder structure

Rahman et al. (2011)

Malaysia 44 government-linked companies listed on Bursa Malaysia

Period 2005-2006 Firm size

Siregar and Bachtiar (2010)

Portugal 87 public firms listed in the Indonesian Stock Exchange

2003 Firm size Board size

Khan (2010) Bangladesh 30 private commercial banks listed on the Dhaka Stock Exchange

Period 2007-2008 Firm size Profitability Non-executive directors Foreign nationalities on the board

Hossain and Reaz (2007)

India 38 listed banking companies in Bombay Stock Exchange and the National Stock Exchange

Period 2002-2003 Firm size Assets in-place

Tagesson et al. (2009)

Sweden 169 companies listed in Stockholm Stock Exchange and all State-owned corporations

2006 Firm size Profitability

Said et al. (2009)

Malaysia 150 non-financial companies listed on the main board of Bursa Malaysia

2006 Government ownership Audit committee

Reverte (2009) Spanish 35 companies listed on IBEX35 index

Period 2005-2006 Firm size Media exposure Industry environmental sensitivity

Branco and Rodrigues (2008)

Portugal 49 companies listed on Euronext –Lisbon

2003 (CSR disclosure)-2004 (CSR disclosure on Internet)

Firm size Financial leverage Media exposure

Ho and Taylor (2007)

US, Japan 100 largest Us and Japan Companies

2003 Firm size Profitability Liquidity Industry Country profile

Mohd Ghazali (2007)

Malaysia 87 non-financial companies listed on Bursa Malaysia

2001 Firm size Director ownership Government ownership

Haniffa and Cooke (2005)

Malaysia 139 non-financial companies listed on the Kuala Lumpur Stock Exchange

1996, 2002 Firm Size Profitability Multiple listing Industry

Figure 1 Research model

PAGE 574 SOCIAL RESPONSIBILITY JOURNAL VOL. 10 NO. 4 2014

such as the number of board meetings, the board’s average age, the percentage of women on board, the board’s size, CEO duality, the financial leverage, the profitability, the total assets, the percentage of independent directors on board and the board’s commitment to CSR are taken into account as explanatory variables so as to justify the extent of CSR disclosure. In each case, an expectation is formed based on prior empirical studies.

3.1 Company’s size

Based on empirical evidence, the company’s size is typically used as a proxy for its visibility (Brammer and Millington, 2006; Branco and Rodrigues, 2008). Large companies tend to be more visible and receive attention from external stakeholder groups; thus, they publish more CSR information to legitimize their initiatives (Cowen, 1987). Cormier and Gordon (2001) pointed out that the large companies produce CSR disclosures for accountability purposes as explained by the legitimacy theory. In general, the company’s size is relevant, reflecting the extent of social commitment (Teoh and Thong, 1984). In addition, larger size companies have more resources available for social initiatives, while the cost of social responsibility and disclosure cost for larger firms is smaller than small or medium firms (Siregar and Bachtiar, 2010; Werther and Chandler, 2005; Graafland et al., 2003; Ho and Taylor, 2007). Mohd Ghazali (2007) mentioned that larger companies use the annual CSR disclosures as a mean to manipulate the political sphere and enhance a firm’s reputation (Hooghiemstra, 2000), whilst Meznar and Nigh (1995) emphasized that large companies are more powerful and thus, more resistant to stakeholders’ pressures. Roberts (1992), on the other hand, did not find a significant correlation between size and social disclosure in the USA.

Different indicators have been used as a proxy for a company’s size, such as the number of employees (Tagesson et al., 2009), the market value of equity (Ho and Taylor, 2007), turnover (Adams et al., 1998; Tagesson et al., 2009), the market capitalization (Mohd Ghazali, 2007; Reverte, 2009) and the total asset (Brammer and Pavelin, 2004; Haniffa and Cooke, 2005; Siregar and Bachtiar, 2010; Hossain and Reaz, 2007; Khan, 2010; Reverte, 2009; Rahman et al., 2011). Previous empirical studies revealed a positive relationship between the extent of CSR disclosure and a company’s size measured by total assets (Eilbert and Parket, 1973; Trotman and Bradley, 1981; Haniffa and Cooke, 2005; Branco and Rodrigues, 2008; Gamerschlag et al., 2010; Hossain and Reaz, 2007; Khan, 2010; Reverte, 2009; Rahman et al., 2011). Thus, the underlying assumption is:

H1. There is positive association between a company’s size and the extent of CSR disclosure.

3.2 Financial leverage

The level of a corporate financial leverage can be used as a proxy for creditor power (Liu and Anbumozhi, 2009). The effect of the financial leverage on the extent of CSR disclosure seems to be a controversial subject with varying results among explanatory studies. Branco and Rodrigues (2008) found that the financial leverage of Portuguese companies has a negative relationship to the extent of CSR information on websites. In addition, Ho and Taylor (2007) concluded that the extent of CSR disclosure is higher for lower liquidity companies. Andrikopoulos and Kriklani (2012) discovered that the companies with high levels of financial leverage tend to reduce the extent of disclosures because the preparation of voluntary disclosure is a costly procedure. Brammer and Pavelin (2008) stated that low financial leverage ensures that creditors will exert less pressure to constrain the managers’ discretion over CSR initiatives, such as disclosure, which can be indirectly linked to financial performance. Chow and Wong-Boren (1987) could not find the predictability of financial leverage on the extent of voluntary disclosure in Mexican stock companies. Siregar and Bachtiar (2010) found that the financial leverage of Indonesian

VOL. 10 NO. 4 2014 SOCIAL RESPONSIBILITY JOURNAL PAGE 575

companies has no effect on the extent of CSR disclosure. Regarding the previous studies, the following hypothesis is tested:

H2. The financial leverage has a negative association with the extent of CSR disclosure.

3.3 Profitability

Giner (1997) explored three theories to justify the positive relationship between profitability and CSR disclosure. Agency theory suggested that profitable companies provide more detailed information to support their own positions and compensation arrangements. Signalling theory supported that owners provided good news to avoid the undervaluation of their shareholder’s value, and the Political Process theory stated that profitable companies provide more information in disclosures to justify their profits.

As far as the empirical studies are concerned, Haniffa and Cooke (2005) claimed that the profitable companies provide more CSR information to legitimize their existence. The positive relationship between profitability and the extent of CSR disclosure is due to the management’s freedom and flexibility to publish more CSR initiatives to shareholders. Gamerschlag et al. (2010) found a positive relationship between profitability and higher environmental disclosures but no association with social disclosures. Tagesson et al. (2009) discovered that if a company is profitable, there is a positive relationship between the extent of CSR disclosure and profitability and the companies can afford the cost for CSR disclosure.

On the contrary, Ho and Taylor (2007) indicated that less profitable companies tend to disclose more information regarding social and environmental disclosures to demonstrate their contribution to society. Siregar and Bachtiar (2010) found that profitable companies devote more financial resources to social initiatives; however, the empirical results showed no significant influence between profitability and CSR disclosure, probably because CSR initiatives are costly without any direct benefits. In addition, Mohd Ghazali (2007), Rahman et al. (2011), Patten (1991), McNally et al. (1982) and Reverte (2009) could not find a strong statistical significance of profitability to the extent of CRS disclosure. Even if the empirical results are contradictory, it is hypothesized, in this study, that profitability affects positively the extent of CSR disclosure:

H3. There is a positive relationship between profitability and the extent of CSR disclosure.

3.4 CEO duality

CEO duality is the situation where the same person is the CEO and the board’s chairperson (Rechner and Dalton, 1991). An important dimension in the corporate governance literature is the effect of CEO duality, used as a proxy for the board’s leadership structure, on the extent of CSR disclosure. Chaganti et al. (1985) found that CEO and the chairman’s board position should be held by a different individual to ensure the independence of the board of directors. It is thought that a chairman who does not hold another office duty tends to be involved in special planning assignments, such as CSR, while a chairman who has various offices roles may not have the time to confront different functions effectively (Stieglitz and Janger, 1963). Elsayed (2007) pointed out that higher levels of corporate performance can be achieved when the executive manager has the chairman’s board responsibilities because fewer conflicts can occur.

Through empirical studies, Michelon and Parbonetti (2012) pointed out that CEO duality reduces overall accountability both to internal and external stakeholders. Cheng and Courtenay (2006) found out that CEO duality is not associated with the extent of voluntary disclosure focussing on companies from the Singapore Exchange and Said et al. (2009) rejecting the positive effect of CSR duality on the extent of CSR disclosure at Malaysian sample companies. In addition, the work of Gul and Leung (2004) demonstrated a negative relationship of CEO duality to the extent of voluntary disclosure. Li et al. (2010)

PAGE 576 SOCIAL RESPONSIBILITY JOURNAL VOL. 10 NO. 4 2014

demonstrated that firms communicating more CSR tend to have separate individuals for the CEO and chairman’s board positions taking into account a sample of Egyptian listed firms. As CEO duality creates clear leadership for the company, it is obvious that important business operations will be affected, such as CSR disclosure. The hypothesis is:

H4. CEO duality has a negative association with the extent of CSR disclosure.

3.5 Board size

Lee and Chen (2011) stated that the board’s size is considered as a crucial aspect of corporate government, and it can be used as a proxy for effective monitoring, while Golden and Zajac (2001) pointed out the potential effect of the board’s size on strategic change in organizations. In literature, the effect of a board’s size on CSR disclosure is controversial. Jensen (1993) found that the small number of members in a board is a determinant factor for the corporate performance and when the members are more than seven or eight, it is less likely to function effectively. Regarding resource dependency theory, Abeysekera (2010) mentioned that a larger board brings diverse and vital resources and faces global challenges more effectively and efficiently. Siregar and Bachtiar (2010) showed positive and non-linear relations between the board’s size and the extent of CSR disclosure. Large boards are able to monitor business operations better than smaller ones; however, too large a board makes the process of monitoring ineffective. Said et al. (2009) suggested a negative relationship between a board’s size and the extent of CSR disclosure, as the large board’s size leads to ineffective coordination in communication and decision-making; however, their results show a positive relation. Esa and Mohd Ghazali (2011) showed that a board’s size is positively associated with the extent of CSR disclosure in a sample of Malaysian listed companies. This was because more productive discussions were held and hence, more investments were made on those activities. This study hypothesizes that firms with larger boards provide more CSR information:

H5. Large board size has a positive association with the extent of CSR disclosure.

3.6 Board meetings

The board meeting frequency can be used as a proxy for the board diligence and the level of monitoring the activities delivered (Vafeas, 1999; Laksmana, 2008). Frequent board meetings give the opportunity to the members to share more information, allowing better workload distribution and committee assignments (Laksmana, 2008). In addition, the increased number of board meetings is considered an inexpensive way to increase the firm value. An opposite point of view states that the board time consumes the limited time of the directors and does not advocate for the meaningful exchange of ideas among them (Vafeas, 1999; Lipton and Lorsch, 1992). The board meeting frequency is examined, for the first time, in relation to the extent of CSR disclosure; thus, there is no evidence in academic literature as far as concerns the board meeting frequency and CSR disclosure. Companies face a number of constraints to develop a CSR policy and strategy in relation to their business operations, such as lack of the appropriate business culture, difficulty in the establishment of visible and measurable CSR, contradictory stakeholders’ expectations, lack of the appropriate personnel, etc. (European Multistakeholder Forum on CSR, 2004; Tencati et al., 2004). Thus, a Board with increased meeting frequency enables to manage better business operations, leading to greater attention on CSR information both to internal and external stakeholders for its initiatives:

H6. There is a positive relationship between the number of board meetings and the extent of CSR disclosure.

3.7 Board’s average age

The average age of board members can be used as proxies for the director’s business experience (Anderson et al., 2004). For the first time, the role of the board’s age is investigated about the extent of CSR disclosure, while in the literature, the determinant of

VOL. 10 NO. 4 2014 SOCIAL RESPONSIBILITY JOURNAL PAGE 577

the board’s age has been analyzed in comparison with the firm performance (Muth and Donaldson, 1998). As younger directors have received their education more recently, they tend to be more knowledgeable on new administration tools. However, older directors may exhibit a conservative bias and better judgement (Bantel and Jackson, 1989); thus, they may avoid all the possible risks (Vroom and Bernd, 1971) deriving from adopting new styles of business administration. In this study, it is hypothesized that younger members of directors may be more willing to incorporate new orientations of innovative business operations, such as CSR than older executives (Child, 1975). The hypothesis is:

H7. There is a negative relationship between the average age of board members and the extent of CSR disclosure.

3.8 Women on board

The relationship of gender composition has been related with the financial performance, but no evidence exists regarding the CSR disclosure. Traditionally, boards comprise only male directors; however, the presence of women members increases board independence (Ujunwa, 2012; Rose, 2007; Carter et al., 2003). The presence of women on boards could add unique and different perspectives, experiences and work styles in relation to male directors. Communication styles tend to be more participative and process-oriented with female members (Daily and Dalton, 2003). Williams (2003) demonstrated that there is a link between the percentage of women on boards and firm philanthropy in the areas of community service and the arts. It is pointed out that the motives are unclear as to why women may be more charitable than men. Regarding women’s presence in the board and CSR, Wang and Coffey (1992) stated that women and other minority directors seemed to be more corporate social performance oriented, thus, their presence tended to have a positive effect on philanthropy. It was showed that women board members played a substantial role in corporate reputation (Bear et al., 2010) by engaging with CSR. On the contrary, Khan (2010) did not find a significant relationship between the women representation in the board and CSR reporting by the banks. Thus, based on the above studies, the hypothesis is:

H8. Increased women’s percentage in the board is positively related to the extent of CSR disclosure.

3.9 Board composition

Board composition can be defined as the proportion of outside directors to the total number of the board, making a distinction; thus, between executive and non-executive members (Hossain and Reaz, 2007). On the one hand, the role of non-executive directors is vital for the formation of CSR policy as they review and refine the strategic initiative (Hill, 1995; Stiles, 2001). Tricker (1984) found that non-executive directors are used as check and balance mechanism to ensure the interests both of the owners and other stakeholders. Khan (2010) demonstrated that non-executive directors have a significant impact on explaining the level of CSR disclosure in commercial banks in Bangladesh. Chen and Jaggi (2000) mentioned that the non-executive directors played a substantial role regarding the mandatory disclosure requirements giving the opportunity to investors to have a better insight into corporate boards. On the other hand, Haniffa and Cooke (2005) demonstrated that non-executive directors pressured companies to disclosure initiatives for legitimacy purposes; however, a negative relationship was found between the proportion of non-executive directors and the extent of CSR disclosure. Hossain and Reaz (2007) did not find a significant relationship between the proportion of non- executive directors and CSR disclosure in the banking sector of India. Said et al. (2009) cited the importance of independent directors in the field of CSR; however, no significant influence was recorded concerning the extent of CSR disclosure. It is obvious that the role of board composition of the field of CSR is controversial; however, the hypothesis in this study is:

PAGE 578 SOCIAL RESPONSIBILITY JOURNAL VOL. 10 NO. 4 2014

H9. Increased proportion of non-executives in the board has a positive relation to the extent of CSR disclosure

3.10 CSR commitment

Most of the times, a company’s commitment to CSR is made through the establishment of CSR standards, as they offer guidance on CSR issues (OECD, 2009). The development of CSR standards represents a new framework of corporate governance (Giannarakis et al., 2011b). It can be used as a proxy for the board’s commitment to CSR under external formal instructions. Different CSR standards have been developed to homogenize the multidimensional face of CSR in each country and sector. King et al. (2005) noted that the attainment of the standard means the adoption of specific initiatives as regards the standards’ guidelines. More specifically, the most well-known CSR standard is UNGC where its members need to incorporate ten principles in four areas, that of human rights, labour, environment and anti-corruption to fulfil the aim and principles of the CSR (Arevalo and Aravind, 2010; Kimbro and Cao, 2011). Several studies have analyzed the role of UNGC in the field of CSR and corporate governance (Arevalo and Fallon, 2008; Gupta, 2007). Arevalo and Aravind (2010) found that companies that integrate UNCG initiatives in their business operations will be affected less by economic crisis in comparison to companies that adopt with lesser conformity the principles of UNGC. Runhaar and Lafferty (2009) indicated that the UNGC is only one of the numerous initiatives that contribute to the development and communication of CSR. Finally, the level of CSR implementation increases with the time of membership in the UNGC (Cetindamar and Husoy, 2007; Schembera, 2012). Thus, CSR commitment through well-known standards, such as UNGC forces companies to publish their social behavior. Based on the afore-mentioned discussion the hypothesis is:

H10. Company’s engagement with UNGC has a positive association with the extent of CSR disclosure.

4. Methodology

4.1 Sample

The sample consists of 100 companies from the Fortune 500 list in the USA through a random procedure for the year ended 2011. Similar to previous empirical studies, the sample is based on large-sized companies, as it is expected to integrate socially responsible initiatives, and it is more possible to find corporate data from online database in relation to CSR. The analysis engaged only in the US economy for comparability purposes which will produce homogeneous results (Gamerschlag et al., 2010; Matten and Moon, 2008).

4.2 Dependent disclosure indices and independent variables

This section concerns both dependent and independent explanatory variables in the proposed model. Contrary to empirical studies where researchers construct a CSR disclosure index on their own and adopt criteria existing in the literature, this study is based on a third-party rating to evaluate the CSR disclosure score. A number of different sustainability indices and ESG agencies have been developed to study companies in terms of sustainability, under economic, social, environmental and corporate governance criteria (Escrig-Olmedo et al., 2010). Sariannidis et al. (2010) noted that the main limitations of the most well-known SRI indices are lack of transparency and neglect of the aspect of sector where the companies operate.

For the first time, the ESG disclosure score provided by Bloomberg’s online database is used as a proxy for the extent of CSR disclosure. Bloomberg scores companies solely on their ESG data disclosure. The ESG disclosure score is a means to provide information to users for a better understanding of the company’s risks and opportunities associated with social expectations and potential investments. The score is based on 100 out of 219 raw

VOL. 10 NO. 4 2014 SOCIAL RESPONSIBILITY JOURNAL PAGE 579

data points that Bloomberg collects based mainly on GRI requirements. The ESG disclosure score ranges from 0.1 for companies that disclose a minimum amount of social and environmental data to 100 for those that disclose every data point. Each data point is weighted in terms of importance, with the workforce data carrying greater weight than other disclosures. The score is also tailored to different industries. In this way, each company is only evaluated in terms of the data that are relevant to its industry sector as each sector has unique characteristics and challenges regarding CSR concerns (Fafaliou et al., 2006; Giannarakis and Litinas, 2011; Giannarakis et al., 2011a; Sariannidis et al., 2010).

The ESG data are based mainly on three categories: environmental, social and governance: the first category includes data, such as water consumption, waste total generation, total greenhouse gases and energy use. The social aspect concerns data, such as employee turnover, workforce accidents, total fatalities and women in the workforce, while the governmental aspect includes data, such as board meeting attendance and independent directors.

As far as the explanatory variables are concerned, Table II presents the independent variables that are recommended to explain the extent of disclosure information achieved from Bloomberg’s online database.

A multiple linear regression model attempts to investigate the interrelationship between explanatory variables and the extent of CSR disclosure (Khan, 2010; Siregar and Bachtiar, 2010; Mohd Ghazali, 2007; Hossain and Reaz, 2007; Branco and Rodrigues, 2008; Haniffa and Cooke, 2005; Reverte, 2009) using the statistical package Eviews:

ESGDS � a0 � b1 � CSIZE � b2 � FLRG � b3 � PROF1 � b4 � PROF2

� b5 � CEOD � b6 � BSIZE � b7 � NBMTNGS � b8 � BAGE

� b9 � WBOARD � b10 � BCOMP � b11 � BCCSR

where:

ESGDS � environmental, social and governmental disclosure score; CSIZE � company size; FLRG � financial leverage; PROF1 � profitability indicator – ROE; PROF2 � profitability indicator – ROS; CEOD � CEO duality; BSIZE � board’s size; NBMTNGS � number of board meetings; BAGE � board’s average age; WBOARD � women on board; BCOMP � board’s composition; and BCCSR � board’s commitment to CSR.

Table II Description of independent variables

Independent variables Measurement

Firm size Total assets Board composition Percentage of independent directors on the Board Board’s commitment to CSR Dummy variable (value 1 � signatory of the UNGC, value 0 � no signatory of the UNGC) Financial leverage Average total assets/average total common equity firm’s capital structure Profitability Return on sales (ROS)

Return on equity (ROE) CEO duality Dummy variable (value 1 � CEO and Chairman, value 0 � otherwise) Board’s size Number of directors on the company’s board Board meetings Total number of corporate board meetings for the year 2011 Board’s age Board average age Women on board Percentage of women on board

PAGE 580 SOCIAL RESPONSIBILITY JOURNAL VOL. 10 NO. 4 2014

Before conducting the regression model, different statistical tests were used, namely, Durbin–Watson (D–W)’s test, Jarque–Bera’s test and White’s test to ensure that the data are appropriate for the statistical analysis. In addition, the correlation matrix table was used for detecting multicollinearity problems.

5. Results

5.1 Regression analysis

Table III presents Pearson’s correlation analysis among explanatory variables with their significance level. When the correlation coefficient between explanatory variables is over 0.80, it is an indication of serious multicollinearity (Guajarati, 1995). In this study, the Pearson correlations between explanatory variables range from 0.168 to 0.542; thus, multicollinearity is not a problem for interpreting the regressions results.

Table IV presents the results of regressing the explanatory variables to the ESG disclosure score. Regarding heteroscedasticity test, the chi-squared test is not significant; thus, there are no heteroscedasticity concerns and no corrective procedure should be made. In addition, no autocorrelation exists, as the D–W test is approximately 2, while F-ration is 3.44

Table III Correlation matrix

CSIZE BAGE BSIZE CEOD BCCSR FLRG NBMTNGS PROF2 PROF1 WBOARD BCOMP

CSIZE 1 BAGE 0.044 1 BSIZE 0.152 0.276* 1 CEOD 0.014 �0.036 �0.023 1 BCCSR 0.042 �0.052 0.140 �0.114 1 FLRG 0.542* 0.044 0.168*** 0.120 �0.133 1 NBMTNGS 0.403* 0.071 �0.178*** 0.104 0.003 0.202** 1 PROF2 0.227** 0.197** 0.126 �0.090 0.054 0.055 0.047 1 ROE �0.112 0.021 0.075 �0.068 �0.026 0.347* �0.153 0.169*** 1 WBOARD 0.099 �0.274* �0.100 �0.016 0.023 0.088 0.261* �0.097 �0.048 1 BCOMP 0.063 �0.065 �0.143 0.220** 0.054 0.096 0.162 �0.033 0.108 0.222** 1

Notes: *Significant at the 0.10 level (two-tailed); **Significant at the 0.05 level (two-tailed); ***Significant at the 0.01 level (two-tailed)

Table IV Regression results

Independent variable Coefficient Standard error t-Statistic Probability

WBOARD 0.123454 0.181001 0.682064 0.4970 PROF1 0.253501 0.076769 3.302102 0.0014* PROF2 29.46676 15.18361 1.940695 0.0555*** NBMTNGS 0.463156 0.501322 0.923869 0.3581 FLRG �1.272134 0.510825 �2.490350 0.0146** BCCSR 10.85441 3.930043 2.761906 0.0070* CEOD 3.704725 3.334521 1.111022 0.2696 BSIZE �0.990343 0.854941 �1.158376 0.2498 CSIZE 1.35E-05 5.91E-06 2.286236 0.0246* BAGE 0.576546 0.456661 1.262527 0.2101 BCOMP �19.73907 16.19261 �1.219017 0.2261 C 9.111678 30.55040 0.298251 0.7662 R2 0.300754 Adjusted R2 0.213348 F-statistic 3.440896 Probability (F-statistic) 0.000521 D–W statistic 1.981226 White heteroskedasticity test Obs*R2 � 80.35423

p � 0.3151 Jarque–Bera test JB � 0.485290

p � 0.784550

Notes: *Significant at the 0.10 level (two-tailed); **Significant at the 0.05 level (two-tailed); ***Significant at the 0.01 level (two-tailed)

VOL. 10 NO. 4 2014 SOCIAL RESPONSIBILITY JOURNAL PAGE 581

(p � 0.01). The model’s explanatory power can be considered satisfied, with an adjusted R2 measure 0.213, implying that the explanatory variables explain 21.3 per cent of the variance in ESG disclosure score.

As hypothesized, the coefficient of profitability variables is positive and significant at 10 per cent for ROE variable and 1 per cent for ROS variable. Regarding the company’s size, it was hypothesized to have positive relationship with the CSR disclosure score. Result show that total assets are significant and positively related at 5 per cent. Therefore, financial leverage is negatively associated with CSR disclosure score and statistically significant at the 5 per cent level. The company’s commitment to CSR standards is the last significant variable and positively related to CSR disclosure level at 10 per cent. As far as the rest of the proposed variables are concerned, there is no significant association with the level of CSR disclosure. Thus, the final model can be demonstrated as follows:

ESGDS � 0.25 PROF1 � 29.46 PROF2 � 1.27 FLRG � 01.35 CSIZE � 10.85 BCCSR

5.2 Discussion of results

Profitability indicators, as measured by ROS and ROE, have a positive relationship with the extent of CSR disclosures. Profitable companies tend to provide more information in their disclosures. This finding is consistent with the study by Haniffa and Cooke (2005), Khan (2010), Gamerschlag et al. (2010) and Tagesson et al. (2009). Profitable companies provide more CSR information on disclosure to legitimize their existence. The management of profitable companies is freer to incorporate a social approach integrating disclosure initiatives to show their contribution to society and to promote a positive impression of its performance. The positive relationship of profitability to CSR disclosure is inconsistent with Siregar and Bachtiar (2010), Reverte (2009), Mohd Ghazali (2007), Rahman et al. (2011), where no significant influence was found on the extent of CSR disclosure.

Financial leverage coefficient shows that this explanatory variable is significantly negatively correlated with the extent of CSR disclosure. Companies with high levels of leverage do not seem to share less corporate information with their creditors, probably because the reporting procedure is costly. Likewise, Branco and Rodrigues (2008) and Andrikopoulos and Kriklani (2012) reached similar results.

It is demonstrated that the company’s size is positively related to the extent of CSR disclosure, thereby suggesting that the larger US companies provide more information on CSR disclosures. It is probably due to the fact that larger companies are more visible than smaller ones, dispose more financial resources on social initiatives, such as CSR disclosures, absorb the extra cost of disclosure, face more pressure to publish their social initiatives from stakeholders’ groups and, finally, incorporate CSR disclosure into their image construction procedure (Alsaeed, 2006; Siregar and Bachtiar, 2010; Cormier and Gordon, 2001; Mohd Ghazali, 2007). The result is consistent with Eilbert and Parket (1973), Trotman and Bradley (1981), Haniffa and Cooke (2005), Branco and Rodrigues (2008), Gamerschlag et al. (2010), Hossain and Reaz (2007), Khan (2010), Reverte (2009) and Rahman et al. (2011).

Finally, the implementation of UNGC standard as a proxy for the board’s commitment to CSR is a decisive factor on the extent of CSR disclosure. Companies that incorporate the ten principles of UNGC tend to provide more information to publicize the implementation of CSR in their business operations to their stakeholders. The development of CSR policy under the instructions of a well-known CSR standard pushes companies to publish what and how to treat corporate stakeholders’ expectations.

In contrast to the hypothesis, the increased presence of women in the board is insignificant to the level of CSR disclosure. The gender diversity of a board does not seem to be a determinant factor for the extent of CSR disclosure, consistent with Khan (2010) and inconsistent with earlier studies, where women in boards are more socially sensitive (Wang and Coffey, 1992; Williams, 2003). The study found that the board’s size does not affect the

PAGE 582 SOCIAL RESPONSIBILITY JOURNAL VOL. 10 NO. 4 2014

extent of CSR disclosure which is inconsistent with Esa and Mohd Ghazali (2011), Said et al. (2009) and Siregar and Bachtiar (2010). In addition, the number of board meetings does not play a substantial role to the extent of CSR disclosure, probably because the board of directors is only responsible for CSR at policy level and not for the implementation of CSR which, in all probability, is the most time-consuming part.

The board’s average age was found not to affect the extent of CSR disclosure contrary to the hypothesis development. The insignificant role of CEO duality on CSR disclosure is due to indirect monitoring mechanism that companies incorporate to allow their stakeholders learn about their initiatives (Michelon and Parbonetti, 2012). This result is consistent with earlier empirical studies, such as those of Said et al. (2009) and Cheng and Courtenay (2006). Regarding the board composition, no significant relationship was found with CSR disclosure. The board’s composition should be made beyond the traditional distinction between executives and non-executives, such as their managerial experience and whether they have worked in international companies or not. This result is consistent with previous empirical studies, such as Hossain and Reaz (2007) and Said et al. (2009).

The results of the study send a vital signal to the various stakeholders with whom companies interact. First, investors are able to detect profitable companies through the extent of CSR disclosure. Second, SRI and reporting institutions are able to understand the determinants of CSR disclosure improving the implementation of disclosure guidelines. Finally, other stakeholders such as employees, consumers and NGOs are informed on the positive initiatives of the companies in relation to corporate stakeholders.

6. Conclusions

During the past decades, shareholders and other stakeholders’ pressure for business transparency has led companies to develop CSR disclosures. The objective of the study is to investigate the determinants of the extent of CSR disclosure by the US companies. For the first time, the study is incorporating the ESG disclosure score collected by Bloomberg’s online database. Both corporate governance and financial variables are concerned, namely, board meeting frequency, board age, presence of women on board, board size, CEO duality, financial leverage, profitability, size, board composition and board commitment to CSR. The statistical results show that profitability, the company’s size, the financial leverage and the board’s commitment to CSR are significant determinants that influence the extent of CSR disclosure.

More specifically, profitability, as measured by ROE and ROS, is significantly positive to the extent of CSR disclosure, consistent with Haniffa and Cooke (2005), Khan (2010), Gamerschlag et al. (2010) and Tagesson et al. (2009). Profitable companies use CSR disclosures as a mean to publicize their image and legitimize their corporate initiatives. In addition, profitable companies can devote more financial resources to social initiatives promoting a positive impression of their performance.

Financial leverage as a proxy for creditors’ power has a negative and significant effect on CSR disclosure consistent with Branco and Rodrigues (2008) and Andrikopoulos and Kriklani (2012). Companies with high levels of financial leverage seem not to publicize corporate information because of the reporting procedure cost, while companies with low financial leverage levels seemed to be freer to share information as regards CSR information.

The company’s size, as measured by total assets, has a positive relationship with CSR disclosure which is in line with conclusions from previous empirical studies, such as those of Haniffa and Cooke (2005), Branco and Rodrigues (2008), Gamerschlag et al. (2010), Hossain and Reaz (2007), Khan (2010), Reverte (2009) and Rahman et al. (2011). Rahman (2011) pointed out several reasons for this reaction, such as that large companies are more visible to investors, absorb extra costs for CSR disclosure, attend the maintenance of their good corporate image and retain the customers’ loyalty and talented employees. Finally,

VOL. 10 NO. 4 2014 SOCIAL RESPONSIBILITY JOURNAL PAGE 583

the board’s commitment to CSR is an important determinant of the extent of CSR disclosure. The implementation of CSR initiatives under the ten principles of UNGC pushes companies to provide information in their disclosures on what and how to satisfy the corporate stakeholders’ expectations. The rest of explanatory variables are not statistically significant to ESG disclosure score. This implies that the presence of women on board, the board’s composition, the board’s average age, the board’s size, CEO duality and the number of board meetings do not have a significant influence on the extent of CSR disclosure.

From a practical point of view, both shareholders and stakeholders have the opportunity for a quick assessment of a company through its CSR disclosure regarding the four statistically significant explanatory variables. For example, a high level of ESC disclosure score is an indication that a company is large, profitable, independent from the creditor’s pressures, and the board is committed to CSR standard; important information, mostly, for ethical investors and other stakeholders. At a policy level, this study contributes to the understanding of determinants of CSR disclosure to improve the implementation of disclosure guidelines (Da Silva Monteiro and Aibar-Guzmán, 2010).

The study presents some limitations. First, it is based only on the presence or the absence of CSR items in CSR disclosure, neglecting the quality dimension which can lead to misinterpretation. The results should not be generalized, as the sample is based on the US companies for 2011. Finally, Bloomberg’s online database does not provide accurate information with regard to the evaluation formula and the specific criteria that are incorporated into the ESG disclosure score.

Despite the limitations, this study contributes to the literature of the determinants of CSR disclosure. For the first time, new explanatory variables are introduced, such as the number of board meetings, the board’s average age and the board’s commitment to CSR through UNGC standard, while the calculation of CSR disclosure score is based on Bloomeberg’s ESG score.

7. Suggestions for future research

It is recommended that more companies from different countries and cultural orientations must be included in the sample, as the concept of CSR varies among them (Hackston and Milne, 1996; Giannarakis et al., 2011a; McMurtrie, 2005). It is proposed that analysis be taken over a longer period of time to provide more reliable and generalized results. In contrast to the empirical studies, the construction of CSR disclosure index could be based not only on quantitative but also on qualitative criteria (Brammer and Pavelin, 2008). In addition, external stakeholders’ perceptions should be considered in future research using different methodological tools, such as interviews to specify the company’s characteristics of the level of CSR disclosure. It would be essential to test the developed model with different samples of companies, such as small and medium companies, to record whether the results are meaningful as well. Therefore, the development of CSR disclosure score could be based not only on Bloomberg’s online database but also on other means, such as official corporate websites (Wanderly et al., 2008). Finally, more corporate characteristics can be examined, such as environmental fines, carbon dioxide emissions or other greenhouse emissions in the avenue for future research in this field.

References

Abeysekera, I. (2010), “The influence of board size on intellectual capital disclosure by Kenyan listed firms”, Journal of Intellectual Capital, Vol. 11 No. 4, pp. 504-518.

Adam, A.M. and Shavit, T. (2008), “How can a ratings based method for assessing Corporate Social Responsibility (CSR) provide an incentive to firms excluded from socially responsible investment indices to invest in CSR?”, Journal of Business Ethics, Vol. 82 No. 4, pp. 899-905.

PAGE 584 SOCIAL RESPONSIBILITY JOURNAL VOL. 10 NO. 4 2014

Adam, A.M. and Shavit, T. (2009), “Roles and responsibilities of boards of directors revisited in reconciling conflicting stakeholders interests while maintaining corporate responsibility”, Journal of Management and Governance, Vol. 13 No. 4, pp. 281-302.

Adams, C.A., Hill, W. and Roberts, C.B. (1998), “Corporate social reporting practices in Western Euro pe: legitimating corporate behaviour?”, British Accounting Review, Vol. 30 No. 1, pp. 1-21.

Alon, I., Lattemann, C., Fetscherin, M., Li, S. and Schneider, A.M. (2010), “Usage of public corporate communications of social responsibility in Brazil, Russia, India and China (BRIC)”, International Journal of Emerging Markets, Vol. 5 No. 1, pp. 6-22.

Alsaeed, K. (2006), “The association between firm-specific characteristics and disclosure: the case of Saudi Arabia”, Managerial Auditing Journal, Vol. 21 No. 5, pp. 476-496.

Anderson, R.C., Mansi, S.A. and Reeb, D.M. (2004), “Board characteristics, accounting report integrity, and the cost of debt”, Journal of Accounting and Economics, Vol. 37 No. 3, pp. 315-342.

Andrikopoulos, A. and Kriklani, N. (2012), “Environmental disclosure and financial characteristics of the firm: the case of Denmark”, Corporate Social Responsibility and Environmental Management, Vol. 20 No. 1, pp. 55-64.

Arevalo, J.A. and Aravind, D. (2010), “The impact of the crisis on corporate responsibility: the case of UN global compact participants in the USA”, Corporate Governance, Vol. 10 No. 4, pp. 406-420.

Arevalo, J.A. and Fallon, F.T. (2008), “Assessing corporate responsibility as a contribution to global governance: the case of the UN Global Compact”, Corporate Governance, Vol. 8 No. 2, pp. 456-470.

Baldarelli, M.G. and Gigli, S. (2011), “Exploring the drivers of corporate reputation integrated with a corporate responsibility perspective: some reflections in theory and in praxis”, Journal of Management and Governance, Vol. 18 No. 2, pp. 589-613.

Bancel, F. and Mittoo, U.R. (2001), “European managerial perceptions of the net benefits of foreign stock listings”, European Financial Management, Vol. 7 No. 2, pp. 213-236.

Bantel, K. and Jackson, S. (1989), “Top management and innovations in banking: does the composition of the top team make a difference?”, Strategic Management Journal, Vol. 10 No. 1, pp. 107-124.

Bear, S., Rahman, N. and Post, C. (2010), “The impact of board diversity and gender composition on corporate social responsibility and firm reputation”, Journal of Business Ethics, Vol. 97 No. 2, pp. 207-221.

Bhimani, A. and Soonawalla, K. (2005), “From conformance to performance: the corporate responsibilities continuum”, Journal of Accounting and Public Policy, Vol. 24 No. 3, pp. 165-254.

Birth, G. and Illia, L. (2008), “Communicating CSR: practices among Switzerland’s top 300 companies”, Corporate Communications: An International Journal, Vol. 13 No. 2, pp. 182-196.

Brammer, S. and Millington, A. (2006), “Firm size, organizational visibility and corporate philanthropy: an empirical analysis”, Business Ethics: A European Review, Vol. 15 No. 1, pp. 6-18.

Brammer, S. and Pavelin, S. (2004), “Voluntary social disclosures by large UK companies”, Business Ethics: A European Review, Vol. 13 Nos 2/3, pp. 86-99.

Brammer, S. and Pavelin, S. (2008), “Factors influencing the quality of corporate environmental disclosure”, Business Strategy and the Environment, Vol. 17 No. 2, pp. 120-136.

Branco, M.C. and Rodrigues, L.L. (2008), “Factors influencing social responsibility disclosure by Portuguese companies”, Journal of Business Ethics, Vol. 83 No. 4, pp. 685-701.

Carter, D.A., Simkins, B.J. and Simpson, W.G. (2003), “Corporate governance, board diversity, and firm value”, Financial Review, Vol. 38 No. 1, pp. 33-53.

Cetindamar, D. and Husoy, K. (2007), “Corporate social responsibility practices and environmentally responsible behavior: the case of the United Nations global compact”, Journal of Business Ethics, Vol. 76 No. 2, pp. 163-176.

Chaganti, R.S., Mahajan, V. and Sharman, S. (1985), “Corporate board size, composition and corporate failures in retailing industry”, Journal of Management Studies, Vol. 22 No. 4, pp. 400-417.

Chen, C.J.P. and Jaggi, B. (2000), “Association between independent non-executives directors, family control and financial disclosures in Hong Kong”, Journal of Accounting and Public Policy, Vol. 19 Nos 4/5, pp. 285-310.

VOL. 10 NO. 4 2014 SOCIAL RESPONSIBILITY JOURNAL PAGE 585

Cheng, E.C.M. and Courtenay, S.M. (2006), “Board composition, regulatory regime and voluntary disclosure”, The International Journal of Accounting, Vol. 41 No. 3, pp. 262-289.

Child, J. (1975), “Managerial and organizational factors associated with company. Performance - part II, a contingency analysis”, Journal of Management Studies, Vol. 12 Nos 1/2, pp. 12-27.

Chow, C.W. and Wong-Boren, A. (1987), “Voluntary financial disclosure by Mexican corporations”, The Accounting Review, Vol. 62 No. 3, pp. 533-541.

Commission of the European Communities (2001), Green Paper: Promoting a European framework for Corporate Social Responsibility, COM 366 final, Brussels, pp. 6-7.

Cormier, D. and Gordon, I.M. (2001), “An examination of social and environmental reporting strategies”, Accounting, Auditing and Accountability Journal, Vol. 14 No. 5, pp. 587-616.

Cowen, S.S. (1987), “The impact of corporate characteristics on social responsibility disclosure: a typology and frequency-based analysis”, Accounting, Organizations and Society, Vol. 12 No. 2, pp. 111-122.

Cowton, C.J. (1999), “Accounting and financial ethics: from margin to mainstream”, Business Ethics: A European Review, Vol. 8 No. 2, pp. 99-107.

Cox, P., Brammer, S. and Millington, A. (2004), “An empirical examination of institutional investor preferences for corporate social performance”, Journal of Business Ethics, Vol. 52 No. 1, pp. 27-43.

CSR Europe (2000a), The First Ever European Survey of Consumers’ Attitude on Corporate Social Responsibility, CSR Europe Publications, Brussels.

CSR Europe (2000b), Communicating Corporate Social Responsibility, CSR Europe Publications, Brussels.

Da Silva Monteiro, S.M. and Aibar-Guzmán, B. (2010), “Determinants of environmental disclosure in the annual reports of large companies operating in Portugal”, Corporate Social Responsibility Environmental Management, Vol. 17 No. 4, pp. 185-204.

Daily, C.M. and Dalton, D.R. (2003), “Women in the boardroom: a business imperative”, Journal of Business Strategy, Vol. 24 No. 5, pp. 8-9.

Daub, C.H. (2007), “Assessing the quality of sustainability reporting: an alternative methodological approach”, Journal of Cleaner Production, Vol. 15 No. 1, pp. 75-85.

Deegan, C. (2002), “Introduction: the legitimising effect of social and environmental disclosures - a theoretical foundation”, Accounting, Auditing & Accountability Journal, Vol. 15 No. 3, pp. 282-311.

Eilbert, H. and Parket, I.R. (1973), “The current status of corporate social responsibility”, Business Horizons, Vol. 16 No. 4, pp. 5-14.

EIRIS (2012), “On track for Rio�20? How are global companies responding to sustainability?”, available at: www.eiris.org/files/research%20publications/EIRISGlobalSustainbailityReport2012.pdf (accessed 30 December 2012).

Elsayed, K. (2007), “Does CEO duality really affect corporate performance?”, Corporate Governance: An International Review, Vol. 15 No. 6, pp. 1203-1214.

Esa, E. and Mohd Ghazali, N.A. (2011), “Corporate social responsibility and corporate governance in Malaysian government-linked companies”, Corporate Governance, Vol. 12 No. 3, pp. 292-305.

Esa, E. and Mohd Ghazali, N.A. (2012), “Corporate social responsibility and corporate governance in Malaysian government-linked companies”, Corporate Governance, Vol. 12 No. 3, pp. 292-305.

Escrig-Olmedo, E., Munoz-Torres, M.J. and Fernandez-Izquierdo, M.A. (2010), “Socially responsible investing: sustainability indices, ESG rating and information provider agencies”, International Journal of Sustainable Economy, Vol. 2 No. 4, pp. 442-461.

European Multistakeholder Forum on CSR (2004), “Corporate social responsibility-final results & recommendations”, Final Report, available at: http://circa.europa.eu/irc/empl/csr_eu_multi_ stakeholder_forum/info/data/en/CSR%20Forum%20final%20report.pd (accessed 30 December 2012).

Fafaliou, I., Lekakou, M. and Theotokas, I. (2006), “Is the European shipping industry aware of corporate social responsibility? The case of Greek-owned short sea shipping companies”, Marine Policy, Vol. 30 No. 4, pp. 412-419.

Gamerschlag, R., Möller, K. and Verbeeten, F. (2010), “Determinants of voluntary CSR disclosure: empirical evidence from Germany”, Review of Managerial Science, Vol. 5 No. 2, pp. 233-262.

PAGE 586 SOCIAL RESPONSIBILITY JOURNAL VOL. 10 NO. 4 2014

Gelb, D.S. and Strawser, J.A. (2001), “Corporate social responsibility and financial disclosures: an alternative explanation for increased disclosure”, Journal of Business Ethics, Vol. 33 No. 1, pp. 1-13.

Giannarakis, G. and Litinas, N. (2011), “Corporate social responsibility performance in the Greek telecommunication sector”, Strategic Change, Vol. 20 Nos 1/2, pp. 73-84.

Giannarakis, G., Sariannidis, N. and Litinas, N. (2011a), “An analysis of corporate social responsibility in the Greek telecommunication sector”, Global Business and Organizational Excellence, Vol. 30 No. 4, pp. 40-49.

Giannarakis, G., Sariannidis, N. and Litinas, N. (2011b), “Evaluation of corporate social responsibility performance standards”, African Journal of Business Management, Vol. 5 No. 17, pp. 7367-7374.

Giner, I. (1997), “The influence of company characteristics and accounting regulation on information disclosed by Spanish firms”, European Accounting Review, Vol. 6 No. 1, pp. 45-68.

Global Reporting Initiative (2012), available at: http://database.globalreporting.org (accessed 30 December 2012).

Golden, B.R. and Zajac, E.J. (2001), “When will boards influence strategy? Inclination x power � strategic change”, Strategic Management Journal, Vol. 22 No. 12, pp. 1087-1117.

Graafland, J., van de Ven, B. and Stoffele, N. (2003), “Strategies and instruments for organising CSR by small and large businesses in the Netherlands”, Journal of Business Ethics, Vol. 47 No. 1, pp. 45-60.

Gray, R., Owen, D. and Adams, C. (1996), Accounting and Accountability: Changes and Challenges in Corporate Social and Environmental Reporting, Prentice-Hall, London.

Guajarati, D.N. (1995), Basic Econometrics, McGrawHill, New York, NY.

Gul, F.A. and Leung, S. (2004), “Board leadership, outside directors’ expertise and voluntary corporate disclosures”, Journal of Accounting and Public Policy, Vol. 23 No. 5, pp. 351-379.

Gupta, A.D. (2007), “Social responsibility in India towards global compact approach”, International Journal of Social Economics, Vol. 34 No. 9, pp. 637-663.

Guthrie, J. and Parker, L.D. (1989), “Corporate social reporting: a rebuttal of legitimacy theory”, Accounting and Business Research, Vol. 19 No. 76, pp. 343-352.

Hackston, D. and Milne, M.J. (1996), “Some determinants of social and environmental disclosures in New Zealand companies”, Accounting, Auditing & Accountability Journal, Vol. 9 No. 1, pp. 77-108.

Haniffa, R.M. and Cooke, T.E. (2005), “The impact of culture and governance on corporate social reporting”, Journal of Accounting and Public Policy, Vol. 24 No. 5, pp. 391-430.

Hill, S. (1995), “The social organisation of boards directors”, British Journal of Sociology, Vol. 46 No. 2, pp. 245-278.

Ho, L.J. and Taylor, M.E. (2007), “An empirical analysis of triple bottom-line reporting and its determinates: evidence from the United States and Japan”, Journal of international Financial Management and Accounting, Vol. 18 No. 2, pp. 123-150.

Hooghiemstra, R. (2000), “Corporate communication and impression management – new perspectives why companies engage in corporate social reporting”, Journal of Business Ethics, Vol. 27 Nos 1/2, pp. 55-68.

Hossain, M. and Reaz, M. (2007), “The determinants and characteristics of voluntary disclosure by Indian banking companies”, Corporate Social Responsibility Environmental Management, Vol. 14 No. 5, pp. 274-288.

Jensen, M.C. (1993), “The modern industrial revolution, exit, and the failure of internal control mechanisms”, Journal of Finance, Vol. 6 No. 4, pp. 831-880.

Khan, H.U.Z. (2010), “The effect of corporate governance elements on corporate social responsibility (CSR) reporting empirical evidence from private commercial banks of Bangladesh”, International Journal of Law and Management, Vol. 52 No. 2, pp. 82-109.

Kimbro, M.B. and Cao, Z. (2011), “Does voluntary corporate citizenship pay? An examination of the UN global compact”, International Journal of Accounting and Information Management, Vol. 19 No. 3, pp. 288-303.

VOL. 10 NO. 4 2014 SOCIAL RESPONSIBILITY JOURNAL PAGE 587

King, A.A., Lenox, M.J. and Terlaak, A. (2005), “The strategic use of decentralized institutions: exploring certification with the ISO 14001 management standard”, Academy of Management Journal, Vol. 48 No. 6, pp. 1091-1106.

Kolk, A. (2005), “Environmental reporting by multinationals from the triad: convergence of divergence?”, Management International Review, Vol. 45 No. 1, pp. 145-166.

KPMG (2011), “KPMG international survey of corporate responsibility reporting 2011”, available at: www.kpmg.com/global/en/issuesandinsights/articlespublications/corporate-responsibility/pages/201 1-survey.aspx (accessed 30 December 2012).

Laksmana, I. (2008), “Corporate board governance and voluntary disclosure of executive compensation practices”, Contemporary Accounting Research, Vol. 25 No. 4, pp. 1147-1182.

Lee, S.P. and Chen, H.J. (2011), “Corporate governance and firm value as determinants of CEO compensation in Taiwan: 2SLS for panel data model”, Management Research Review, Vol. 34 No. 3, pp. 252-265.

Li, S., Fetscherin, M., Alon, I., Lattemann, C. and Yeh, K. (2010), “Corporate social responsibility in emerging markets the importance of the governance environment”, Management International Review, Vol. 50 No. 5, pp. 635-654.

Lipton, M. and Lorsch, J. (1992), “A modest proposal for improved corporate governance”, Business Lawyer, Vol. 48 No. 1, pp. 59-77.

Liu, X. and Anbumozhi, V. (2009), “Determinant factors of corporate environmental information disclosure: an empirical study of Chinese listed companies”, Journal of Cleaner Production, Vol. 17 No. 6, pp. 593-600.

McGuire, J.B., Sundgren, A. and Schneeweis, T. (1988), “Corporate social responsibility and firm financial performance”, Academy of Management Journal, Vol. 31 No. 4, pp. 854-872.

McMurtrie, T. (2005), “Factors influencing the publication of social performance information: an Australian case study”, Corporate Social Responsibility and Environmental Management, Vol. 12 No. 3, pp. 129-143.

McNally, G.M., Eng, L.H. and Hasseldine, C.R. (1982), “Corporate financial reporting in New Zealand: an analysis of user preferences, corporate characteristics and disclosure practices for discretionary information”, Accounting and Business Research, Vol. 13 No. 49, pp. 11-20.

Maignan, I. and Ferrell, O.C. (2004), “Corporate social responsibility and marketing: an integrative framework”, Journal of the Academy of Marketing Science, Vol. 32 No. 1, pp. 3-19.

Matten, D. and Moon, J. (2008), “‘Implicit’ and ‘explicit’ CSR: a conceptual framework for a comparative understanding of corporate social responsibility”, Academy Management Review, Vol. 33 No. 2, pp. 404-424.

Mathews, M.R. (1995), “Social and environmental accounting: a practical demonstration of ethical concern?”, Journal of Business Ethics, Vol. 14 No. 8, pp. 663-671.

Meznar, M.B. and Nigh, D. (1995), “Buffer or bridge? Environmental and organizational determinants of public affairs activities in American firms”, Academy of Management Journal, Vol. 38 No. 4, pp. 975-996.

Michelon, G. and Parbonetti, A. (2012), “The effect of corporate governance on sustainability disclosure”, Journal of Management & Governance, Vol. 16 No. 3, pp. 477-509.

Mohd Ghazali, N.A. (2007), “Ownership structure and corporate social responsibility disclosure: some Malaysian evidence”, Corporate Governance, Vol. 7 No. 3, pp. 251-266.

Morhardt, J.E., Boird, A. and Freeman, K. (2002), “Scoring corporate environmental and sustainability reports using GRI 2000, ISO 14031 and other criteria”, Corporate Social Responsibility and Environmental Management, Vol. 9 No. 4, pp. 215-233.

Muth, M. and Donaldson, L. (1998), “Stewardship theory and board structure: a contingency approach”, Corporate Governance: An International Review, Vol. 6 No. 1, pp. 5-28.

OECD (2009), Overview of Selected Initiatives and Instruments Relevant to Corporate Social Responsibility, Annual Report on the OECD Guidelines for Multinational Enterprises 2008 Employment and Industrial Relations.

Patten, D.M. (1991), “Exposure, legitimacy, and social disclosure”, Journal of Accounting and Public Policy, Vol. 10 No. 4, pp. 297-308.

PAGE 588 SOCIAL RESPONSIBILITY JOURNAL VOL. 10 NO. 4 2014

Perrini, F. (2005), “Building a European portrait of corporate social responsibility reporting”, European Management Journal, Vol. 23 No. 6, pp. 611-627.

Rahman, N.H.W.A., Zain, M.M. and Al-Haj, N.H.Y.Y. (2011), “CSR disclosures and its determinants: evidence from Malaysian government link companies”, Social Responsibility Journal, Vol. 7 No. 2, pp. 181-201.

Rechner, P.L. and Dalton, D.R. (1991), “CEO duality and organizational performance: a longitudinal analysis”, Strategic Management Journal, Vol. 12 No. 2, pp. 155-160.

Reverte, C. (2009), “Determinants of corporate social responsibility disclosure ratings by Spanish listed firms”, Journal of Business Ethics, Vol. 88 No. 2, pp. 351-366.

Roberts, R.W. (1992), “Determinants of corporate social responsibility disclosure: an application of stakeholder theory”, Accounting Organizations and Society, Vol. 17 No. 6, pp. 595-612.

Rodríguez, L.C. and LeMaster, J. (2007), “Voluntary corporate social responsibility disclosure SEC CSR seal of approval”, Business Society, Vol. 46 No. 3, pp. 370-384.

Rose, C. (2007), “Does female board representation influence firm performance? The Danish evidence”, Corporate Governance: An International Review, Vol. 15 No. 2, pp. 404-413.

Runhaar, H. and Lafferty, H. (2009), “Governing corporate social responsibility: an assessment of the contribution of the UN global compact to CSR strategies in the telecommunications industry”, Journal of Business Ethics, Vol. 84 No. 4, pp. 479-495.

Said, R., Zainuddin, Y.H. and Haron, H. (2009), “The relationship between corporate social responsibility disclosure and corporate governance characteristics in Malaysian public listed companies”, Social Responsibility Journal, Vol. 5 No. 2, pp. 212-226.

Sariannidis, N., Giannarakis, G., Litinas, N. and Konteos, G. (2010), “� GARCH examination of macroeconomic effects on US stock market: a distinguish between the total market index and the sustainability index”, European Research Studies, Vol. 13 No. 1, pp. 129-142.

Schembera, S. (2012), “Implementing corporate social responsibility: empirical insights on the impact and accountability of the UN global compact”, UZH Business Working Paper Series, Working Paper 316.

Shavit, T. and Adam, A.M. (2011), “A preliminary exploration of the effects of rational factors and behavioral biases on the managerial choice to invest in corporate responsibility”, Managerial and Decision Economics, Vol. 32 No. 3, pp. 205-213.

Siregar, S.V. and Bachtiar, Y. (2010), “Corporate social reporting: empirical evidence from Indonesia stock exchange”, International Journal of Islamic and Middle Eastern Finance and Management, Vol. 3 No. 3, pp. 241-252.

Stieglitz, H. and Janger, A. (1963), “When chairman is chief executive”, Management Record, Conference Board (August), p. 7.

Stiles, P. (2001), “The impact of boards on strategy: an empirical examination”, Journal of Management Studies, Vol. 38 No. 5, pp. 27-50.

Tagesson, T., Blank, V., Broberg, P. and Collin, S.O. (2009), “What explains the extent and content of social and environmental disclosures on corporate websites: a study of social and environmental reporting in Swedish listed corporations”, Corporate Social Responsibility and Environmental Management, Vol. 16 No. 6, pp. 352-364.

Tencati, A., Perrini, F. and Pogutz, S. (2004), “New tools to foster corporate socially responsible behavior”, Journal of Business Ethics, Vol. 53 Nos 1/2, pp. 173-190.

Teoh, H.Y. and Thong, G. (1984), “Another look at corporate social responsibility and reporting: an empirical study in a developing country”, Accounting, Organizations and Society, Vol. 9 No. 2, pp. 189-206.

Tricker, R.I. (1984), Corporate Governance-Practices, Procedures and Powers in British Companies and Their Boards of Directors, Gower Publishing Company, England.

Trotman, K. and Bradley, G. (1981), “Associations between social responsibility disclosure and characteristics of companies”, Accounting, Organizations and Society, Vol. 6 No. 4, pp. 355-362.

Tschopp, D.J. (2005), “Corporate social responsibility: a comparison between the United States and the European Union”, Corporate Social Responsibility and Environmental Management, Vol. 12 No. 1, pp. 55-59.

VOL. 10 NO. 4 2014 SOCIAL RESPONSIBILITY JOURNAL PAGE 589

Turker, D. (2009), “Measuring corporate social responsibility: a scale development study”, Journal of Business Ethics, Vol. 85 No. 4, pp. 411-427.

Ujunwa, A. (2012), “Board characteristics and the financial performance of Nigerian quoted firms”, Corporate Governance, Vol. 12 No. 5, pp. 656-674.

Ullmann, A. (1985), “Data in search of a theory: a critical examination of the relationship among social performance, social disclosure and economic performance of US firms”, Academy of Management Review, Vol. 10 No. 3, pp. 540-557.

Vafeas, N. (1999), “Board meeting frequency and firm performance”, Journal of Financial Economics, Vol. 53 No. 1, pp. 113-142.

Voorhes, M., Humphreys, J. and Solomon, A. (2012), 2012 Report on Sustainable and Responsible Investing Trends in the US, US SIF: The Forum for Sustainable and Responsible Investment.

Vroom, V.H. and Bernd, P. (1971), “Relationship between age and risk taking among managers”, Journal of Applied Psychology, Vol. 55 No. 5, pp. 399-405.

Wanderly, L.S.O., Lucian, R., Farache, F. and de Sousa Filho, J.M. (2008), “CSR information disclosure on the web: a context-based approach analysing the influence of country of origin and industry sector”, Journal of Business Ethics, Vol. 82 No. 2, pp. 369-378.

Wang, J. and Coffey, B.S. (1992), “Board composition and corporate philanthropy”, Journal of Business Ethics, Vol. 11 No. 10, pp. 771-778.

Werther, B. and Chandler, D. (2005), “Strategic corporate social responsibility as global brand insurance”, Business Horizons, Vol. 48 No. 4, pp. 317-324.

Williams, R.J. (2003), “Women on corporate boards of directors and their influence on corporate philanthropy”, Journal of Business Ethics, Vol. 42 No. 1, pp. 1-10.

World Business Council for Sustainable Development (2002), Sustainable Development Reporting: Striking the Balance, Earthprint, Hertfordshire.

Corresponding author

Grigoris Giannarakis can be contacted at: [email protected]

To purchase reprints of this article please e-mail: [email protected] Or visit our web site for further details: www.emeraldinsight.com/reprints

PAGE 590 SOCIAL RESPONSIBILITY JOURNAL VOL. 10 NO. 4 2014

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.