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final_presentation-edited.pptxCorporate Social Responsibility Disclosure Practices Among Saudi Arabia Companies Listed In Tadawul Stock Exchange: An Exploratory Study
By:
BEDOOR AHMED ALZAHRANI (11127013)
Supervisor:
Ms. ROHAYA SHAARI
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INTRODUCTION
Corporate Social Responsibility CSR is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large. (WBCSD)
Corporate Social Responsibility Disclosure (CSRD) a process of providing information about interactions between companies with regard to environment, employees, society, and consumer issues. Grey et. Al (2001)
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CSRD IN SAUDI ARABIA
Even though there is a lack of academic papers that focuses on CSR in Saudi Arabia, recent studies have shown that CSR awareness is prevalent (NCB, 2009)
The high importance given to CSR in Saudi Arabia mainly arises from several reasons.
Although CSR is still in an early stage of development in Saudi Arabia, and shows less initiatives was taken as to date, presently most of the companies already recognizing and responding to the CSR concerns (Mandura, 2012).
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PROBLEM STATEMENT
Research on CSRD in Saudi Arabia is very much limited, the similar research in this area especially in the developed countries is abundant.
There is still ambiguity and lack of sufficient knowledge on the part of public, companies and Arab society as a whole on the concept of CSR and its dimensions, the extent of its development as well as the extent of its effectiveness. It is therefore, the purpose of the present study is to document evidence of current practice of CSRD in Saudi Arabia, including the nature and type of such disclosures.
This paper intends to bridge the gap particularly apprising about the CSR activities in the Saudi Arabia companies through an exploratory study.
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OBJECTIVE
The aim of this study is to examine the practice of CSRD among
Saudi Arabia companies listed in Tadawul Stock Exchange.
Specific objectives for this study are as follows:
To explore the practices of CSRD among selected Saudi Arabia companies.
To investigate the content category theme of CSRD such as environment, energy, human resource, product/consumers, community involvement and others among selected Saudi Arabia companies.
To identify the location of CSRD within the annual report of the Saudi Arabia companies.
To examine the amount of CSRD, measured by the number of sentences as reported in the annual report of the selected Saudi Arabia companies.
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CONTRIBUTION OF THE STUDY
This research seeks to contribute to the literature by reviewing and documenting CSRD of relatively large sample of Saudi Arabian companies listed in Tadawul Stock Exchange in the current period.
This study also presents the first attempt at a content analysis of annual reports of Saudi Arabia companies listed in the Tadawul Stock Exchange.
Furthermore, this cross-sectional study will allow for inter-industry comparisons, which will increase the contribution of this study to the field of literature.
Above all, the findings of this study may also be relevant to the government bodies related to CSR in their decision to introduce accounting standards in the area of CSRD since as to date; none of the standards exist to guide businesses in reporting their CSRD in the annual report.
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LITERATURE REVIEW
| Author: | Nazli et al. (2003) |
| Population & sample: | P: 98 companies in Malaysia which listed under KLSE S: 82 companies |
| Methodology: | Content analysis, Frequency, and Percentage . |
| Objective: | Examine the incidence of CSRD, content-category theme, method of CSRD, the news type of CSRD, Determine the location of CSRD, the extent of CSRD |
| Finding: | The result show that 84% companies in the sample made CSRD, most companies disclose CSR in product\consumer, Employees, and community involvement, and most of companies disclose CSR using declarative statement (80.6%) and (80%) companies made good new, proportion of companies made CSRD in both chairman’s statement and operation review, and the sample of companies had total of 1974 sentences. |
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LITERATURE REVIEW
| Author: | Nadher et al. (2014) |
| Population & sample : | P: 3 family owned businesses in Saudi Arabia S: all the population |
| Methodology: | Interview |
| Objective: | Explored CSR policies, CSR initiatives with view of impact on business grow and community. |
| Finding: | Saudi Arabian family owned businesses are actively involved in CSR activities locally, and some are even doing it internationally, which all businesses interviewed agreed that it is completely different procedure. The businesses family members agreed that CSR activates carry a very important role for them of giving back to the society. It is also undeniable that CSR can be a very strong marketing tool. CSR has been there for a long time, yet, only few businesses structured the process of practicing it. |
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LITERATURE REVIEW
| Author: | Yao et al. (2011) |
| Population & sample: | P: 800 listed firms on the Shanghai Stock Exchange in 2008 and 2009 S: 2008 282 firms 2009 283 firms |
| Methodology: | Multivariate regression model |
| Objective: | identified the determinants of CSRD, company size as a reliable predictor of the extent of CSRD, and studied the relationship between CSRD and firm age |
| Finding: | CSRD is positively associated with firm size, media exposure, share ownership concentration and institutional shareholding. In addition, companies in environmentally sensitive industries tend to disclose more environmental responsibility information than others. However, contradictory to previous studies, this research shows a negative relationship between CSRD and firm age. This can be explained by the specific characters of China’s capital market. The research results support the legitimacy theory in an emerging market with important and relevant insights for enterprise managers interested in exploiting the annual reports as a tool to legitimize their corporate social conduct. |
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LITERATURE REVIEW
| Author: | Ponnu, and Okoth (2009) |
| Population & sample : | P: 54 listed Companies at the NSE S: 47 companies |
| Methodology: | Content analysis, frequency, and percentage |
| Objective: | investigation of CSRD, determined the relationship between company size and CSRD, and examined the content category theme |
| Finding: | Chosen from five different industry groupings, these companies make up 87% of the total population of companies listed on the NSE. Results reveal that CSR disclosure received only modest attention and the theme most commonly disclosed was community involvement. There were significant differences among various industry groupings with respect to company background and themes of CSR disclosure. |
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LITERATURE REVIEW
| Author: | Firas et al. (2014) |
| Population & sample : | P: 46 firms in the Palestine (PXE), and 55 firms in Jordan (ASE) |
| Methodology: | Institutional Theory Approach and Legitimacy Theory |
| Objective: | evaluated CSRD practice, measured the level of CSRD, analysis whether CSR presents specific characteristic, and study the factors that have an impact on CSRD |
| Finding: | levels of CSRD in Jordan are higher than in Palestine in all aspects, though it is low in both countries when compared with Western countries. Moreover, we have found a positive association between CSRD and the legal system, external auditor firm characteristics and corporate governance (e.g. board size and board audit committee). |
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LITERATURE REVIEW
| Author: | Abu-Baker (1999) |
| Population & sample : | P: 143 annual reports of publicly listed in Jordanian shareholding companies S: all of the companies |
| Methodology: | Content analysis |
| Objective: | the study provides an examination of key aspect of CSD practices in Jordan, mainly on the extent, themes, methods, locations and amounts of CSD in the company’s annual reports. In addition, this study investigated the relationship between CSD and industry groupings. |
| Finding: | 100% of sample made CSRD, The themes most commonly disclosed across the four industry groupings were human resources and community involvement. Environmental disclosure needs much more attention by the JSCs. Significant differences among the various industry groupings were noted with respect to the amounts, methods and locations of CSD in annual reports. |
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POPULATION & SAMPLE
Population: 168 companies listed in Tadawul Stock Exchange .
The data were collected from 2013 annual reports of the selected companies on their website or in Tadawul website.
The sample composed of all the large companies in Saudi Arabia, categorized in 15 sectors , which include namely; bank & financial services, petrochemical industries, cement, retail, energy & utilities, agriculture & food industries, telecommunication & information technology, insurance, multi-investment, industrial investment, building & construction, real estate development, transport, media & publishing and hotel & tourism.
Sample: 111 companies or (66.07% of the sample).
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METHODOLOGY
Content analysis methodology was utilized as the research methodology for this study and all data was analyzed using frequency and percentage analysis.
Content analysis has been defined as a systematic, replicable technique for compressing many words of text into fewer content categories based on explicit rules of coding (Berelson, 1952; GAO, 1996; Krippendorff, 1980; and Weber, 1990).
The research instruments and general methodology in this study were utilized in accordance with Guthrie and Mathews (1985). These authors developed an approach (based upon Krippendorff (1980) and Holstil (1969) ideas concerning a number of options available for enumeration in content analysis) for measuring the nature and extent of CSRD in annual reports. This approach contains several content categories under 4 testable dimensions, namely: explore the practices of CSRD, investigate the content category theme of CSR disclosure, identify the location of CSR disclosure, and the extent of CSRD in annual report.
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RESULT and DISCUSSION
PRACTICE OF CSRD
| Total Number of Companies in Sample | Total Number of Companies Having CSRD | Percentage of Sample |
| 168 | 111 | 66.07% |
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percentage of companies with CSRD percentage of companies without CSRD 0.66070000000000195 0.33930000000000116
RESULT and DISCUSSION
PRACTICE OF CSRD – Discussion
The findings of this study imply that companies in Saudi Arabia do practice CSRD and reported them in their annual reports. This may have been due to:
the strong collaboration with society and continuous development of the human resources
Effective CSR activities also are deemed to give a positive impact on local communities
being a responsible business will guide their long-term commitment to investing in future generations and to embedding ethical principles in the company’s culture.
most of the companies nowadays realize the importance of disclosing their CSR activities as the stakeholder becoming increasingly aware of the need for the businesses to be socially responsible (Lindblom, 1994).
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CONTENT-CATEGORY THEME OF CSRD
| Environment | Energy | Human Resource | Product\Consumer | Community Involvement | |||||
| No. | % | No. | % | No. | % | No. | % | No. | % |
| 53 | 31.54 | 3 | 1.78 | 91 | 54.16 | 31 | 18.45 | 84 | 50 |
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RESULT and DISCUSSION
| environment | energy | human resource | product\consumer | community involvement | ||||||
| INDUSTRIES : | no | % | no | % | no | % | no | % | no | % |
| banks & financial investment | 5 | 41.66 | 0 | 0 | 11 | 91.66 | 1 | 8.33 | 9 | 75 |
| petrochemical industries | 11 | 78.57 | 1 | 7.14 | 13 | 92.85 | 8 | 57.14 | 10 | 71.42 |
| cement | 9 | 64.28 | 0 | 0 | 10 | 71.42 | 4 | 28.57 | 11 | 78.57 |
| retail | 4 | 28.57 | 0 | 0 | 7 | 50 | 1 | 7.14 | 10 | 71.42 |
| energy & utilities | 1 | 50 | 1 | 50 | 2 | 100 | 2 | 100 | 2 | 100 |
| agriculture & food industries | 7 | 43.75 | 0 | 0 | 7 | 43.75 | 7 | 43.75 | 9 | 56.25 |
| telecommunication & information technology | 2 | 40 | 0 | 0 | 3 | 60 | 0 | 0 | 3 | 60 |
| insurance | 1 | 2.85 | 0 | 0 | 13 | 37.14 | 0 | 0 | 4 | 11.42 |
| multi-investment | 0 | 0 | 0 | 0 | 1 | 14.28 | 0 | 0 | 2 | 28.57 |
| industrial investment | 4 | 28.57 | 0 | 0 | 7 | 50 | 2 | 14.28 | 7 | 50 |
| building & construction | 5 | 31.25 | 1 | 6.25 | 8 | 50 | 2 | 12.5 | 7 | 43.75 |
| real estate development | 1 | 12.5 | 0 | 0 | 2 | 25 | 1 | 12.5 | 3 | 37.5 |
| transport | 2 | 50 | 0 | 0 | 2 | 50 | 2 | 50 | 3 | 75 |
| media and publishing | 1 | 33.33 | 0 | 0 | 2 | 66.66 | 0 | 0 | 3 | 100 |
| hotel & tourism | 0 | 0 | 0 | 0 | 3 | 75 | 1 | 25 | 1 | 25 |
| TOTAL : | 53 | 31.54 | 3 | 1.79 | 91 | 54.16 | 31 | 18.45 | 84 | 50 |
CONTENT-CATEGORY THEME OF CSRD - Discussion
no distinct patterns of specific locations for CSRD in the annual reports
CSRD was high in Human Resource theme in Saudi Arabia companies due to some specific reasons:
Most importantly, it is due to the large size of companies operating in Petrochemical Sector. These companies are aspired to work to the highest safety and ethical standards, to help customers meet their sustainability goals and applying the highest environment, health, safety, and security standards.
recognizing the significance the Human Resource which is of being the real wealth and the most prominent success factors for a company.
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RESULT and DISCUSSION
LOCATION OF CSRD
| Chairman’s Statement | Operation Review | Corporate Dairy | Others | ||||
| No. | % | No. | % | No. | % | No. | % |
| 98 | 58.33 | 7 | 4.16 | 0 | 0 | 10 | 5.95 |
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RESULT and DISCUSSION
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| Chairman’s Statement | Operation Review | Corporate Dairy | Others | Total: | |||||
| INDUSTRIES : | no | % | no | % | no | % | no | % | no |
| Banks & Financial Investment | 9 | 75 | 5 | 41.66 | 1 | 8.33 | 15 | ||
| Petrochemical Industries | 11 | 78.57 | 3 | 21.42 | 14 | ||||
| Cement | 11 | 78.57 | 10 | ||||||
| Retail | 10 | 71.42 | 1 | 7.14 | 10 | ||||
| Energy & Utilities | 2 | 100 | 2 | ||||||
| Agriculture & Food Industries | 10 | 62.5 | 1 | 6.25 | 11 | ||||
| Telecommunication & Information Technology | 2 | 40 | 1 | 20 | 3 | ||||
| Insurance | 14 | ||||||||
| Multi-Investment | 3 | 42.85 | 3 | ||||||
| Industrial Investment | 6 | 42.85 | 3 | 21.42 | 9 | ||||
| Building & Construction | 8 | 50 | 1 | 6.25 | 9 | ||||
| Real Estate Development | 4 | 50 | 4 | ||||||
| Transport | 2 | 50 | 1 | 25 | 3 | ||||
| Media And Publishing | 3 | 100 | 3 | ||||||
| Hotel & Tourism | 3 | 75 | 3 | ||||||
| TOTAL : | 98 | 58.33 | 7 | 4.16 | 10 | 5.95 | 99 |
LOCATION OF CSRD - Discussion
no distinct patterns of specific location of CSRD in the annual report on Saudi Arabia’s companies. However, the analysis found that the CSRD was high in Chairman’s Statement in Saudi Arabia companies. The reason of that is because Saudi Arabia is a developing country and there is no regulatory intervention about how and where CSR activity should be disclosed.
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RESULT and DISCUSSION
AMOUNT OF CSRD
| Total sentences | Average | Maximum | Minimum |
| 5030 | 46.11% | 346 | 2 |
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RESULT and DISCUSSION
The sector which had the highest number of sentences on CSRD activities were Petrochemical Sector with a total of 981 sentences.
The sector which had the lowest number of sentences on CSRD activities were Multi-Investment sector with only of 2 sentences in CSRD.
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The numbers of sentences were segmented into different groups in order to determine the highest number or the lowest number of sentences on CSRD.
| 0 | No CSRD |
| 1-100 | Lowest number of sentences in CSRD |
| 101-200 | between the lowest and the highest number of sentences |
| 201-300 | |
| 301-400 | |
| 401-500 | |
| Over than 501 | Highest number of sentences in CSRD |
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| Number of Sentence Segmented in Different Groups | ||||||||
| Sectors: | 0 | 1-100 | 101-200 | 201-300 | 301-400 | 401-500 | More that 501 | Total: |
| banks & financial investment | 510 | 510 | ||||||
| petrochemical industries | 981 | 981 | ||||||
| cement | 513 | 513 | ||||||
| retail | 305 | 305 | ||||||
| energy & utilities | 364 | 364 | ||||||
| agriculture & food industries | 484 | 484 | ||||||
| telecommunication & information technology | 421 | 421 | ||||||
| insurance | 121 | 121 | ||||||
| multi-investment | 12 | 12 | ||||||
| industrial investment | 507 | 507 | ||||||
| building & construction | 435 | 435 | ||||||
| real estate development | 94 | 94 | ||||||
| transport | 145 | 145 | ||||||
| media and publishing | 55 | 55 | ||||||
| hotel & tourism | 83 | 83 | ||||||
| TOTAL : | 244 | 266 | 669 | 1340 | 2511 | 5030 |
AMOUNT OF CSRD -Discussion
The result suggests that there is a lot of difference in the extent and nature of CSRD in the annual reports examined among the Saudi Arabia companies. This may be due to improve their corporate image and to be seen as responsible corporate citizens; it is also regarded as important as information about CSR in annual report will provide important and useful information to the audience about the company social responsibility. It is also helpful to know the practice of CSR in Saudi Arabia.
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RESULT and DISCUSSION
Limitation OF THE STUDY
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The study is relates to a single year only and is restricted to annual reports of companies. As such, the study excludes other possible sources of CSR disclosure, such as press releases, flyers, promotional leaflets and other documents.
Owing to the small sample in which only a total of 111 companies or 66.07% from 168 companies listed in Tawadul Stock Exchange had some CSRD while the remaining 33.93% did not practice any CSRD activities in year under studied, it was not possible for us to run any statistical tests to examine if there are significant differences in the nature and extent of CSR disclosures between industrial sectors.
The third limitation, due to the content analysis method applied in this study, there is some amount of subjectivity.
Finally, as CSRD has just recently assumed strategic significance in Saudi Arabia, both for companies and governments alike, there is no any regulatory intervention about how and where CSR activity should be disclosed.
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recommendation
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A longitudinal study may provide further insights into some reporting patterns, if any.
The research can be replicated with a bigger sample size to enable the application of some statistical tests to determine differences between industrial sectors.
Examine if CSRD are associated, in any way, with companies’ financial performance.
Further analysis can used surveys and interviews to be conducted with the management of the selected companies to elicit their views on the reasons for companies not reporting CSR information or to see their influences on companies’ decisions to report or not to report CSR information in their annual reports.
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Thank you
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