Corporate Governance and Corporate Social Responsibility (CSR) Disclosure: Evidence from Sri Lankan Listed Banks

Abstract

The main purpose of this paper is to examine the relationship between corporate governance and corporate social responsibility of Sri Lankan listed banks during the period from 2016 to 2019. Corporate governance was measured through its characteristics namely, board size, board independence, board meeting, board gender diversity, cross directorship, audit committee size and audit committee meetings. The content analysis was employed to measure the CSR disclosure using GRI framework 2016. All the data were collected from the annual report published in the website of Colombo stock exchange, Sri Lanka. All the listed banks (11) were selected to this study except one due to the recent listing. Hierarchical regression analysis was employed to investigate the association between the corporate social responsibility disclosure and other independent variables. The result indicates the moderate level of CSR disclosure among the sample listed banks in Sri Lanka. Result of the regression analysis indicate that only three governance variables positively associated with CSR disclosure. Those are, board size, audit committee size and audit committee meeting. The study also proves the positive association among firm size, firm profitability and CSR disclosure. The findings of the study are limited to the context of the study, Sri Lankan listed banks, for the period 2016 to 2019. Therefore, generalizability of the result to the other context is questionable. The findings of the study pressure the need of larger size board and audit committee to pool the expertise by which the CSR disclosure could be enhanced. The result also provide the implications to policy makers to develop the mandatory reporting requirement at least to a certain extent. The study reveals the relationship between CSR disclosure and corporate governance based on the CSR disclosure measured through content analysis with the contents of GRI framework 2016.