Abstract

Of late, there has been growing demand for companies to intensify its corporate social responsibility (CSR). It is no longer one of the responsibilities of the companies but has become the responsibility of companies to give back to the society in which it has been operating and making huge profit. Unfortunately there appears to be a wide gap between the level of CSR awareness between companies from developed countries and those from the developing companies. Companies from developed countries have higher CSR level of awareness and faced no difficulty in disclosing their CSR activities relatively to the companies in the developing countries (including Malaysia). Thus, the aim of this paper is to examine the level of CSR disclosure of consumer products and trading and services industries from Malaysia. In addition, the study also would like to ascertain if the level of CSR disclosure influences the performance of the company in terms of its return on asset (ROA) and firm value (Tobin’s Q). The study starts with the development of CSR disclosure index and using the index to determine if company’s performance is related to its contribution to the society. Panel data is used to achieve the second objective. Findings of the study provide positive, negative and insignificant results between CSR activities on the company performance.

Highlights

  • There has been a rapid evolution on Corporate Social Responsibility (CSR) over the last few decades among companies

  • The aim of this study is to examine the relationship between corporate social responsibility (CSR) disclosure and the company financial performance (CFP) among Malaysian public listed companies (PLCs) focus on consumer product and Trading and services industry only

  • The analysis found that the total CSR disclosure, CSR index (CSRD) for trading and services companies was 0.05 while the minimum and the maximum values were 0 and 0.70 respectively

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Summary

Introduction

There has been a rapid evolution on Corporate Social Responsibility (CSR) over the last few decades among companies. According to Kay (1993), there are three reasons for CSR to be pertinent to business, (1) provides input to strategy as it provides an understanding about the different key elements in the business milieu, (2) a support for the value of chain and value creation activities and (3) a middle-of-the- road management task that to be supervised as well as any other business process This is supported by Ruf, Muralidhar, Brown, Janney and Paul (2001) stating that “the dominant stakeholder group, shareholders, financially benefit when, management meets the demands of multiple stakeholders. They conclude that by improving subsequent corporate social performance (CSP), it is positively related to sales growth for the current and subsequent years. Most of these companies viewed CSR as additional costs and found it not to be relevant to their business strategy

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