Determinants of Corporate Social Disclosure: An Empirical Study of BSE-SENSEX Companies in India

Abstract

Corporate Social Responsibility (CSR) has now gained increased significance in the decisions that are carried out in the ‘board rooms’ of companies in India. Companies have started giving CSR a place in their overall strategies of growth. This paper empirically examines the association of CSR disclosure with corporate attributes, such as size of a firm, its profitability, leverage, ownership structure, nature of the industry and residential status of 25 companies representing major industries of India, drawn from the BSE-30 companies. The annual reports for the financial year 2009–10 are the major sources of data collection. Backward stepwise regression analysis has been used, which shows a significant association between corporate attributes, namely, size of a firm (measured by total assets), profitability, Returns on Assets (ROA), leverage of a company, its ownership structure, nature of the industry and CSR disclosure level. However, no significant association (though positive) was found between CSR disclosure score and residential status of a company. The results of this empirical study would provide a deeper insight to the managers in the corporate sector to review their responsibilities towards their stakeholders. In fact, the results of this study are strongly suggestive of a harsh fact that in the long run, corporates cannot keep their stakeholders blindfolded by merely mentioning the CSR issues in words. They need to transverse the same into action soon, if they really want to utilise it as a strategic tool. The present study would also be of great relevance to the researchers in the same field, as it shows that it is not necessary that blue chip companies definitely indulge in social welfare activities. It would rather motivate them to further explore the same issue, especially in the Indian scenario. The study is no doubt based on the evaluation of representative companies of India chosen from SENSEX. Still, perhaps, a better evaluation can be made if larger sample is taken. Also, a cross-sectional analysis over a period of time or at different points of time could be undertaken to see the progress with respect to CSR parameters.