Fostering Stakeholders Trust through CSR Reporting: An Analytical Focus

Abstract

Corporate social responsibility (CSR) is a buzzword worldwide. In today’s globalized world, one of the great challenges faced by firms is integration of CSR in business. Stakeholders require a lot more from companies than merely pursuing growth and profitability. They demand information about economic, social and environmental performances of the companies. Previous studies in developed countries have confirmed that a true and sincere corporate communication leads to the building of stakeholders’ trust. There is, however, a dearth of such studies in developing countries such as India. This study is an attempt to bridge the gap by conducting an exploratory study on how the top management of a company reports CSR. Using the technique of content analysis, this article assessed the extent and nature of CSR reporting by Indian companies. We used multiple regression analysis to evaluate how well a set of predictors explain the social disclosure practices of Indian firms. The results indicated that there is no significant relationship between a firm’s profitability and its corporate social disclosure (CSD). However, a firm’s ownership (private sector or public sector) has influence on CSD practices. The findings also suggest that firm size has a positive association with CSD under the community development theme. This implies that large companies with public visibility favour community development. Finally, the study ends with a conclusion that has strong managerial implications: sincere and honest social reporting can harness a better relationship with all stakeholders.