Stakeholder Reporting in the Australian Banking Industry

Abstract

Recent corporate scandals such as Enron, WorldCom and James Hardie have both made stakeholders dissatisfied with corporate financial accountability and increased calls for greater corporate transparency. In response, companies are increasing the amount on voluntary disclosures to inform stakeholders about organisational performance. While criticisms abound as to the 'public relations' nature of these exercises, there has been little formal evaluation of stakeholder reporting, especially in Australia. In addition, the important aspect of stakeholder reciprocity, where not only stakeholder satisfaction but also their contribution to the organisation is evaluated and reported, has not been examined. Arguably, the disclosure of both of these increases the transparency of the organisation from a stakeholder's perspective. To examine both of these issues, a detailed study was conducted using the non-financial performance indicators of Australia' Top five banks, as available in both annual reports and websites, to examine the nature of stakeholder reporting and the extent to which stakeholder reciprocity is disclosed. The results clearly showed that there is neither consistency in the reporting of key performance indicators nor is there consistency in reporting across both stakeholder satisfaction and stakeholder contribution. Stakeholder satisfaction dominates and little effort has been directed to evaluate and report on the stakeholder contribution. The study has also clearly indicated that, other than shareholders, the top five Australian banks have identified customers and employees as their primary key stakeholders. Communities and regulators are secondary stakeholders, whereas there was little or no emphasis on suppliers, alliances, partnerships and intermediaries. The findings of this study have important implications for both future research and policy. In relation to the latter, guidelines need to be established to improve stakeholder reporting and value creation processes aligned with these reciprocity dimensions.