Abstract
Background: The corporate social responsibility (CSR) disclosure was made mandatory in Malaysia in 2007 with the introduction of the CSR Framework by Bursa Malaysia. Since then, the practice of CSR disclosure is growing, as Malaysia joins global efforts towards sustainable development. Despite increased research on CSR; limited studies are assessing the relationship of specific dimensions – environmental, community, workplace and marketplace, towards dividend payout, which is crucial to investment and corporate financial decision making. Method: The study involved 32 Malaysian public listed finance companies as of 2017. It deployed data from annual reports and databases. Additionally, the study used content analysis to measure the CSR disclosure score, and dividend payout was calculated from the database. Results: There was a significant correlation between community and workplace dimensions with dividend payout. Despite the absence of significant results, the regression analysis showed a positive relationship between community and workplace dimensions with dividend payout. Besides, there was an inverse relationship between the environmental and marketplace dimension with dividend payout. The results indicated that active involvement in the community dimension resulted from an immediate positive impact towards brand equity, attracting current and new customers, and therefore improving the earning levels and dividend payout. Additionally, greater participation in the workplace dimension solidifies employees' engagement and motivation, improves the productivity level, which can be translated into enhanced earning levels and dividend payout. Meanwhile, participation in environmental and marketplace dimensions requires a longer period to yield an impact, higher development expenditure, and involve sensitive information that might benefit competitors. Hence, companies tend to utilise internal funding instead of redistributing the wealth through dividend payout. Conclusion: The study contributes to the literature of CSR by explaining the relationship of specific dimensions of environmental, community, workplace, and marketplace towards dividend payout using the evidence from the emerging economy.
Highlights
Corporate Social Responsibility (CSR) has been around for decades, which was initially carried out voluntarily
These results show that there were finance companies without involvement in environmental and community-related corporate social responsibility (CSR) programmes
The workplace dimension was strongly and significantly related to environmental, community, and marketplace dimensions. It implied that finance companies could actively engage the workforce or garner employees support to execute CSR programmes. It reflected that finance companies organised awareness workshops or provided training for employees to familiarise the workforce in CSR initiatives
Summary
Corporate Social Responsibility (CSR) has been around for decades, which was initially carried out voluntarily. At the start of 2017, CSR practice and disclosure in Malaysia started to surge since it was made mandatory by the government for publicly listed companies to disclose CSR initiatives in their annual reports (Bursa Malaysia, 2012). The framework consists of four dimensions of CSR, namely (1) environmental, (2) workplace, (3) community, and (4) marketplace (Bursa Malaysia, 2012). This framework governed public companies' CSR disclosure and was incorporated as a new rule in Bursa Malaysia Listing Requirement. Despite increased research on CSR; limited studies are assessing the relationship of specific dimensions – environmental, community, workplace and marketplace, towards dividend payout, which is crucial to investment and corporate financial decision making.
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