Abstract
The field of Corporate Social Responsibility (CSR) has been growing very exponentially over the past decade. There are continuous opposing views of the role of the firms in society and disagreements as to whether wealth maximization should be the sole goal of any corporations out there. With Insurance companies facing and fulfilling in the intense demand of diverse stakeholders, this study explores the impact of CSR disclosures on Financial Performance among the listed domestic-owned companies in Malaysian insurance sector. Although CSR is a hot topic in Malaysia and throughout various industries, no detailed study has been conducted to ascertain whether Malaysian insurance companies derive any benefits therefrom. The study examines the impact of CSR on financial performance using an extensive content analysis method on annual reports from 13 domestic-owned Malaysian insurance companies over the past 9 years (2008-2017). The content analysis data is further transformed into GRI CSR Disclosure Index table before matching the findings against the Financial Performance indicators (return on assets (ROA), return on equities (ROE) and earnings per share (EPS)). The relationship between CSR and ROA, ROE and EPS is tested using correlation analysis. The results indicate significant relationship between CSR disclosure and Financial Performance; designates CSR has significant impact on ROA; whereas relationship between CSR and ROE & EPS is found to be insignificant. The study suggests and indicates that insurance companies in Malaysia ought to carry out efforts continually in a bigger scale so that their CSR activities are more aligned with the reporting regulatory standards as well as to bring a positive impact in the current prospect. In addition, the remedial action proposed by Bursa Malaysia from year 2016 is expected to improve the findings of this study and bring a tremendous improvement to the exiting regulatory guidelines.
Highlights
The Corporate Social Responsibility (CSR) field has been continuously emerging and reportedly more than half of Fortune 1,000 companies are issuing CSR reports for the public (Tsaoutsoura, 2004)
This claim is further reinforced by Saleh et al (2010) that Malaysian companies only contribute less than 0.31% for CSR contributions which is enormously lower in comparison with European Union countries that contributes at least in average 1% of the their profit to the community
The emergence of various non-government organisations and mounting environmental pressure has caused Malaysian businesses to embark onto CSR disclosure practices in order to respond to social responsibility concerns
Summary
The Corporate Social Responsibility (CSR) field has been continuously emerging and reportedly more than half of Fortune 1,000 companies are issuing CSR reports for the public (Tsaoutsoura, 2004) This is a subsequent result from continual drive by analysts, shareholders, regulators, activists, labour unions, employees, community organizations and media where they have played a crucial role in de-. In Malaysia, the momentum for CSR initiatives are marked as consistent with various national agenda, remarkably Malaysian Vision 2020 and National Integrity Plan that aims at greater capital growth as well as to accelerate the vaster economy. This extensive study will add to the existing literature by focussing two important elements, namely the body of knowledge and policy implications. It is aimed to comprehend the fundamentals of sustainable development achieved through the corporate performance and allows corporations to contribute back profits and non-financial benefits to various groups of stakeholders in their existing community (Yin & Zhang, 2012)
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