The Relationship between Corporate Social Responsibility Disclosure and Corporate Governance Characteristics in Malaysian Public Listed Companies

Abstract

Purpose – The purpose of this paper is to investigate the relationship between corporate social responsibility disclosure and corporate governance characteristics namely board size, board independence, audit committee, ownership concentration and managerial ownership in Malaysian public listed companies.Design/Methodology/Approach – The content analysis was used to extract the CSR disclosure items from annual reports and companies' web sites. Then the CSR disclosure index was constructed after combining CSR disclosure items disclosed both in annual reports and companies' web sites. Econometric analysis was used to investigate the relationship between the corporate social disclosures index and the independent variables, namely board size, board independence, audit committee, ownership concentration and managerial ownership.Findings – Results based on the full regression models indicated that only one variable was associated with the extent of disclosures, namely audit committee. Audit committee are positively and significantly correlated with the level of corporate social responsibility disclosure.Research Limitations/Implications – The findings are limited to the context of the study and it was limited to Malaysian public listed companies, January to December 2011. The sources of the data in this report were companies' annual reports and web sites only.Practical Implications – The study is functional to organizations and statutory bodies to take into considerations in distinguishing the corporate governance characteristics that will enhance CSR disclosures, since it had been shown in previous studies that corporate social responsibility in Malaysia is low. The meaningful of company which should be willing to allocate their costs towards corporate social responsibility activities also can be determine by the government. Thus, this study will stress the level of activity through corporate social responsibility reporting in Malaysian public listed companies and helps the government to ascertain the level of corporate social responsibility activities through corporate social responsibility reporting among Malaysian public listed company.Originality/Value – The study reveals the extent of the disclosure of corporate social responsibility to companies' web sites and constructed the CSR index based on two sources of data, namely companies‟ web sites and annual reports.