Factors determining CSR disclosures :analysis of shariah and non-shariah approved companies

Abstract

In the year 2006, Bursa Malaysia (formerly known as KLSE) launched its CSR framework (effective in 2007) which is supposed to guide the Malaysian PLCs’ CSR disclosure practices. It is believed that this CSR framework may influence CSR disclosure practices to be more systematic, yet there is no evidence whether this framework influences the extent and quality of CSR disclosure practices. Thus, this study examines this area of research using BMB’s CSR framework as a benchmark. This study analysed the extent and quality of CSR information disclosure in the annual reports of the Shariah-approved companies and their counterparts listed at BMB. The empirical results show that Malaysian PLCs disclose more CSR information related to community involvement and environment related information than workplace and marketplace CSR themes. On the other hand, the quality of disclosure practices was minimal when it is compared to the extent of disclosure practices. For the comparison between SE and NSE companies, the study reveals that there is no statistically significant difference between these two groups with regard to the CSR disclosure practices. Finally, for the factors influencing CSR disclosure, the study documented that the variable award has a significant positive association with both the extent and quality of CSR disclosure practices of the Malaysian PLCs. However, traditional factors (e.g., firm size, profitability and industry) show insignificant relationship with the CSR disclosure practices. This study contributes to the literature where it examined both the traditional and non-traditional factors influencing management’s decision to disclose CSR information in the annual reports of the Malaysian PLCs.