Corporate social responsibility disclosures (CSRD), corporate governance and the degree of multinational activities: Evidence from a developing economy

Abstract

Purpose

The purpose of this paper is to examine the effect of corporate governance and degree of multinational activities (DMAs) on corporate social responsibility disclosures (CSRD) within the context of a developing country.

Design/methodology/approach

Using the annual report of 33 listed firms spanning from 2008 to 2013, the authors employed content analysis based on an adapted index score of CSRD developed by Hackston and Milne (1996) as applied in similar studies (e.g. Deegan et al., 2002; Hassan, 2014). Guided by the authors’ hypotheses, the authors model quantity and quality of CSRD (two separate econometric models) as functions of multinational activity and corporate governance.

Findings

The results show that the DMA has a positive association with both quality and quality of CSRD. The results also show that certain corporate governance characteristics such as board size (quality and quantity) as well as the presence of a social responsibility sub-committee of the board (quality) have a positive relationship with CSRD. However, increasing the number of non-executive directors (NEDs) may not necessarily improve the quantity or quality of disclosure.

Research limitations/implications

The study is limited by theory and geography. Theoretically, the study is based on the legitimacy theory and feels compelled to reiterate the importance of considering alternative theoretical perspective in future research. Again the study is limited geographically as the investigation is based on Ghana only and the authors suggest that future research be extended to other countries.

Practical implications

This study is important as it demonstrates the importance of providing quality of CSRD to stakeholders when the board of a firm has a sub-committee responsible for corporate social responsibility.

Originality/value

The results of the study extend the literature on CSRD by demonstrating a new evidence on how the degree of firm’s multinational activities together with corporate government mechanism affects both quantity and quality of CSRD in the context of unchartered developing country. The results support the theoretical view that companies engage in CSRD in attempt to legitimize their operations based on the pressure exerted on them and the mechanism put in place to respond to those pressures.

Citation

Coffie, W., Aboagye-Otchere, F. and Musah, A. (2018), "Corporate social responsibility disclosures (CSRD), corporate governance and the degree of multinational activities: Evidence from a developing economy", Journal of Accounting in Emerging Economies, Vol. 8 No. 1, pp. 106-123. https://doi.org/10.1108/JAEE-01-2017-0004