Institutional factors and CSR reporting in a developing country: Evidence from the neo-institutional perspective

Figures & data

Figure 1. The neo-institutional (coercive, mimetic, and normative) framework.

Source: Adopted from Azlan Amran (2007) and Alshbili et al. (2019)

Table 1. Descriptive statistics—Dependent variable

Period	Obs.	Mean (%)	Standard deviation	Median (%)	Min (%)	Max (%)	Trend (%)
2017–18	1,088	35.88	0.176921	32.50	0	78
2018–19	1,088	37.43	0.184036	35.00	0	93	1.54
2019-20	1,088	38.95	0.179677	37.50	0	83	1.53
2020–21	1,088	39.56	0.181155	37.50	5	85	0.61
Total	1,088	37.95	0.180781	35.00	0	93

Table 2. Descriptive statistics—Independent and control variables

Variable	Observation	Mean	Standard deviation	Median
CSRRG	1,088	0.331802	0.471077	0
CGC18	1,088	0.5	0.50023	0.5
BIG4	1,088	0.19761	0.39838	0
MULO	1,088	0.273897	0.446162	0
GRIA	1,088	0.170956	0.376644	0
CSRA	1,088	0.378677	0.549304	0
INVS	1,088	1.498162	0.502062	1
ROA	1,088	0.040684	0.04798	0.028107
LEVER	1,088	0.496117	0.289586	0.470333
SIZE	1,088	22.32232	2.284478	22.08414
AGE	1,088	17.21783	11.38429	14

Table 3. Showing the Pearson Product Moment Correlation Coefficient Matrix

	CSRR	CSRRG	CGC18	BIG4	MULO	GRIA	CSRA	INVS	ROA	LEVER	SIZE	AGE	VIF
CSRR	1
CSRRG	0.2577 ***	1											2.42
CGC18	0.072 **	0.002	1										1.03
BIG4	0.2586 ***	0.0082	−0.0162	1									1.2
MULO	0.347***	0.1362***	0.0041	0.2956***	1								1.46
GRIA	0.4611 ***	0.4526***	−0.0049	0.1854***	0.2631***	1							1.52
CSRA	0.1686***	0.3886***	0.0234	0.158***	0.2446***	0.2782***	1						1.34
INVS	−0.159***	−0.6995***	−0.0037	−0.0557*	0.0474	−0.3729***	−0.3544***	1					2.17
ROA	−0.1017***	−0.0314	−0.0999***	0.0684**	0.0688**	−0.0875***	−0.015	0.0547*	1				1.27
LEVER	0.3508***	0.2603***	0.0296	0.2068***	0.2643***	0.3821***	0.0528*	−0.1732***	−0.3634***	1			1.64
SIZE	0.4513***	0.374***	0.0169	0.1998***	0.3765***	0.4087***	0.2689***	−0.2656***	−0.1838***	0.3755***	1		1.6
AGE	−0.0435	0.1727***	0.1326***	0.1005***	0.1251***	0.1324***	0.1231***	−0.1291***	−0.1357***	0.2944***	−0.0139	1	1.2

Note: Correlation is Significant at the * 0.10, ** 0.05 and *** 0.01 level (two-tailed)

Table 4. Association between institutional factors and CSRR

	Dependent variable
	CSRRI (Panel-A) (Omitted Industry)	CSRRI (Panel-B) (Included Industry)
CSRRG	0.0252*	0.0286
	(0.0145)	(0.0186)
CGC18	0.0317***	0.0316***
	(0.0089)	(0.0089)
BIG4	0.0553***	0.0556***
	(0.0120)	(0.0121)
MULO	0.0589***	0.0597***
	(0.0118)	(0.0121)
GRIA	0.1348***	0.1345***
	(0.0143)	(0.0144)
CSRA	−0.0050	−0.0057
	(0.0092)	(0.0096)
INVS	0.0143	0.0127
	(0.0128)	(0.0141)
ROA	−0.0957	−0.0950
	(0.1028)	(0.1029)
LEVER	0.0861***	0.0867***
	(0.0194)	(0.0195)
SIZE	0.0148***	0.0148***
	(0.0024)	(0.0024)
AGE	−0.0362***	−0.0360***
	(0.0057)	(0.0057)
INDID		0.0006
		(0.0020)
_cons	0.0089	0.0055
	(0.0612)	(0.0624)
N	1088	1088
F	57.1175	52.3202
r2	0.3687	0.3687
r2_a	0.3622	0.3617

Note: Table 4 presents multivariate regression results regarding the relationship between institutional factors and CSRR. *, ** and *** indicate statistical significance at the 10%, 5% and 1% levels, respectively. The definitions of all the variables are presented in appendix Table A3.

Table A1. The final sample was calculated as below

The industrial sector, according to DSE	DSE-registered selected firms	Firms that four years AR available	firm-year obs.	Sector-wise subtotal obs.
Bank	30	30	120
Financial Institutions	23	19	76
Insurance	47	41	164
Sub Total of Financial Sector				360
Cement	7	7	28
Ceramics Sector	5	5	20
Engineering	39	30	120
Food & Allied	17	14	56
Fuel & Power	19	17	68
IT Sector	10	7	28
Jute	3	1	4
Miscellaneous	13	9	36
Paper & Printing	4	3	12
Pharma & Chem	32	27	108
Services & Real Estate	4	4	16
Tannery Industries	6	6	24
Telecommunication	2	2	8
Textile	56	47	188
Travel & Leisure	5	3	12
Sub Total of Nonfinancial Sector				728
Total	322	272	(272x4) = 1088	1088

Table A2. CSR Reporting checklist

Checklist on CSR Reporting
Name of Company:			Annual Report Year:
Industry Category:
Serial		CSR Reporting Items
1. Community Involvement	1.1	Policies to support the local community
	1.2	Donations to charity, education, sports, and arts
	1.3	Sponsoring religious activities
	1.4	Rehabilitation program orphanage, old home, home for distress
	1.5	Parks and gardens construction
	1.6	Road/City beautification
	1.7	Community poverty alleviation
	1.8	Honored to an eminent person
	1.9	Skill development program for young unemployed
	1.10	Support for public health
	1.11	Total 10 (theme) items
2. Human resources	2.1	Occupational health and safety policies
	2.2	Service rule and employee benefits
	2.3	Sweatshop-free work environment
	2.4	Employee profile
	2.5	Employee profit sharing
	2.6	Employee training and education
	2.7	Freedom of Association
	2.8	Study scholarship for the employee’s children/benevolent fund
	2.9	Maternal and parental leave facilities
	2.10	Total 9 (theme) items
3. Products & Consumers	3.1	Information on products/services
	3.2	Safe products/services
	3.3	Environmentally friendly products
	3.4	Ethical principles in stakeholder engagement
	3.5	Good customer relations
	3.6	Protecting the financial privacy of customers
	3.7	Total 6 (theme) items
4. Environment	4.1	Compliance with environmental laws and regulations
	4.2	Policy for pollution reduction
	4.3	Energy savings in performing business operations
	4.4	Environmental damage repair
	4.5	Use of recycled materials
	4.6	Waste management practices
	4.7	Wastewater treatment plant installation
	4.8	Control of emissions in business operations conduct
	4.9	Information on air pollution
	4.10	Water discharge details
	4.11	Tree plantation
	4.12	Tourism development
	4.13	Pure drinking water and sanitation
	4.14	Investment in environment-friendly projects
	4.15	Providing online information to reduce pollution
	4.16	Total 15 (theme) items
A total of 40 (theme) items

Table A3. Variables definition, measurements, and supporting literature

Variables	Symbol	Measurement	Supporting prior studies
Dependent Variable
CSR Reporting Index	CSRRI	CSRRI checklist is developed by using the scores of “1” if the firm reports the corporate social responsibility items(theme) and “0” if it is not.	Gray et al., 1995; Branco & Rodrigues, 2008; R. M. Haniffa & Cooke, 2005; Sobhani et al., 2012; Muttakin & Khan, 2014; Muttakin et al., 2015; A. Rashid, 2021.
Independent Variables
CSRR Guidelines	CSRRG	Assigned value “1” to i firm at the year of t firms for mandatory CSR reporting (Applying Bangladesh Bank CSR policy Guidelines), and “0” for otherwise.	Wang et al., 2017; Esa & Ghazali, 2012; Haji, 2013; Carcia-Sanchez et al. 2013; Esteban et. al., 2017; Fatma, et al., 2021.
Reforming CG Code 2018	CGC2018	Assigned value “1” to i firm at the year of t firm practicing modified Corporate Governance Guidelines, 2012, and “0” for otherwise	Hamad et al., 2020; Koirala et al., 2020; Siddiqui, Javed, & Chowdhury Saima Ferdous. 2014, Oehmichen, Jana, 2018.
Firms Auditing with BIG 4	BIG4	Assigned value “1” to firm i in year t if the annual reports are audited with BIG 4 audit firms (including KPMG; Ernst &Young; Deloitte, and PricewaterhouseCoopers) and “0” for otherwise.	Mohamed Adnan, S. et al., 2018; Jizi et al., 2014; Ridwan & Mayapada., 2022; Abid and Dammak, 2022.
Firms’ Multinational Operations	MULO	Assigned value “1” to firm i in year t if the firm operates in more than one country, “0” for otherwise.	Amran & Haniffa, 2011; Coffie, W.et al., 2018.
Firms with Adoption of GRI Standard	GRIA	Assigned value “1” to firm i in year t if the firm adopted(registered) GRI standard, “0” for otherwise	Tran & Beddewela, 2020; Barakat et al., 2015; Adams, Alhamood & He, 2022.
Membership with CSR promoting association	CSRA	Assigned value “1” to firm i in year t if the firm has a professional network promoting CSR reporting, “0” for otherwise	Hoffman, 1999; J. L. Campbell, 2007; Galasklewicz, 1991; Tran & Beddewela, 2020; Ali & Frynas, 2018.
Control Variables
Environmental sensitivity*	INVS	Assigned value “1” to firm i in year t if the firm is working in an environmentally sensitive industry, 0 for otherwise.	Gamerschlag et al., 2011; Coffie et al. 2018; Hamad et al., 2020;
Leverage	LEVR	Total liabilities divided by total assets of i firm at the year t	Reddy & Bather, 2013; Chou et al., 2013; Akhtaruddin & Haron, 2010; M. Masud et al., 2018.
Return on Asset	ROA	Total net income divided by the total assets of the firm i and the year t.	Villiers et al.,2011; M. Masud et al., 2018; Khan et al.,2013
Age	AGE	Number of years in the business from the date of establishment to DSE, Bangladesh	Kolsi, 2017; Sarhan et al., 2019
Firm size	SIZE	The natural logarithm of total assets of the firm i during the year t.	Michelon & Parbonetti, 2012; Rao et al., 2012; R.M. Haniffa & Cooke, 2002; Kamel and Awadallah, 2017; Sarhan et al., 2019; M. M. Rashid, 2020.

* Firms with a high risk of harming the environment, such as those that use chemicals, steel & metals, oil & gas, mining, building & construction, and utility distribution, are considered environmentally sensitive industries (Branco & Rodrigues, 2008, p. 691). Fuel & Power, Ceramic, Cement, Tannery, Jute, Paper, Miscellaneous, Food & Allied, Textile, and Pharmaceuticals & Chemicals are therefore included in this study as examples of environmentally sensitive industries.

Amran, A., & Devi, S. S. (2007). Corporate social reporting in Malaysia: A mixed method approach. Paper presented at the 5th Asia Pacific Interdisciplinary Research in Accounting Conference, Auckland, July.

 Google Scholar

Alshbili, I., Elamer, A. A., & Beddewela, E., 2019. Ownership types, corporate governance and corporate social responsibility disclosures: Empirical evidence from a developing country. Accounting Research Journal. 33 1 148–166 https://doi.org/10.1108/ARJ-03-2018-0060

 Google Scholar

Gray, R., Kouhy, R., & Lavers, S. (1995). Corporate social and environmental reporting: A review of the literature and a longitudinal study of UK disclosure. Accounting, Auditing & Accountability Journal. 8 2 47–77 https://doi.org/10.1108/09513579510146996

 Google Scholar

Branco, M. C., & Rodrigues, L. L. (2008). Factors influencing social responsibility disclosure by Portuguese companies. Journal of Business Ethics, 83(4), 685–701. https://doi.org/10.1007/s10551-007-9658-z

 Google Scholar

Haniffa, R. M., & Cooke, T. E. (2005). The impact of culture and governance on corporate social reporting. Journal of Accounting and Public Policy, 24(5), 391–430. https://doi.org/10.1016/j.jaccpubpol.2005.06.001

 Google Scholar

Sobhani, F. A., Amran, A., & Zainuddin, Y. (2012). Sustainability disclosure in annual reports and websites: A study of the banking industry in Bangladesh. Journal of Cleaner Production, 23(1), 75–85. https://doi.org/10.1016/j.jclepro.2011.09.023

 Google Scholar

Muttakin, M. B., & Khan, A. (2014). Determinants of corporate social disclosure: Empirical evidence from Bangladesh. Advances in Accounting, 30(1), 168–175. https://doi.org/10.1016/j.adiac.2014.03.005

 Google Scholar

Muttakin, M. B., Khan, A., & Subramaniam, N. (2015). Firm characteristics, board diversity and corporate social responsibility: Evidence from Bangladesh. Pacific accounting review, 27(3), 353–372. https://doi.org/10.1108/PAR-01-2013-0007

 Google Scholar

Rashid, A. (2021). Board Independence and corporate social responsibility reporting: Mediating role of stakeholder power. Management Research Review, 44(8), 1217–1240. https://doi.org/10.1108/MRR-09-2020-0590

 Google Scholar

Wang, J., Tian, G., Fan, W., & Luo, D. (2017). The effect of mandatory regulation on corporate social responsibility reporting quality: Evidence from China. Journal of Applied Business Research, 33(1), 67–86. https://doi.org/10.19030/jabr.v33i1.9861

 Google Scholar

Esa, E., & Ghazali, N. A. M. (2012). Corporate social responsibility and corporate governance in Malaysian government‐linked companies. Corporate Governance: The International Journal of Business in Society. 12 3 292–305 https://doi.org/10.1108/14720701211234564

 Google Scholar

Haji, A. A. (2013). Corporate social responsibility disclosures over time: Evidence from Malaysia. Managerial Auditing Journal, 28(7), 647–676. https://doi.org/10.1108/MAJ-07-2012-0729

 Google Scholar

Esteban, V. A., Villardón, M. P. G., & Sánchez, I. M. G. (2017). Cultural values on CSR patterns and evolution: A study from the biplot representation. Ecological indicators, 81, 18–29. https://doi.org/10.1016/j.ecolind.2017.05.051

 Google Scholar

Corporate Governance Guidelines (2012). Bangladesh Securities and Exchange Commission (BSEC). https://sec.gov.bd/slaws/Notification_on_CG-07.8.12-Amended.pdf

 Google Scholar

Hamad, S., Draz, M. U., & Lai, F. W. (2020). The impact of corporate governance and sustainability reporting on integrated reporting: A conceptual framework. Sage Open, 10(2), 2158244020927431. https://doi.org/10.1177/2158244020927431

 Google Scholar

Koirala, S., Marshall, A., Neupane, S., & Thapa, C. (2020). Corporate governance reform and risk-taking: Evidence from a quasi-natural experiment in an emerging market. Journal of Corporate Finance, 61, 101396. https://doi.org/10.1016/j.jcorpfin.2018.08.007

 Google Scholar

Oehmichen, J. (2018). East meets west—corporate governance in Asian emerging markets: A literature review and research agenda. International Business Review, 27(2), 465–480. https://doi.org/10.1016/j.ibusrev.2017.09.013

 Google Scholar

Mohamed Adnan, S., Hay, D., & van Staden, C. J. (2018). The influence of culture and corporate governance on corporate social responsibility disclosure: A cross country analysis. Journal of Cleaner Production, 198, 820–832. https://doi.org/10.1016/j.jclepro.2018.07.057

 Google Scholar

Jizi, M. I., Salama, A., & Dixon, R., et al (2014). Corporate Governance and Corporate Social Responsibility Disclosure: Evidence from the US Banking Sector. Journal of Business Ethics: JBE, 125, 601–615. https://doi.org/10.1007/s10551-013-1929-2

 Google Scholar

Ridwan, R., & Mayapada, A. G. (2022). Does sharia governance influence corporate social responsibility disclosure in Indonesia Islamic banks?. Journal of Sustainable Finance & Investment, 12(2), 299–318. https://doi.org/10.1080/20430795.2020.1749819

 Google Scholar

Amran, A., & Haniffa, R. (2011). Evidence in development of sustainability reporting: A case of a developing country. Resour. Policy, 20(3), 141–156. https://doi.org/10.1002/bse.672

 Google Scholar

Coffie, W., Bedi, I., & Amidu, M. (2018). The effects of audit quality on the costs of capital of firms in Ghana. Journal of Financial Reporting and Accounting, 16(4), 639–659. https://doi.org/10.1108/JFRA-03-2017-0018

 Google Scholar

Tran, M., & Beddewela, E. (2020). Does context matter for sustainability disclosure? Institutional factors in Southeast Asia. Business Ethics: A European Review, 29(2), 282–302. https://doi.org/10.1111/beer.12265

 Google Scholar

Barakat, F. S., Lopez Perez, M., & Rodríguez Ariza, L. (2015). Corporate social responsibility disclosure (CSRD) determinants of listed companies in Palestine (PXE) and Jordan (ASE). Review of Managerial Science, 9(4), 681–702. https://doi.org/10.1007/s11846-014-0133-9

 Google Scholar

A. Adams, C., M. Alhamood, A., & He, X. (2022). Chapter 3: The development and implementation of GRI Standards: practice and policy issues. Handbook of Accounting and Sustainability. Cheltenham, UK: Edward Elgar Publishing.

 Google Scholar

Hoffman, A. J. (1999). Institutional evolution and change: Environmentalism and the US chemical industry. Academy of Management Journal, 42(4), 351–371. https://doi.org/10.2307/257008

 Google Scholar

Campbell, J. L. (2007). Why would corporations behave in socially responsible ways? An institutional theory of corporate social responsibility. Academy of Management Review, 32(3), 946–967. https://doi.org/10.5465/amr.2007.25275684

 Google Scholar

Galaskiewicz, J. (1991). Making corporate actors accountable: Institution-building in Minneapolis-St. Paul. In W. W. Powell & P. J. DiMaggio (Eds.), The new institutionalism in organizational analysis (pp. 293–310). Chicago: University of Chicago Press.

 Google Scholar

Ali, W., & Frynas, J. G. (2018). The role of normative CSR‐promoting institutions in stimulating CSR disclosures in developing countries. Corporate Social Responsibility and Environmental Management, 25(4), 373–390. https://doi.org/10.1002/csr.1466

 Google Scholar

Gamerschlag, R., Möller, K., & Verbeeten, F. (2011). Determinants of voluntary CSR disclosure: Empirical evidence from Germany. Rev Manag Sci, 5, 233–262. https://doi.org/10.1007/s11846-010-0052-3

 Google Scholar

Masud, M., Kaium, A., Nurunnabi, M., & Bae, S. M. (2018). The effects of corporate governance on environmental sustainability reporting: Empirical evidence from South Asian countries. Asian Journal of Sustainability and Social Responsibility, 3(1), 1–26. https://doi.org/10.1186/s41180-018-0019-x

 Google Scholar

Haniffa, R. M., & Cooke, T. E., 2002. Culture, corporate governance and disclosure in Malaysian corporations. Abacus, 38(3), pp.317–349. https://doi.org/10.1111/1467-6281.00112

 Google Scholar

Rashid, M. M. (2020). Ownership structure and firm performance: The mediating role of board characteristics. Corporate Governance: The International Journal of Business in Society, 20(4), 719–737. https://doi.org/10.1108/CG-02-2019-0056

 Google Scholar