Empirical study on the effective factors of social responsibility disclosure of Iranian companies

Abstract

Purpose The purpose of this paper is twofold: first, to investigate the relationship between some characteristics of corporations including firm size, financial leverage, profitability, firm age and the type of industry with social responsibility disclosure of firms listed on Tehran Stock Exchange (TSE); and second, to study the association between the level of corporate social responsibility disclosure (CSRD) and some of the audit variables such as audit fees, audit tenure and audit firm’ size. Design/methodology/approach The study population consists of 125 firms listed on the TSE during the years 2010–2015. Following Salehi et al. (2017), content analysis is used to measure the level of social responsibility disclosure, and hypotheses are performed using multiple regression analysis and R software. Findings The results represented that there is a positive significant relationship between a firm size and a firm age with the level of CSRD. However, there is a negative significant association between financial leverage and profitability with the level of CSRD. Given that CSRD is different among various industries and the type of industry can be an influential factor in CSRD, an industry type’ variable in the fourth hypothesis is of a type of index variable and has eight levels, of which the first level is ranked as the base level. Our findings showed that the level of CSRD at industries of machinery and appliances, production of metal products, food and beverage products, and textiles is lower than the baseline level (pharmacy). Nevertheless, companies in the fifth industry (mineral products) have a higher level of CSRD in comparison with the pharmacy industry. Moreover, the authors find that there is a significant positive connection between audit fees and CSRD. This implies that Iranian managers in an inflationary economy probably manage earnings when they provide more CSRDs, which leads to increase in the audit risk and audit fees. Practical implications Needless to say, the findings of this paper will have practical implications for investors, auditors and other users of financial statements. First of all, this study will aware them of the fact that when a country faces economic sanctions and most of its companies are in financial strain investors should not consider the firms engaging in corporate social responsibility activities to behave morally and provide transparent financial reports. Second, the results will convince auditors to be conservative toward the firms that are financially distressed, for audit risk of them will be high. Thus, policymakers should be cautious concerning directors’ opportunistic actions and increase monitoring to enforce social obedience. Originality/value The turning point of this research is related to the time period of research related to firms that have faced severe financial problems due to economic sanctions. In fact, the study revealed another aspect of CSRD that could have negative consequences when managers are in financial strain and take opportunistic actions.

The effect of auditor characteristics on tax avoidance of Iranian companies

“…We did not witness a significant connection between auditor industry specialization and the level of tax avoidance' actions of corporate managers, while the results saw a positive and meaningful linkage between audit tenure and tax avoidance' behavior. Its reason is that since auditors obtain a better understanding of the client's working environment over time, the long-term presence of auditors is a Launchpad to firms that want to engage in fraudulent financial reporting (Salehi, Tarighi and Rezanezhad, 2018). Insufficient attention to the investment in audit technologies and experienced senior workforce by Iranian audit firms because of their low level of revenues seems to have caused manipulated managers to easily predict auditors' work approaches (Azizkhani et al, 2018).…”

Factors Affecting Islamic Social Reporting in the Halal Industry Sector

“…This result is in line with Kurniawati and Yaya (2017) research that profitability is closely related to a company's management's effectiveness in determining strategic steps to gain profit. Companies with a higher profit rate will attract investors by providing better information to the public and other stakeholders by increasing social responsibility disclosure (Nainggolan & Handoyo, 2019;Platonova, Asutay, Dixon, & Mohammad, 2018;Salehi, Tarighi, & Rezanezhad, 2019). This means that the higher the profitability, the more full the ISR disclosure will be (Mukhtaruddin, Saftiana, & Dwikatama, 2018).…”

Analisis Leverage Ratio Terhadap Pengungkapan Tanggung Jawab Sosial Perusahaan (Csr) Dan Diversitas Gender Sebagai Variabel Moderasi

“…Hal tersebut menandakan bahwa tinggi atau rendahnya leverage tidak memiliki pengaruh pada intensitas pengungkapan CSR. (Salehi et al, 2018) 2019Berdasarkan Tabel 12 dapat diketahui bahwa pada variabel interaksi (Lev_Gen) memiliki nilai Sig. sebesar 0,294 atau lebih besar dari 0,05 yang artinya variabel interaksi tersebut tidak memoderasi hubungan antara tingkat leverage dengan pengungkapan CSR sehingga variabel diversitas gender merupakan variabel homogoliser moderator.…”