Factors determining social and environmental reporting by Indian textile and apparel firms: a test of legitimacy theory

Abstract

Purpose – The purpose of this research is to investigate the factors determining the social and environmental reporting (SER) of Indian textile and apparel (TA) firms. Design/methodology/approach – The 2010 annual reports of a sample of top 100 Indian TA firms listed on the Bombay Stock Exchange were examined to assess the extent of SER. SER was assessed based on the Global Reporting Initiative index applicable to the TA industry. Multiple regression analysis was conducted to investigate the determinants of SER. Findings – This study reports a low extent of SER in the annual reports of Indian listed TA firms, with a mean disclosure of 14 per cent. On average, firms reported more extensive environmental information, with a mean disclosure of 18.4 per cent, compared to social information, with a mean disclosure of 10.7 per cent. Most firms reported social information relating to “labour practices and decent work”, while the reporting of information relating to “human rights” was sparse. Overall, the SER patterns provide support for legitimacy theory. Consistent with legitimacy theory expectations, corporate size, brand development and audit committee size are significant factors determining the variation in SER. No significant relationship was found between board independence, level of ownership and SER. Originality/value – There is no existing study specifically on SER by TA firms in India. In fact, there is surprisingly little research on SER in the Indian context in general. Given the dearth in research on corporate social reporting in the Indian context, the study extends prior literature on corporate SER by concentrating on SER of TA firms in an emerging economy. The theoretical contribution of this study is the testing of legitimacy theory in the context of an emerging economy. This study contributes towards practice by delineating the relationship between governance structure and SER, particularly with regard to issues such as child labour. These findings have implications for the future development of reporting standards and regulations in regard to corporate governance in India. The dearth of social reporting by Indian TA firms has implications for foreign purchasers of branded products, as international companies have been implicated in sub-optimal social or environmental practices or incidents.

Ownership types, corporate governance and corporate social responsibility disclosures

“…Essentially, we expect to make several contributions to the existing literature. First, our research findings provide additional evidence to the limited empirical studies of CSRD itself in developing countries (e.g., Nurhayati et al, 2016), which suggest that on average the level of CSRD is still low in these countries in comparison to Western countries. Second, by examining the 'determinants' of CSRD in a developing country context, our research offers evidence that A c c o u n t i n g R e s e a r c h J o u r n a l 3 purports the influence of government ownership, joint venture ownership, foreign ownership, frequency of board meetings, and CSR committee existence on CSRD practices.…”

The Evolution of Sustainability Measurement Research

“…The first focuses on companies' motivations to disclose sustainability information, and adds to the debate on 'greenwashing' (Nurhayati et al 2016), i.e. These clusters may represent emerging trends in sustainability measurement research.…”

“…These clusters may represent emerging trends in sustainability measurement research. The first focuses on companies' motivations to disclose sustainability information, and adds to the debate on 'greenwashing' (Nurhayati et al 2016), i.e. firms use sustainability reports to portray themselves as 'good' corporate citizens, despite not having any particular social or environmental credentials.…”

Peran Dewan Pengawas Syariah Dalam Pengungkapan Islamic Sosial Reporting

“…Selain itu, aset yang be sar memungkinkan memiliki dampak negatif yang semakin besar bagi masyarakat. Juh mani (2014) dan Nurhayati, et al (2016) yang menunjukkan bahwa aset yang besar akan diikuti dengan semakin besarnya tekanan dari stakeholders kepada perusahaan un tuk memberikan informasi yang lebih luas dalam mengungkapkan kinerjanya daripada perusahaan yang memiliki aset lebih kecil.…”