Global financial crisis and corporate social responsibility disclosure

Abstract

Purpose This paper investigates the effect of the global financial crisis (GFC) on the level of corporate social responsibility disclosures (CSRD) in the annual report and/or CSR report of 36 major listed Portuguese companies in each of the years 2005, 2008 and 2011. Design/methodology/approach The analysis is framed principally by stakeholder theory. Data were explored using thematic content analysis and an index of disclosure calculated by year, industry type (consumer proximity versus environment sensitivity) and category of information. Findings Before the GFC, Portuguese listed companies increased their CSRD practices significantly. During the crisis, there was a slight decrease in CSRD. However, this was not as pronounced, as it would otherwise have been because it was counteracted by increased disclosures of company interactions with society, particularly in matters of corruption prevention and community engagement. CSRD was higher for companies with high consumer proximity but did not appear to be influenced by companies’ level of environmental sensitivity. Originality/value The results reveal a strong concern by companies for stakeholder management (particularly in respect of community relations) in a period of financial crisis. This study highlights the effect of a company’s proximity to consumers on levels of CSRD.

Corporate Governance Effects on Social Responsibility Disclosures

“…The significant negative correlation between CEO Duality (CEOD) and Corporate Size (LnSIZE) (0.01 level) indicates that smaller companies, in which the CEO is also the board Chair, disclose more CSR information. This can be explained by argument that, in a period of financial crisis featuring strong concern by companies for stakeholder management (particularly in respect of community relations) (Dias et al, 2016), CEO duality strengthens the commitment the CEO and Chair to improve CSRD -and thereby, their company's image with stakeholders (Jamali et al, 2008).…”

“…We use "consumer proximity" to classify companies, in view of strong empirical evidence that industry classification based on "consumer proximity" explains differences in the quantity and quality of CSRD between listed companies in Portugal (Branco & Rodrigues, 2005, 2008Dias et al, 2016). Companies with high consumer proximity are those that expect their name to be known by the final consumer (Branco & Rodrigues, 2008).…”

“…In May 2011, the International Monetary Fund, European Union, and Portuguese government, established an Economic and Financial Assistance Program to redress budget austerity and economic pessimism and to restore the confidence of international investors in Portugal. There have been continuing (but weakly effective) policy initiatives to promote competitiveness and sustainable growth in the economy (Dias et al, 2016).…”

“…We focused especially on the GRI core indicators that represent well established CSR indicators (Dias et al, 2016). The selected items were adapted to avoid penalizing companies that did not use the GRI model.…”

“…As with Gray et al (1995), Haniffa and Cooke (2005), and Dias et al (2016), we constructed an inclusive CSRD checklist (see Table 1). This comprised three CSR dimensions and 40 individual CSR indicators (5 economic, 20 social, 15 environmental) that allow a broad view of a company's CSR.…”