Malaysian Corporate Responsibility Disclosure: Miscommunication Between Providers and Users of Information?

Abstract

As concerns for accountability, social responsibility and the environment grow, users of the financial reports expect more social information to be included in the financial statements for decision‐makings. Although the amount of social information has increased over the past decades, it has not yet fulfilled the needs of the users. This paper identifies the miscommunication between providers and users of information as the main reason for the failure. The preparers of financial report do not appear to be in communication with the users and visa‐versa The preparers seldom provide the information needed by the users and the users seldom communicate to the preparers the information they require. It then gives suggestions and recommendations to bridge this gap. In order to bridge this gap, the co‐operation from all parties involved is greatly necessary. The users have to identify the kind of information they need and the importance of the preparers to communicate what information they can realistically provide. To make sure that the information provided is accurate and credible, the accounting profession has to play a role in formulating guidelines and standards. The profession needs to communicate with the universities and academicians in their effort to develop a suitable curriculum to link teaching with research. Universities on the other hand need to develop a curriculum that fits with what is practiced and is foreseen will be practiced. Apart from re‐educating the public and companies on the importance of moral, ethical and religious values the government will have to weigh and decide whether to impose environmental regulations or not. On part of the companies, they will have to be more aware of the social responsibilities, develop training programs in order to educate the staff and the community about social responsibilities.

CSR disclosures and its determinants: evidence from Malaysian government link companies

“…This increasing trend of disclosure is mainly contributed by disclosure on the sub‐category of education, disaster relief and charity and donations. The increasing trend of disclosure in these areas might be due to the introduction of the “Caring society policy” and “Vision 2020” (Janggu and Mohamed Zain, 2006) by the government in the early 1990s and the third thrust of the National Mission based on the Ninth Malaysian Plan (2006‐2010) where the government strongly believes in eradicating poverty, generating more balanced growth in ensuring the benefits of growth are enjoyed by the Malaysian people in a fair and just manner. As stressed by Mohamed Zain (1999) disclosing companies might want their readers to know that they are good corporate citizen, adhering to the government policy and they are accountable to the wider public.…”

“…CSR is now being carried out as an extension of normal accounting practices in order to meet different expectations of user groups of CSR. Mohamed Zain (2006) stressed that CSR is generally understood to be the way a company achieves a balance or integration of economic, environmental, and social imperatives while at the same time addressing shareholder and stakeholder expectations.…”