Political connection, ownership concentration, and corporate social responsibility disclosure quality (CSRD): empirical evidence from Jordan

Abstract

One of the main goals of this study is to investigate whether politically connected firms have a different tendency toward disclosing CSR information compared to those without political connections. Another purpose of this research is to add to the existing literature by looking into the impact of political connections in moderating the relationship between ownership concentration and CSRD. We collect data on CSR activities undertaken by a group of 94 non-financial Jordanian companies listed on the Amman Stock Exchange using the content analysis approach. From 2010 to 2019, 940 yearly reports were evaluated for this study. Also, the study hypotheses are tested using Ordinary Least Squares regression (OLS). In Jordan, politically connected companies are more likely to disclose high-quality CSRD than unconnected companies. Furthermore, the findings revealed that CSRD is likely to be negatively impacted by ownership concentration. However, political ties can moderate the relationship between ownership concentration and the disclosure practice of companies included in our sample. The regression analysis results show that closely held businesses with political ties are more likely to reveal high-quality CSRD than businesses without political ties. The study adds to the debate over CSRD by shedding light on the role of political ties and ownership structure (particularly ownership concentration) in influencing CSRD by businesses. The findings of the study can help managers of Jordanian companies listed on the stock exchange make better decisions about their CSRD and other related disclosure, such as environmental disclosure. This is the first study to look at how political nexuses can moderate the relationship between firm CSRD and political connections in Jordan. As a result, it significantly adds to previous research.

Corporate Social Responsibilities and Firm Values: Evidence from Indonesia

“…Financial sector firms with political connections incur more significant CSR expenditure than firms that do not have political connections. These results support the results of the previous research (Ananzeh et al, 2023;Huang & Zhao, 2016;Nainggolan et al, 2021). Politically connected firms tend to incur more CSR costs because they consider several factors.…”

Corporate governance perspective on environmental reporting: Literature review and future research agenda

“…The empirical evidence in this field remains mixed, however, with evidence of a negative relationship between ownership concentration and ER in Taiwan (Huang & Kung, 2010) and Jordan (Gerged, 2021). Media exposure (Ananzeh, Bugshan, & Amayreh, 2023) and corporate political connections (Ananzeh, Al Shbail, et al, 2023) offset the negative effects of concentrated ownership. Consequently, companies with dispersed ownership are expected to be more sensitive to external pressure (D'Amico et al, 2016) and increase the level of voluntary ER (Brammer & Pavelin, 2006) driven by greater shareholder demand for a broader range of environmental information (Huang & Kung, 2010).…”

Does environmental, social and governance (ESG) affect market performance? The moderating role of competitive advantage

“…Firms use sustainability to achieve a competitive advantage, whereas others consider it a standard practice; nevertheless, the adoption of sustainability is a continuous and multifaceted process that grows over time (Di Simone et al , 2022; Alkaraan et al , 2021). Ananzeh et al (2022) explore whether politically linked companies disclose CSR information differently from those without political connections. In addition, Ananzeh et al ’s (2022) results suggest that political links can moderate company transparency and ownership concentration.…”

“…Ananzeh et al (2022) explore whether politically linked companies disclose CSR information differently from those without political connections. In addition, Ananzeh et al ’s (2022) results suggest that political links can moderate company transparency and ownership concentration. Along the same line, Mansour et al (2022) study whether a capital structure affects corporate governance) quality and company performance.…”