The effect of corporate social disclosure practice on reporting quality

Abstract

This research is striving to provide an insight into the importance of Corporate Social Responsibility (CSR) for the insurance sector while aiming to examine various corporate social responsibility initiatives undertaken by insurance companies in Croatia. There is a broad range of potential benefits from CSR for insurance companies such as long-term sustainability and profitability, yet only several research studies on CSR practices have thus far been conducted on the insurance sector. Hence, the purpose of this research is to determine the level of CSR reporting for insurance and reinsurance companies in Croatia and its impact on reporting quality. The empirical research is based on online reporting of six aspects of corporate social responsibility to determine Corporate Social Disclosure Index (CSDI). Reporting quality is measured with Disclosure Quality Index of annual report (DQI) which is structured in five phases. This research includes all 24 insurance and reinsurance companies in Croatia and the research findings show that all insurance and reinsurance companies in Croatia publish information at least concerning two aspects of CSR. It was found that they are the most transparent regarding the human resources aspect of CSR activities and the least transparent concerning environmental aspect of CSR activities. The overall level of CSR disclosure for insurance sector in Croatia is quite low, so we can conclude that insurance and reinsurance companies in Croatia do not have a high level of CSR online disclosure. Considering the issue of reporting quality, insurance and reinsurance companies have an average quality of annual report (AR), measured by DQI of annual report. According to research findings, CSR reporting on the Internet is positively associated with DQI which leads to the conclusion that more socially responsible insurance and reinsurance companies provide annual reports of a more superior quality. Business and society interact and exert a mutual influence through their specific objectives and goals. Consequently, the link between business and society is indisputable. Companies, as one of the key segments of a society, can achieve a number of economic benefits, such as superior business results and considerable competitive advantage if they implement CSR and if they provide high quality information through their annual reports. Moreover, society benefits from socially responsible companies as it enjoys better care both for its own well-being and for that of the environment.

Corporate social responsibility disclosures (CSRDs) in the banking industry: a study of conventional banks and Islamic banks in Malaysia

“…Most of the CSRD studies conducted in the financial sector used annual reports and sustainability reports as sources to determine the levels of CSR information (for example, Khan, 2010; Menassa, 2010; Kilic and Kuzey, 2019). The focus on both the annual and sustainability reports may be due to the consideration of both reports by the investors, customers, business partners and other stakeholders as highly credible sources of information (El-Bassiouny et al , 2018; Dropulic and Cular, 2019). Moreover, past studies exploring on the communication medium for CSR practices amongst the firms in financial sector revealed that the financial institutions prefer to communicate their CSR practices in annual reports or sustainability reports rather than in their websites (for example, Sobhani et al , 2012 (Bangladesh); Matuszak and Rozanska, 2017 (Poland); Dropulic and Cular, 2019 (Croatia)).…”

Non-Financial Information Disclosure in Italian Public Interest Companies: A Sustainability Reporting Perspective

“…As various authors state [31][32][33][34], CSR and sustainability [5,35] have acquired increasing importance as strategic factors for the survival and the achievement of long-lasting competitiveness in the market [36][37][38][39][40]. Company performance can no longer be assessed only on the basis of the economic dimension, but also on the social and environmental dimension [41].…”

Disclosure of social responsibility and the competitive advantage at Sudan industrial companies

“…According to Kavitha and Anuradha (2016), social responsibility "is the commitment of companies to provide resources that work towards social development." Dropulić and Cular (2019) have defined social responsibility as the relationship between the organization and society.…”

“…They found that government and customer pressure led to a positive correlation with banks' social disclosure. Dropulić and Cular (2019) examined various corporate social responsibility initiatives undertaken by insurance companies in Croatia and their effect on reporting quality. They found that insurance and reinsurance companies in Croatia do not have a high level of corporate social responsibility online disclosure Garcia et al (2018) investigated the influence of social disclosure on the relationship between Corporate Financial Performance and Corporate Social Performance.…”