Abstract
We investigate the effects of national culture and corporate governance on corporate social responsibility reporting and the extent to which corporate governance has a moderating effect on the cultural influences on corporate social responsibility reporting. A total of 403 annual reports, corporate websites and corporate sustainability stand-alone reports pertaining to 203 companies in China, Malaysia, India and the United Kingdom were evaluated. Corporate social responsibility reporting is more prevalent in companies in countries in which the society is individualistic and also in societies where there is low power distance. Corporate social responsibility reporting is enhanced by corporate governance in the form of social responsibility board committees, while government ownership influences the reporting quality of corporate social responsibility reporting. Corporate governance moderates some of the detrimental cultural influences on corporate social responsibility reporting. These findings have implications for the development of guidelines for corporate social responsibility and sustainability reporting across countries. A further contribution is to show that national culture is associated with resistance to reporting corporate social responsibility, but that corporate governance can help to mitigate the influence of national culture.
DISCUSSION AND CONCLUSION
We notice significant differences in CSR reporting between countries. The UK companies provide the highest quantity and quality of reporting. Across the emerging market countries, Chinese companies consistently provided the least CSR disclosure, both in annual reports and on corporate websites; whereas Malaysian companies are shown to have provided the highest amount of CSR in annual reports. We expected cultural differences, based on previous literature (e.g., Haniffa and Cooke, 2005; Orij, 2010; Ortas et al., 2015). While we expected to find more similarity in reporting between the companies in our sample in terms of the mimetic isomorphism argument of institutional theory (DiMaggio and Powell, 1983), we find that cultural influences explain the differences in CSR reporting among the countries, i.e., normative and coercive structures are influenced by country level cultural practices (culturalcognitive) and that mimicking disclosures from companies in other countries is secondary to the cultural-cognitive influences. Our findings are therefore innovative in showing that when there is a conflict between isomorphism on a global scale and country level cultural differences that could influence governance and disclosure, the country level differences are more important than institutional isomorphism in determining company responses. In regard to our second hypothesis, we find that some aspects of corporate governance have a positive influence on CSR reporting, i.e., CSR board committee and government ownership. The presence of a committee shows a company’s concern for their social and environmental actions and reputation (Neu et al., 1998; Rankin et al., 2011; Eberhardt-Toth, 2017; Fuente et al., 2017). Companies that appoint directors as members of the CSR committee are more committed to providing CSR disclosure than companies that do not engage in this practice. Government ownership impacts the quality but not the quantity of CSR disclosure. Although these results are not entirely consistent, they are generally in accordance with the predictions of Amran and Devi (2008).
