Gembri, Abdulmunaem .S. M.
(2013)
The Determinants Of Corporate Social Disclosure
In The Annual Reports Of Malaysian Construction
Companies: An Application Of Stakeholder Theory.
PhD thesis, Universiti Sains Malaysia.
Abstract
This study seeks to investigate the motivations that make the Malaysian construction
publicly listed companies voluntarily provide social and environmental information
in their annual reports. The first objective of this research is to examine the level of
corporate social disclosures present in 2010 Malaysian construction listed
companies’ annual reports. The second objective, is the application of Ullmann’s
(1985) stakeholder framework, which contains three dimensions namely stakeholder
power; strategic posture; and economic performance, to determine their ability to
explain why these companies disclose voluntarily social and environmental
information in their annual reports. Companies without a 2010 annual reports are
omitted from the construction companies listed on the Bursa Malaysia to create a
sample of 107 companies. Data was collected to measure components of corporate
social disclosure, and proxies for Ullmann’s three-dimensional stakeholder
framework were applied. This study examines the level of corporate social
disclosures in relation to creditor stakeholder power represented by return on equity;
investors’ stakeholder power represented by government shareholders and foreign
shareholders and employee stakeholder power represented by employee share
ownership. Evidence shows that both creditor and government shareholders
(measures investor power), and employee share ownership does empower
stakeholder pressure regarding the quantity and quality of corporate social
disclosures. In contrast, foreign shareholders were an insignificant proxy and did not
serve in explaining the level of corporate social disclosure in the companies’ annual
report. The results also find that companies displaying a more active strategic posture
towards social and environmental issues disclose higher quantity and quality of
corporate social disclosure information than companies displaying a less active
posture to these issues. Companies employ strong corporate governance mechanisms
to, strategically, manage their relationship with their stakeholders through disclosing
voluntary social and environmental information. The presence of corporate social
responsibility committee in the companies’ board structure is also evidence of
strategic posture, but only in quantity of corporate social disclosure. Companies with
higher economic performance disclose a greater amount of corporate social
disclosure information than, companies with lower economic performance.
Economic performance represented by average return on assets. The results showed
that larger companies are significantly associated with higher levels of corporate
social disclosures.
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