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Annotated Literature Review
CSR Reporting and Disclosure Practices
Prepared by
Himanshu Lakhani
RMIT University
The impacts of the scientific and technological development in
the last three decades have stimulated changes in all walks of
life. We can now begin to recognize that a new historic era has
begun. We are experiencing a combined economic, political,sociological revolution, frequently termed the post-industrial
era, comparable to the agricultural and industrial revolution.
These impacts have resounded through all aspects of
management and have resulted in new demands on and
expectations from accounting (Rabun and Williams, 1974: 3)
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Contents
1. Introduction ............................................................................................................ 3
2. Literature Search .................................................................................................... 4
3. Basis of grouping CSR themes ................................................................................ 6
4. Annotated Literature Review .................................................................................. 7
4.1 CSR reporting by countries ................................................................................ 7
4.2 CSR reporting by industry ............................................................................... 13
4.3 Relationship between CSR and financial performance and effect of other
variables ................................................................................................................ 18
5. Conclusion ............................................................................................................ 21
References ............................................................................................................... 23
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1.Introduction
Corporate social responsibility (CSR) activity is an area of intense and
increasing interest both on the practice and academic fronts. Within the last
decade, CSR has been gaining momentum as a growing number ofcompanies began to recognise their impacts on not just the economy, but
also society and the environment. CSR stems from companies
acknowledging that they should be accountable not only for their financial
performance, but for the affect they have on society and/or the environment
that they operate in.
CSR is defined broadly as including the concern for the impact of all of the
corporations activities on the total welfare of society(Bowman and Haire,
1976). This assumes that the entity is influenced by, and in turn influences
the society in which it operates (Farook and Lanis, 2005). According to thetriple bottom line approach, organisations communicate not only their
profit/income figures with the stakeholders but also disclose information
regarding the companys social and environmental performance. Companies
use their annual reports and/or websites as primary communication tools for
voluntary disclosure of their non-financial performance with different
stakeholder groups.
Business is already accountable for its activities over the diverse strands that
now come under the 'CSR' umbrella such as human resources,
environmental issues, community and health and safety practices. This isdepicted in Figure 1 below.
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Depending on the nature of companies, CSR reports would focus on any of
these four variables to be a socially responsible organization and thereby
expand corporate image.
The next section discusses key word combinations that were used to explore
the vast literature available in the field of CSR. The third section provides the
basis on which the themes were categorized. Subsequently, the section of
annotated literature review looks at each particular theme in more detail and
provides a table of the annotated literature review of articles relevant to thetheme. Following the table, a comparative evaluation is provided that
highlights the similarities and differences between the articles in the table.
Finally, concluding comments are presented in the last section on the overall
extent and quality of prior research done in this field and also includes
identification of research gaps.
2.Literature Search
CSR reporting, social and environmental accountability and social
performance were the first key words used to find literature available in this
area. To be able to condense the topic into appropriate themes or sub-topics,
the following key word combinations were applied:
Corporate social responsibility reporting
Non-financial information
Corporate disclosure
CSR in developing countries CSR practices in U.S.
Industry
Stakeholders
CSR business ethics, and
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Figure 1: CSR Variables
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Financial and environmental performance
Table 1 below shows the search results and provides the names of journals
(sources) from where each of the articles is taken.
Table 1: Number of articles in ranking journals
Name of
Journal
Themes Total
Countries Industries Determina
ntsAccounting,
Auditing and
Accountability
Journal
1 1
Critical
Perspectives on
Accounting
1 1
European Business
Review
1 1
Greener
Management
International: TheJournal of
Corporate
Environmental
Strategy and
Practice (GMI)
1 1
Industrial
Management &
Data Systems
1 1
International
Journal of
Contemporary
Hospitality
Management
1 1
Journal of Business
Ethics
3 1 4
Journal of Cleaner
Production
1 1
Journal of
Comparative
1 1
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Economics
Journal of
Marketing
Communications
1 1
Managerial
Auditing Journal
1 1
Qualitative
Research in
Accounting &
Management
1 1
7 5 3 15
3.Basis of grouping CSR themesFor the purpose of this exercise, the broad area of CSR reporting and
disclosure has been divided into three key themes, namely:
CSR reporting by countries
CSR reporting by industries
Relationship between CSR and financial performance and effect of other
variables
In general, the social responsibilities of a firm seem to arise from theintersection and compatibility of the political and cultural system with the
economics system (Jones, 1983). The two most common theories in social
and environmental accounting research are legitimacy and stakeholder
theory. These theories consider managements responsibility to cater to the
needs and expectations of various stakeholders and also be mindful of the
beliefs, norms and cultures of the society they operate in. The categorization
of the themes in the above manner is also supported by (Maignan and
Ralston, 2002). Previous studies suggested that there are country and
industry-specific differences in the extent of CSR reports. The last themeanalyses the determinants of CSR reporting, link between financial and non-
financial performance and effect of other factors such as ownership
structures and privatisation to understand the extent of, and the motivations
and incentives behind CSR disclosures. This application to the categorization
of themes covers important issues revolving around CSR reporting where
there is wide-range of literature available.
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4.Annotated Literature Review
4.1 CSR reporting by countries
CSR reporting by countries interestingly considers differences in the extent
of disclosures in developing and developed nations in todays global
economy. It encompasses motivations of companies in these different
economies to report on non-financial issues. The countries which formed part
of the research in the articles under this theme are: Bangladesh, Malaysia,
India, Thailand, USA, UK, Australia and Germany. Although the emphasis is
on the CSR reporting practices in a particular country, this theme overlaps
with categorization of reporting by industries. The articles that are included
in the literature review under this theme were taken from wide range of
journals. The most journal articles, that being 3, belonged to the Journal ofBusiness Ethics.
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Table 2: Annotation of articles for CSR reporting by countries
Authors(Year)
Researchquestions/Objectives
Theory/Concepts
Context Methods Findings/Conclusions
MuhammadAzizul Islam& CraigDeegan(2007)
1. What are thefactors thatmotivatemanagement toreport on
environmentalmatter?
2. Purpose is todescribe andexplain the socialand environmentalreporting practicesof a major garmentexportorganization withina developingcountry(Bangladesh)
1. Legitimacytheory
2. Stakeholdertheory
3. Institutional
theory(coerciveisomorphism)
Measurementmethod:Number of words in theannual reportpertaining toCSR disclosure
A large export-oriented clothingtrade organization inBangladesh, calledBangladesh Garment
Manufacturers andExport Association(BGMEA) operating ina global community
1. Conductinginterviewswith seniorexecutivesof BGMEA
2. Contentanalysis ofannualreportsreleased byBGMEAfrom 1987to 2005
1. Particular stakeholdergroups placedpressure on theBangladeshi clothingindustry in terms of its
social performance2. The clothing industry
in Bangladesh directlyresponded to thesocial pressures asthey were perceivedto exist by themanagers within theindustry
3. The disclosureappeared to bemotivated by survivalconsiderations, ratherthan any realattempts to embracebroader accountabilityfor their activities
BikramChaterjee &Monir ZamanMir (2008)
Exploring the state ofenvironmentalreporting by Indiancompanies
Legitimacytheory(managingpublicimpression)
Measurementmethod:Number ofsentences in
Top 39 Indiancompanies by marketcapitilisation as listenonwww.indiainfoline.com as on 31December, 2003. Thislist excludescompanies in thefinancial sector
1. Contentanalysis:Websites ofcompanies
2. Contentanalysis:Annualreports ofcompanies
1. Although, there are noregulations enforcingthe disclosure ofenvironmentalinformation, most ofthe Indian companieshave disclosedenvironmentalinformation
2. These companiesprovided moreenvironmental
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the annualreportpertaining toCSR disclosure
information on theirwebsites compared tothe informationprovided in theirannual reports
SuneeRatanajongkol, HowardDavey &
Mary Low(2006)
Extent and nature ofCSR practices inThailand
1. Legitimacy
theory
2. Political
economy
theory
Measurement
method:
Number of
words in the
annual report
and web sites
pertaining to
CSR disclosure
and percentage
of total
disclosures
Largest 40 companieslisten on the StockExchange of Thailandas at 31
December1997, 1999and 2001
Contentanalysis:Annual reportsof companies
1. There is a trend ofincreasing amounts ofcorporate socialdisclosure
2. CSR among Thaicompanies was foundto be primarilyfocused on humanresources
3. These companiesprimarily provideddeclarative goodnews
4. The key areas ofcompany socialexposure are reflectedby CSR
Y. Sumiani,Y. Haslinda& G. Lehman(2006)
1. To explore thevoluntaryenvironmentalreporting practicesof Malaysiancorporations
2. Does certificationof ISO 14000standards forcecompanies toreportenvironmental
1. Stakeholdertheory -Externalpressuresforcompaniesto reportenvironmentalinformation
2. Legitimacytheory -
Top 50 Malaysianpublic companiesfrom variousindustries listed onthe Bursa Malaysia inthe financial year2003
Contentanalysis:Websites ofthe companies
1. Trading/servicesindustry comprisedthe highest number ofcompanies thatvoluntarily reportenvironmentalinformation
2. ISO 14001certification has putsome pressure uponthe companies tomake some form of
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information? Newdevelopments in the ISO14000standards
environmentalreporting (as all ISOcompanies reportedsome environmentalinformation)
Sukru Ozen&Fatma Kusku(2009)
Why some companiesin developingcountries go beyondenvironmental
regulations whenimplementing theircorporateenvironmental socialresponsibilities orcitizenship behavior?
Newinstitutionaltheory
Institutionalfactorsconsidered:
Marketorientation
Industrycharacteristic
Corporateidentity
Institutional effects ofmarket orientations,industryconcentrations, and
organisationalidentity as factorsshaping CECbehaviour indeveloping countries
Contentanalysis
1. Companies fromdeveloping countriesthat are orientedtoward market in
developed countrieswould be at higherlevels of CEC adoption(i.e. normative orcognitive) thaninward-orientedcompanies, given thehigher level ofregulative andnormative pressuresfor CEC behaviour indeveloped countries.
2. Companies fromdeveloping countriesthat operate in highlyconcentratedindustries would be at
higher levels of CECadoption companiesoperating in low-concentratedindustries, given thelower level of (oremerging) customerexpectations of CECbehaviour indeveloping countries.
3. Missionaryorganisations within
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developing countrieswould be at higherlevels of CEC adoptionthan non-missionaryorganisations.
StephenChen & PetraBouvain(2008)
Does the adoption of aglobal CSR standard,such as the GlobalCompact by firms
affect firms reportingpractices of CSRperformance?
Institutionaltheory
Top listed firms in theUS, UK, Australia andGermany (largest bymarket capitilisation):
151 firms in total
1. Contentanalysissoftwarepackage
calledLeximancer CSRreports onthewebsites ofthe largestcompaniesin differentcountries
2. ANOVA inSPSS
3. MANOVA inSPSS
4. Linearregressionin SPSS
1. Global Compactmembership has aneffect only in certainareas of reporting,
related to theenvironment andworkers
2. Businesses fromdifferent countriesvary significantly inthe extent to whichthey promote CSR andCSR issues that theychoose to emphasizein their reports
3. Global Contactmembership wasshown to have asignificant effect onthe inclusion ofmeasured CRS
performance statisticsin the report
Holder-Webb,Cohen, Nath& Wood
1. What CSRreporting is beingprovided by U.S.firms?
No theoryspelled out inthe journalarticle
Size-and industry-stratified-sample of50 publicly tradedU.S. firms during
Contentanalysis of CSRdisclosures
1. 44 of 50 firms in thesample provided someCSR disclosures
2. The most common
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(2009) 2. What reportingformats are U.S.firms choosing toprovide CSRdisclosures?
Measurementmethods:Examiningwebsites,annual reports,mandatoryfilings, CSRreports,governance
documents,product factsheets andpress releases
2004 types of informationdisclosed pertained tocommunity relations,health ad safetymatters, and diversity,and HR
3. Corporate website,followed by pressreleases and bymandatory filings, are
the most popularavenue for publicizingCSR disclosures
4. Use of websites ispositively related tofirm size, while theuse of mandatoryfilings is negativelyrelated to firm size
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In the paper written by Chatterjee and Mir (2008), there appeared a
significant weakness. The authors disregarded companies belonging to the
financial sector from the sample as they claimed that these companies do
not have any impact on the environment. This does not necessarily hold
true. There have been studies done in the past that consider environmental
reporting in the financial sector. One of them is Kolk et al. (2001), which
found that out of the largest 250 multinationals in the sample, reporting
frequencies were quite different in financial and non-financial sectors, at 15%
and 44% respectively. Ratanajongkol et al (2006) does consider the finance
sector in its study though. One of the findings in the paper by Chatterjee and
Mir (2008) was that companies disclosed more environmental information in
their websites compared to in the annual reports. This finding is different
from the findings of Cormier and Magnan (2005) where they found common
characteristics of print and web disclosure by a sample of companies on the
Toronto Stock Exchange.
The main drivers of CSR reporting in developing nations were found to be
cultural traditions, international standardization and socio-economic
priorities as opposed to drivers like community expectations and ethical
considerations in developed nations. The literature suggests that distinction
between liberal market economies and coordinated market economies may
be too simplistic to capture all differences in CSR reporting and a more
refined typology is required.
4.2 CSR reporting by industry
The literature involving CSR reporting by industries explores the different
extent of CSR reporting in different industries like oil and gas, financial,mining, telecommunications, banking, and hospitality in line with the impact
of the companies activities on the society as a whole. The articles chosen
under this theme belong to a wide-range of journals.
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Table 3: Annotation of articles for CSR reporting by industries
Authors(Year)
Researchquestions/Objectives
Theory/Concepts
Context Methods Findings/Conclusions
PeterJones,DaphneComfort &DavidHillier
(2006)
Exploring corporatesocial responsibility(CSR) issues addressedand reported within thepub sector of thehospitality industry
No theoryspelled out inthe journalpaper
CSR reporting
elements- Marketplace
Workplace
Environment
Community
Top ten puboperators listedin LeisureReview UK(2005)
Case study-Search on theworldwide webandInvestigatingwebsites of the
leading puboperators in theUK
1. Majority of the UKs topten pub operators reporton their commitment toCSR
2. The pub operators thatreport tend to cover
similar sets of themes andthere are generalcommitments to differentCSR issues
3. CSR reports andinformation posted on theworldwide web by the puboperators focus on theiraspirations rather thanoperational imperatives
ChristineCoupland(2006)
How distance is createdbetween CSR issues andaccounting practices inthe web-based literatureof banking firms?How CSR is constructedas a concern of the
organisations and toinvestigate how this islegitimated
No theoryspelled out inthe journalarticle
Measurement
method:Examiningweb-basedforms of thereports and CSRdocuments offirms
Five bankinggroupsoperating in theUK Lloyds/TSB,The Royal Bankof Scotland,HSBC, Barclays
and Co-operative Bank
DiscourseanalysisMedia analysisContentanalysis
The location of CSRinformation disclosures isdisguised on the web and theinformation is peripheralisedand marginalisedBanks which are typicallyobserved as profit-oriented
organisations are beginning toarticulate a stance withregard to CSR, as increasinglymore attention is being paidto social and environmentalissues
EdeltraudGuenther,HolgerHoppe &Claudia
Overview of the currentstatus quo inenvironmental reportingpractices (quantityaspect) of mining and oil
No theoryspelled out inthe journalarticle
29 miningcompanies and19 oil and gascompaniesregistered with
Quantitativeand qualitativecontentanalysis
The quantity of the reportedindicators vary, depending onfactors such as the relevanceof the environmental aspectsand impacts to the industry or
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Poser(2007)
and gas companiesTesting the quality of thereports in line with theGlobal ReportingInitiative (GRI) G2guidelines
Measurementmethod:Adherence toGRI Guidelines
GRI for theperiod 2005
company assessedWater and compliance are thetwo most reported categoriesby the mining companiesEmissions, effluents, waste,compliance andtransportation are thecategories most reported bythe oil and gas industryIn general, the mining
industry reports theenvironmental indicators in ahigher or similar quantity tothe oil and gas industry. Onlytransportation is not reportedby the mining industryThe percentage of thecompletely reportedindicators (all informationrequired by G2 was provided)in relation to all indicatorsreported is higher in themining industry
Hsiang-LinChih,Hsiang-Hsuan
Chih &Tzu-YinChen(2009)
What are the conditionsunder which corporationsmay or may not act insocially responsible
ways?
No theoryspelled out inthe journalarticle
Measurementmethod:Examiningannual reportsof companies
520 financialfirms in 34countries, whichare listen on the
Dow Jones WorldIndex and on theDJSI World,between theyears 2003 and2005
Regressionanalysis
1. Firms with larger size aremore CSR minded, and thefinancial performance andCSR are not related
2. Firms would act in a moresocially responsible waysto enhance theircompetitive advantageswhen the marketcompetitiveness is moreintense
3. Financial firms in countrieswith stronger levels oflegal enforcement tend toengage in more CSRactivities
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4. Financial firms in countrieswith stronger stakeholderrights tend to engage inless CSR activities
5. Self-regulation within thefinancial industry has asignificantly positiveimpact on CSR
6. Financial firms in countrieswith more cooperative
employer-employeerelations, higher qualitymanagement schools anda better macroeconomicenvironment will be moreCSR minded
LorraineSweeney& JosephCoughlan(2008)
1. Do different industriesreport CSR differently?
2. How organizationsbelonging to differentindustries take a focusedstakeholder view of CSR?
Stakeholdertheory
Measurementmethod:Examiningannual reportsand CSR reportsof companies
Mainstakeholdergroups to whichthe CSR reportsare focused CustomersEmployeesSuppliersShareholdersEnvironmentCommunity
Top 28 firms onthe FTSE4Goodindices in UK, USand Europe as atDecember 2004,attributing to sixdifferentindustries
Contentanalysis:Annual reportsof thecompanies inthe sample
Many of the organizationsstudied had separate annualand CSR reports. They alsoprovided extra CSRinformation online andreferred to it in their annualreportsCSR activities werecommunicated as theirresponsibilities and policieswith regard to their main
stakeholder groupsCustomers and communitiesidentified as primarystakeholders in the financialservices industryPharmaceutical industryfocused substantially on theshareholders and not onenvironmental issues in theirreportThe growingtelecommunications industry
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focused on customeracquisition and retention andnot on environmental issuesThe focus of CSR inautomobile industry as well asoil and gas industry rest onenvironmental performanceCompanies operating in theretail industry concentratedon the customers and to a
lesser extent, theenvironment
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It was found that CSR disclosures varied greatly between industries. One of
the crucial factors impacting the extent of reporting was the level of impact
of the companys activities on the environment. Companies in high-risk
industries like oil and gas and mining were more inclined to disclose CSR
information. The reported categories also varied among various industries,
depending on the relevance of the environmental aspects. The literature
suggested that the firms should focus on certain stakeholders more than
they should focus on others. One of the most interesting finding which is
consistent with all these articles under this theme was the lack of a clear
focus on the benefits of the shareholder as a specific stakeholder.
4.3 Relationship between CSR and financial performance
and effect of other variables
The final theme analyses the link between CSR and financial and economic
performance. It considers both directions of causality. The theme also
considers impact of ownership structures and privatisation on corporate
environmental performance. The article chosen under this theme belong to a
wide-range of journals.
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Table 4: Annotation of articles for Determinants of CSR performance
Authors(Year)
Researchquestions/Objectives
Theory/Concepts
Context Methods Findings/Conclusions
DietrichEarnhart& LubomirLizal(2006)
1. Effects of differentownership structureson standardmeasures ofcorporate financialperformance in the
transition economyof Czech Republic
2. Link betweenfinancialperformance andenvironmentalperformance
3. Impact ofprivatisation oncorporateenvironmentalperformance
No theoryspelled out inthe journalarticle
Model:
1. Assumingownershipand controlare notseparated
2. Allowing forseparationof ownershipand controlin privatefirms
3. Examiningthe impactof liquidityconstraints
1. Firm data fromthe CzechRepublicbetween 1993and 1998
2. Database
provided by theprivate vendorAspekt whichincludes allfirms traded onthe PragueStock Exchange
1. Standardunbalanced panelanalysis
2. Regressionanalysis
3. Successful financialperformance improvesfuture environmentalperformance
4. Increased state ownershipimproves environmental
performance related to allother ownership types
5. More concentratedownership improvesenvironmentalperformance in CzechRepublic
Jose M.Moneva &
EduardoOrtas(2009)
1. Evaluate thesignificance of the
link betweencorporateenvironmental andfinancialperformance
2. Aim is to showmanagers how anadequatemanagement ofenvironmentalfactors couldcontribute to the
Stakeholderanalysis
CEPmeasurementmethod: socialaudit proxies
CFPmeasurementmethod:market-basedand accounting-based measures
A sample of 230European
companies (2004-2007)
Multivariateanalysis
Partial leastsquares model(PLS)
1. Results indicate that firmsthat reached a high
degree of corporateenvironmentalperformance (CEP) in2004 improved theirinternal efficiency andobtained satisfactorycorporate financialperformance (CFP) levelsin 2005-2007
2. The link between CEP andCFP was significant in allthe periods analysed
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financial success ofthe firm
showing that it was apersistent effect and notbased on short-termissues
GeorgeBalabanis,Hugh C.Phillips &
Jonathan
Lyall(1998)
Testing the relationshipbetween CSR andeconomic performanceof corporations within aUK context
No theoryspelled out inthe journalarticle
Economicperformanceincluded:
Financialperformance(return oncapitalemployed,return onequity andgross profitto salesratio), and
Capitalmarketperformance(systematicrisk andexcessmarketevaluation)
56 large UKcompaniesselected based onthe quotation onthe London Stock
Exchange and theavailability of CSRratings by the NewConsumer Group(NCG) a UKpublic-interestorganisation
1. Regressionanalysis
2. Principalcomponentanalysis
(PCA)3. ANOVA4. Hierarchica
l multipleregressionanalysis
1. A combination of highCSR performance anddisclosure found to havea positive effect on firmsoverall profitability
2. The reaction of the capitalmarkets in thesubsequent period tocompanies with high CSRdisclosure was found tobe negative
3. The capital marketsseemed to be indifferentto firms that undertakesome CSR activities
4. Other factors than CSRperformance were moreimportant determinantsof investors behaviour
5. Firms with goodperformance in terms ofCSR are more inclined to
disclose more
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The link between social responsibility and financial performance suggests a
positive correlation between the two in the long run. Earnhart and Lizal
(2005) found that as financial performance improves, environmental
performance is also enhanced. As expected, state ownership of corporations
improves environmental performance considerably. The empirical research
in the relationship between corporate social responsibility and financial or
economic performance is unclear and not conclusive. One of the reasons for
obtaining the differences in the sign of the relationship could be the use of
different performance measures to evaluate financial and non-financial
performance. These measurement methods could be ROA, ROE, ROCE, etc.
for assessing financial performance and disclosures, CSR rankings, social
audits etc to measure social and environmental performance.
5.Conclusion
In the past, wealth maximization was considered as the main goal of
businesses. Growing concern about the environment and several social
issues surrounding us, however, has forced companies to disclose more than
just their financial performance. CSR is a concept that has attracted
worldwide attention and acquired fresh debate in the global economy. Social
and environmental performance is now seen as one of the biggest
challenges as well as an opportunity for companies to gain competitive
advantage. Thus, harming the society or environment and ignoring
environmental performance measures can be vital mistakes for
organisational managers.
Although there has been extensive research done in the area of social and
environmental reporting, the findings have proven to be inconclusive and at
times contradictory, especially when considering the link between financial
and non-financial performance of companies. There has been some single
industry research in the CSR area. Prior research found that firms in a
particular industry may be more socially responsible due to the nature of
their activities. Research analysing the relationship between financial andnon-financial performance has been contradictory depending on the varying
time periods, geographies and the methodologies used in the research.
CSR reporting is a growing and dynamic area of investigation. The numerous
pressures and expectations from the society faced by todays corporations
provide an important research area and further opportunities for
investigation. While social and environmental disclosures remain voluntary,
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more research would be done to observe managerial practices. Future
research should help to further develop theory to explain social and
environmental reporting practices by corporations.
Since these reports are not audited, their verifiability can be questioned.
Thus, there lies ample scope for further research in testing the validity andreliability of social and environmental reports. Careful study should also
include examine the accuracy of these reports and how they help in decision-
usefulness for the stakeholders.
Is CSR just another catchphrase, a senior management trend that will
disappear or be replaced over the next few years? Or is it a true change in
how companies are doing business, a new positive force in corporate
culture? There is much debate on the issue and future research would
consider such critical questions and optimistically, look for much needed
answers.
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