Culture and Corporate Social Responsibility (CSR) Reporting: Evidence from China, India, Malaysia and United Kingdom

Abstract

This research documents the CSR reporting practices of 203 multinational corporations operating in eight socially and environmentally sensitive industries in China, India, Malaysia and the UK. Specifically, it is hypothesized that the quality and quantity of CSR reporting varies across countries, and that cultural attributes are amongst the factors that are associated with the differences in reporting. It is also argued that cultural attributes interact with governance and ownership structure in influencing the quality and quantity of CSR disclosure. Content analysis was conducted on a total of 403 of the companies' annual reports, CSR stand-alone reports, and CSR sections on corporate websites. CSR sentences were identified based on a checklist of 65 items, which had been modified from Global Reporting Initiatives (GRI) indicators. Scores are given based on the quality and quantity of CSR disclosure. The CSR disclosures were regressed against national culture variables, board composition, CSR board committees, governmental ownership, companies' listing status, proportion of subsidiaries located overseas, the existence of a CSR assurance statement and companies' market capitalization. Various sensitivity analyses have been provided. In addition, data on the institutional backgrounds of countries under study was also provided to assist discussion on the CSR reporting practices of companies operating in these countries. Results show that quality and quantity of CSR reporting practice is different across countries, with UK corporations providing the most CSR information. This is followed by India, Malaysia and China. One of the cultural attributes, i.e. individualism was found to be significant in explaining CSR reporting. The overall results demonstrate that CSR reporting is prominent in the countries in which the society is individualistic. However, the presence of CSR board committees significantly enhances CSR reporting in companies based in countries in which the society is collectivist. Thus, it is suggested, that culture interacts with corporate governance structure in influencing CSR reporting. The findings are robust throughout several robustness tests. It is inferred that a CSR policy that has been designed in a way that suits the local culture could enhance the quality and quantity of CSR reporting.