ePROCEEDINGS FOR 2011 INTERNATIONAL RESEARCH CONFERENCE AND COLLOQUIUM Contemporary Research Issues and Challenges in Emerging Economies

CORPORATE SOCIAL RESPONSIBILITY DISCLOSURE IN RESPONSE TO CSR AWARD WITH THE MODERATING EFFECT OF FAMILY GROUP AFFILIATION IN YEMEN

Nahg Abdul Majid Alawi College of Business, Universiti Utara Malaysia, E-mail: nahgalawi@hotmail.com Azhar Abdul Rahman College of Business, Universiti Utara Malaysia, E-mail: azhar258@uum.edu.my ABSTRACT In the recent years the Yemeni Government is increasingly calling Yemeni companies to participate in the country‟s economic developments as their social responsibility. Driven by this measure, this study examines the level of corporate social responsibility disclosure (CSR) and its categories made in annual reports, websites, and newspapers of the 73 most active shareholding companies registered in Yemen. The study also examines whether these companies have expanded their corporate social responsibility disclosure in response to CSR Award announcement. Finally, the study seeks to examine factors that may influence the level of corporate social responsibility disclosure by considering the moderating effect of family group affiliation. A content analysis procedure is used to measure the level of corporate social responsibility disclosures over a period of three years which includes the pre and post announcement of CSR Award. The results indicate that while the disclosure level of corporate social responsibility is low, companies have increased the CSR disclosure in response to CSR Award announcement. The OLS regression analysis results indicate that the firm‟s characteristics (company size, industry type, profitability) affect the level of CSR disclosure in Yemen. Interestingly, the moderated multiple regression (MMR) analysis results also reveal that family group affiliation has significant moderating effect on the relationships between firm size, profitability, foreign ownership and CSR disclosure. This study aims to contribute to the CSR literature by providing empirical evidence of the moderating effect of family group affiliation and the CSR disclosure in one of less-developed country. KEYWORDS: Corporate social responsibility disclosure, Yemen, Family group affiliation, CSR Award. INTRODUCTION The Yemeni government has called on the private sectors to participate in the welfare and development of the country in fulfilling their social responsibilities by financially contributing to social programs or by reducing harmful effects of the industrialization to the environment and society at large. There is noticeable evidence to suggest that some Yemeni companies are developing and implementing social responsibility policies. For example, the Hayel Saeed Anam Group has established the Hayel Saeed Anam and Associates Welfare Corporation and Al-Saeed Foundation for Science and Culture as institutional entities to organize social responsibility action of the group (Hayel, 2008). But unfortunately most companies have singularly failed to embrace any but the traditional model of accounting and “most companies in Yemen are still not aware of the broad view of social responsibility, believing that CSR is no more than building mosques, donations for charities or seasonal work during Ramadan; and these activities do not require any disclosure” (Althawra, 2008).

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ePROCEEDINGS FOR 2011 INTERNATIONAL RESEARCH CONFERENCE AND COLLOQUIUM Contemporary Research Issues and Challenges in Emerging Economies

In Yemen the disclosure of CSR within the traditional financial reports is no longer optional, but has become an important factor, to allow the government to ensure that this contribution is consistent with Yemen‟s sustainable economic and social development plans. However, Yemen has not passed any legislation or disclosure requirements in this regard, neither in the Companies Act 1997, Labour Act 1998 or Environment Act 1995. In addition, there is no Stock Exchange in Yemen, which would require the disclosure of social responsibility information, as in the case of many developed and developing countries‟ Stock Exchanges that require listed companies to provide information on their CSR activities. For example, in France all companies listed on the Paris Stock Exchange are required to include information about their social and environmental performance in their financial statements. In South Africa, the Johannesburg Stock Exchange requires all listed companies to comply with a CSR based code of conduct. This emphasise the importance of CSR disclosure regulations regarding CSR in these countries. As there have been no prior studies that have attempted to evaluate the corporate social responsibility disclosure in Yemen, the apparent problem of CSR in Yemen is to what extent Yemeni companies disclose CSR activities to show their partnerships with the government in order to achieve the objectives of sustainable development. Consequently it creates the ability to measure and evaluate whether their participation can be regarded as an act of charity or institutional and it‟s within the framework of sustainable development. In addition evaluate the effect of CSR Award announcement on CSR disclosure. Also what are the factors that might influence this CSR disclosure? However, this study is important in providing a systematic empirical examination of the patterns of CSR disclosure in Yemen and other least developed countries in general. As it is difficult to generalize the results of studies on developed countries to less developed countries as the stage of economic development is likely to be an important factor affecting CSR practices (Tsang, 1998). In addition this study seek to provide evidence about the factors that could affect the level of CSR disclosure, which can benefit Yemeni government and companies alike in order to improve the quality and quantity of corporate social reporting (Adam et al., 1998).The objectives of this paper are: (i) to determine the level of corporate social responsibility disclosure practices by companies in Yemen in annual reports, websites and newspapers, (ii) to examine whether companies in Yemen have increased the level of corporate social responsibility disclosures in response to CSR Award, (iii) to determine whether certain firms‟ characteristics (such as size, industry type, profitability and foreign share ownership) are associated with the level of corporate social responsibility disclosure and (iv) to examine the moderating impact of family group affiliation on the association between companies‟ characteristics corporate social responsibility disclosure. This paper contributes to the body of CSR literature in terms of: firstly attempting to fill the gap in CSR literature by conducting the first comprehensive study on CSR in one of least developed countries with no stocks exchange market. Secondly, examine the moderating impact of family group affiliation on the association between company‟s characteristics and corporate social responsibility disclosure. Finally, attempt to fill the gap in CSR literature by examining the effect of CSR Award on the level of corporate social responsibility disclosures. THEORETICAL FRAMEWORK AND LITERATURE REVIEW 2.1 Legitimacy Theory The existence, survival and growth of any company require support from the community. In order to gain and sustain this support, companies must report specific information voluntarily, to show and convince the society that their activities, are legitimate and have contributed to the society. Thus, legitimacy theory is built upon the concept of “social contract” and it considers that the organisation‟s continuous existence will be under threat if society becomes aware that the organisation has violated its social contract. If the society does not agree that the organisation is operating in an acceptable or permissible manner, then the society will end the organisation‟s “contract” to continue its

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which arise from their deteriorating performance. businesses attempt to affect the perception of society to reduce the misperceptions on the companies‟ activities that can affect society.5 percent environmental and 10 percent consumer. websites and newspapers. 3 . 1998. Since the mid-1970s. which refers to the organizations‟ activities that are harmonious with social values. 22. physical resources. p.. through the use of different strategies. businesses attempt to educate the public about the real changes in corporate performance and activities to fill the legitimacy gap. The result of the show that in terms of space given and subjects covered in annual reports CSD was given a little. of Jordanian companies operating in the banking and manufacturing sectors which have disclosed their CSD responsibilities in a convincing manner. Thus. human resources. state authorities and journalists without the influence of regulation or public pressure. The human resources and community involvement were the most themes disclosed across the four industry group. Another recent study by Rizk et al (2008) examined CSR disclosure in 60 annual reports of manufacturing companies in Egypt and found that CSR disclosure was low and descriptive in natural . According to Lindblom (1994) there are four different strategies of providing social information to the society to legitimize their behaviors. Secondly. First. The study concluded that the disclosure level was very poor and inadequate. labour and customers necessary for their long-term survival (Neu et al. In Bangladesh.However. Furthermore. Imam (2000) studied the annual reports of 40 listed companies at Dhaka Stock Exchange for 1996-1997. many previous studies investigated the social responsibility disclosures and in various countries and at different time periods . there was a limited number. businesses attempt to control the perception of society by diverting the attention of public from the serious issues such as pollution to other issue such as social or environmental charities. is reporting organizational activities that are harmonious with social values. Therefore legitimacy theory developed to explain the nature and basis of the relationship between a company and its society is considered to be an essential resource on which an organization is dependent for survival and this is achieved by showing that organizations‟ activities are harmonious with social values (Dowling and Pfeffer.In addition they found that industry type affects the category of disclosure. Belal and Owen (2007) also had similar opinion and argued that CSR development in Bangladesh was driven by a concern to enhance corporate image and to control the perceptions of the main powerful stakeholders in Bangladesh. it can be expected that businesses will provide social information (for example community involvement. only A very few published studies examine the corporate social responsibility disclosure in the Arab world and in least developed countries (LDCs) in general. Of the companies surveyed. where companies will disclose social information in several medium such as annual reports.They examined the corporate social responsibility disclosure practiced in a sample of 143 companies in Jordan using content analysis approach. Second. 1975) Dowling and Pfeffer (1975) stated that there are two elements of consistency in organizations‟ activities and social values: First is the element of action. It is expected that legitimacy theory could explain the CSR disclosure practice in Yemen as least developed country due to the absence of stock exchange market and the lack powerful NGOs in Yemen. one of the earliest studies in Middle East . 100 percent made some form of human resource disclosure. was due to their strategies to support their image with customers.ePROCEEDINGS FOR 2011 INTERNATIONAL RESEARCH CONFERENCE AND COLLOQUIUM Contemporary Research Issues and Challenges in Emerging Economies operation. However. 265). The last strategy is that businesses attempt to change the understanding of the public when the public have unclear ideas about the performance of the company. Adams (2002) noted that the reason behind the increase in the number of companies publishing environmental reports since the early 1990‟s. Third. environment contribution and product and service contribution) for the public to legitimize their activities with the aim of influencing the public and stakeholders‟ perceptions about the organization. to improve their image and to ensure the continued inflow of capital. Abu Baker and Naser (2000) study. 25 percent community. Zain (1999) also confirmed these strategies that the social reports prepared by corporations are represent a form of advertising to promote or to enhance the company's image and to please the financial statements readers or users or to attract their attention to a particular issue while diverting their attention from the major issue.

The relationship between company‟s characteristics and CSR disclosure with the moderating affect of family group affiliation. 1987). are likely to voluntarily. Cowen et al. The study‟s conceptual framework is completed with family group affiliation as moderating variable and CSR disclosure as the dependent variable. 1995. Ghazali 2007) that have showed that there is a positive relationship between firm size and the level of social disclosures. Watts and Zimmerman (1978) argues that larger firms are more visible in the public eyes and more politically sensitive. Hackston and Milne 1996. Cooke 1989. 4 . 1987.2001. A number of arguments have been introduced in the literature in an attempt to explain this relationship. industry type. Zain and Janggu 2006. CSR disclosure is measured by particular CSR information disclosed by the company in its annual report. The following section discusses the hypotheses development. HYPOTHESIS DEVELOPMENT 3. Company‟s characteristics (company size. The larger companies are subject to more of stakeholder groups' attention therefore they are more likely to receive greater pressure to report about their social responsibility involvements (Cowen et al. Stanwick and Stanwick 1998. 2002. profitability and foreign ownership as the essential four company‟s characteristics.g. Deegan and Gordon 1996. Meek et al. For example. profitability and foreign ownership) are expected elements that may lead Yemeni companies to disclose CSR. Hossain et al.Romlah et al. which are more visible in the “public eyes”.1 Company Size There are a large number of empirical studies (e. Company Size Industry Type CSR Disclosure Profitability Foreign Ownership Family group affiliation Figure 1 lists company size. 1994. Firth (1979) suggests that large firms will disclose more information to improve the reputation of the firm.ePROCEEDINGS FOR 2011 INTERNATIONAL RESEARCH CONFERENCE AND COLLOQUIUM Contemporary Research Issues and Challenges in Emerging Economies Figure1. Haniffa and Cooke 2005. 1992. Gray et al. Carven and Marston 1999. industry type. website and newspaper. Chow and Wong-Boren 1987. Trotman and Bradley 1981.

Patten. 1995. et al. 277). Mangos and Lewis. “These alternatives are likely to be more similar among firms in one industry than.. 1997. Brammer and Pavelin (2004) argue that large firms disclose more CSR information as they are more able to manage the cost of disclosure. Hackston and Milne (1996) similar to Patten (1991) and Roberts (1992) found that high-profile industry companies disclose significantly more social and environmental information than low-profile industry companies. (2000) found that manufacturing companies in Jordon disclose a high score of CSR information They explain that companies operating in this industry are large in size and profitable. They linked this result to the high political visibility of these companies. 2008) will have higher levels of CSR disclosure comparison to their counterparts in other sectors. when considering the social responsibility of companies. Moreover.ePROCEEDINGS FOR 2011 INTERNATIONAL RESEARCH CONFERENCE AND COLLOQUIUM Contemporary Research Issues and Challenges in Emerging Economies Patten (1991) argues that large companies will disclose more information of corporate social responsibility than small companies. because companies in those sectors have close relation to social and environmental externalities and their associated threats to corporate reputations. pointing out that the company is hiding bad news. the industry‟s nature has a strong influence on companies‟ social responsibility disclosure because the industry is exposed to harsh public criticism from social groups.. Consistent with the legitimacy theory. 1992). Ingram (1978) considers industry type as an important attribute for consideration because the nature of. 2009) and the great concern to improve corporate image (Branco and Rodrigues. profitability determines the relative weight of a social demand and the attention it receives from top decision-makers. it is expected that social responsibility disclosure is more likely to be positively related to the size of company.2 Industry Type Industry type is often referred as an important factor. Several empirical evidences support this argument. In periods of low profitability and in situations of high 5 . disclosure varies according to the production-investment alternatives available to individuals. Moreover. Patten (1991) also argued that like company‟s size. First. Ulmann (1985) identifies two ways how a company‟s past and current profitability could determine organizational CSR. Abu-Baker and Naser. Haniffa and Cooke (2005) explain that Profitable companies have the freedom and flexibility to implement and disclose social responsibility activities to stakeholders. H2: The level of social responsibility disclosure positively associated with the high profile industries 3. our hypothesis is directional for industry type. Carven and Marston (1999) argue that industry type could influence companies‟ political vulnerability forcing them to have same levels of disclosure. between firms in different industries” (p. it is believed that high profile manufacturing/ telecommunication companies with its high public profile due to the nature of its product and frequent public-policy controversy over the availability and pricing of its Products (Holder et al. Based on the results of prior studies. 1988. as they are more visible they exposure to harsh public criticism from social groups. Moreover. H1: The level of social responsibility disclosure is positively associated with the size of the company 3. 1991.3 Profitability Profitability also exerts a significant impact on company social responsibility behaviour disclosure (see Waddock and Graves. (2008) pointed out that sector which dominated by big companies and exposed to environmental issues disclose better CSR information . Roberts. and they can afford the cost process of collecting and classifying information and disclosure of corporate social responsibility. they argue that if a company could not maintain industry disclosure level this will be viewed as a bad sign for the market. McGuire. Brammer and Pavelin (2004) claimed that firms from food drink and tobacco and other manufacturing sectors in UK disclose more voluntary social information than other industries. Amran and Devi . and motivation for. Moreover. in order to legitimise their existence.

this study expects that profitability will have an impact on CSR disclosure in Yemen.4 Foreign Share Ownership Teoh and Thong (1984) argued that companies with large proportion of foreign ownership are more exposed to implement social responsibility programs. This expectation is built on the arguments which support that company‟s strong financial performance provides the freedom and resources for the company to involve in CSR activities such as employee concern.5 CSR AWARD It is predictable that awards are devised to highlight companies with the best practice in the overall contents of their annual reports. failed to find any positive relationship. On the other hand. where they find that the country of ownership and foreign ownerships improves corporate social responsibility disclosure in Malaysian and Germany respectively Haniffa and Cooke (2002) also find a significant positive relationship between foreign ownership and the level of disclosure in Malaysia. the next hypothesis is: H3: The level of social responsibility disclosure is positively associated with the profitability of the company. 6 . Bowman and Haire (1976) and Abbot and Monsen (1979). it can hypothesised that: H4: The level of social responsibility disclosure is positively associated with the foreign share ownership of the company. Preston (1978) supported Bowman and Haire's study by reporting a higher ROE for high disclosers.foreign ownership companies. studies on relationship between profitability and CSR have produced mixed results. They argued that foreign ownership leads Zimbabwean companies to implement modern technology which enable them to gather and produce information with less cost than non. Evidences by Zain (1999) and Cormier et al. Following the above arguments. which was launched by the ACCA in the middle of 2002. In the literature. by using reputational scales (responses from the public to a social phenomenon). (2004) are consistent with these arguments. Studies by Haniffa and Cooke (2005) and Hamid and Atan (2011) find that obtaining awards such as the Best Corporate Social Reporting Award and the Environmental Reporting Awards was the reason behind the increased of CSR disclosure in Malaysia.Hence. and thus companies whose ownership are dominated by foreign shareholders are expected to disclose more CSR information. using multiple regression analysis. economic demands will have priority over social demands. Mangena and Tauringana (2007) also found that foreign ownership is positively and significantly associated with disclosure in Zimbabwe. thereby legitimizing their existence to attract foreign investors as well as to please current investors (Amran and Devi . profitability influences the financial capability to undertake costly programs related to social demands. Foreign ownership will highlight their corporate social responsibility. Andrews et al . Cowen et al. Thompson and Zakaria (2004) argued that the most important factor that may encourage Malaysian firms to environmental disclosure is perhaps the Malaysia Environmental Reporting Awards (MERA). (1987) and Hackston and Milne (1996). 3. According to the ACCA 2002. through disclosing more CSR information. community relations or environment issues (Waddock and Graves.ePROCEEDINGS FOR 2011 INTERNATIONAL RESEARCH CONFERENCE AND COLLOQUIUM Contemporary Research Issues and Challenges in Emerging Economies debt. the ACCA UK Environmental Reporting Awards is influential in the development of environmental reporting in UK and the scheme has been mirrored by other countries. They report significant differences for a five-year average return on equity (ROE) between disclosing and non-disclosing companies. 1997). Examples of such awards are the ACCA Environmental Reporting Awards.(1989) further argued that foreign ownership is expected to have greater effect on corporate social disclosure as foreign companies have greater visibility and are more likely to be subject to control by the host government. Mills and Gardner (1984) concluded in their analysis of the relationship between social disclosure and financial performance that companies are more likely to disclose social responsibility activities when their financial statements indicate favourable financial performance. 2008). Second. Ulmann (1985) argued that the production for these mixed results is due to the weakness in the methodology used in most of the studies. Moreover. Thus. 2002). 3. which was first introduced in United Kingdom (Hayatudin. detected a positive correlation.

it was found that reported earnings are of better quality for family firms as compared to non-family firms (Ali et al. This way it results in better disclosurerelated benefits. Thus. They have found out that family firms are more likely to be socially responsible actors than are firms without family involvement. RESEARCH METHODOLOGY 4. found that the family business tends to have a different. a letter requesting the annual reports was addressed to 7 . Based on their findings they believe that the family business owner might consider building good relationships with employees. more personal relationship with employees and clients when compared with the non-family business. argues Godfrey (2005). Therefore. and suppliers as advantageous for their business. protecting the firm‟s (and family‟s) assets in times of crisis. and suppliers.6 Moderating Variable 3. Since there is no stock exchange in Yemen. (2004) who found that the family character of the business has the most frequently impacts on the relationships between the company and its employees. 3.Therefore. Also these companies are required to summit copy of their annual reports to the Ministry of Industry and Trade. therefore they are unwilling to damage those reputations by making irresponsible decisions. One way as Skinner points out.1994).ePROCEEDINGS FOR 2011 INTERNATIONAL RESEARCH CONFERENCE AND COLLOQUIUM Contemporary Research Issues and Challenges in Emerging Economies The above discussion provides a basic to support the argument that CSR Award encourages disclosures concerning social responsibility positively ..6. They believe that families see their images and reputations connected to the firms they own. Two studies were conducted on small European businesses. clients. Therefore. family values are easier to be induced to influence the way in which the businesses are run. These companies have been chosen because the Companies Act (No 22) for the year 1997 on Commercial Companies in Article (92) requires shareholding companies to publish their financial annual reports to the public. based on the above discussion. as well as increased liquidity of the firms‟ stocks. Firms have incentives to be socially responsible. thus. firms try to acquire a reputation of giving earnings warning before negative earnings report (Skinner. This conclusion and findings are based on their study. the hypothesis is to be tested. 1996). industry type . comparing the social performance of family and nonfamily firms in the S&P 500 over a 10-year period. one in Dutch companies (Flbren and Wijers. profitability and foreign ownership ) and the level of social responsibility disclosure. clients. Therefore. H6 : The family group affiliation moderates the relationship between association between company characteristics (size. 1998). such as increased following by analysts and money managers. there are no listed companies. The supporters of this research finding are Uhlaner et al. 2007). since a positive reputation in the minds of key stakeholders may serve as a form of social insurance. In Yemen shareholding companies are mainly family group affiliated. consequently. we test the following: H5 : The level of social responsibility disclosure is expected to significantly increase from 2007 to 2009 due to CSR Award announcement.1. it is expected that the family group affiliation will have moderate impact on the association between company characteristics and corporate social responsibility disclosure.1 Family group affiliation Dyer and Whetten (2006) believed that family involvement in a firm makes the responsible actors to be cautious and responsible with their decisions compared to a firm without family involvement. Sample of the Study The population of the study consists of all shareholding companies registered with the Ministry of Industry and Trade in Yemen. and the other in Belgian companies (Donckels.

1998. Fourth. As at December year 2007. the annual report is considered as a major source of information about an organization's financial and environmental performance (Deegan and Rankin.ePROCEEDINGS FOR 2011 INTERNATIONAL RESEARCH CONFERENCE AND COLLOQUIUM Contemporary Research Issues and Challenges in Emerging Economies Ministry of Industry and Trade. Unerman. 4. 1995). focusing on only one document source the researchers may be drawing incomplete conclusions. television and radio advertising and company brochures”. 39) state that “one cannot judge corporate performance on social responsibility solely on the basis of information disclosed in the annual reports. Annual reports were chosen for several reasons. However. For that reason. the annual report has been widely recognized as a regulated document with a high degree of credibility (Tilt. p. Frequency 30 43 73 Percent 41. namely Althourah Daily since many companies may use other media of communication to demonstrate social responsibility disclosures (see Zeghal and Ahmed. These three medium of communication are the annual reports. First. 1999). systematically. 1995 and Naser. Second. Third.8 100 Table 2 Distribution of Companies base on the family group affiliation Family group affiliation NO Yes Total 4. the year 2007 (pre-CSR Award announcement). 102 companies were registered with the Ministry of Industry and Trade in Yemen. press releases. out of 102 companies only 73 companies were active and were subject to analysis. Social information disclosure may also take place through company staff newspapers. 1995. 1994. paid newspaper. 1988. Moreover.3 Content analysis Content analysis is a technique employed to measure objectively. Wallace and Naser.2. annual reports are widely viewed as major official and legal documents (Gray et al. However.1 58. Neu et al. the annual report is the only regulated document that is widely accessible to researchers (Buhr. Data collection This study focused on CSR disclosure in three years. 1998).9 100 8 . Zeghal and Ahmed (1990. Table 1 Distribution of Companies base on the industry type Industry Type Low Profile High Profile Total Frequency 41 32 73 Percent 56. the researchers have chosen to focus also on companies‟ websites as well as advertisements and articles in the largest Yemeni newspaper. websites and newspapers. and qualitatively the content of communication (Wallace. 1998).. 1990). 2000). Tables 1 and 2 show companies included in study sample.2 43. the importance of these media (websites and newspapers) as resources for future research on CSR disclosure has been highlighted by Hanifa and Cooke (2005) and Ghazali (2007). 2008 (during CSR Award announcement) and 2009 (post CSR Award announcement) in three medium of communication because the study hypothesized that companies‟ CSR disclosure will increase in response to CSR Award. Gray et al.

3 . 2003) nor on-line copies of social and/or environmental reports. web sites and newspapers) . multiple visits to Althourah Corporation for Press.. total assets figures were used as a measurement of company size. This procedure replicated for the all annual reports. because this exclusion is an appropriate means of setting the boundaries (Douglas et al. 2004. • Neither on-line copies of the annual report (Patten and Crampton. • 4. 2008 and 2009 were entirely analysed. were all links were followed.392) 4. 4. human resources. 9 . the idea is to collect the data separately on the two media analysed (Frost et al.1 CSR Disclosure The CSR disclosure level was measured by accumulating the content analysis results in the three medium of communication.4.4. Printing and Publishing library in Yemen and all issues for the years 2007. Examined company‟s web site was by using McMurtrie (2001) approaches. The second..3 .Content analysis of counts of words has been used to determine the level CSR disclosure in Yemen in the four categories (community involvement. 2008 and 2009 and each CSR theme related to any of the CSR categories disclosed and dated within the period of the study was printed and words count added to scoring sheet.1980). Each scoring sheet was code with the company‟s name and the year of annual report. • Neither on-line copies of the annual report (Patten and Crampton. were included in the web page analysis.ePROCEEDINGS FOR 2011 INTERNATIONAL RESEARCH CONFERENCE AND COLLOQUIUM Contemporary Research Issues and Challenges in Emerging Economies Another definition is given by Krippendorff who defines content analysis as a research technique for making replicable and valid inferences from data according to their context (Krippendorff. 91). except for the following: Web pages that are not rooted in the company‟s name. for segregation. 4. • Links to external press release disclosures were also excluded (but press releases of the companies will be examined for CSR disclosure) Patten and Crampton. product/service and environment) in the three medium (annul reports .4.2 Content analysis of web sites Each company‟s web site was accessed and examined entirely during 2007. Measurement Both dependent variable and independent variables were measured as follows: 4.2 Content analysis of newspaper Due to difficulties to obtain full soft copy issues. excluding all external links that took the user outside the sphere of control of the target company. (2003). Wards of CSR theme related to any of the CSR categories disclosed by companies of the study‟s sample was counted and added to the company‟s scoring sheet. 2003) nor on-line copies of social and/or environmental reports will be included in the newspaper analysis. 1999). p.2 Independent variables  Size: There is no theoretical reason for a particular measure of size in disclosure studies (Choi. 2005. These categories were chosen as they are able to capture the areas that fall under CSR disclosure. There are two reasons for the exclusions: first.1 Content analysis of annual reports Each company‟s annual report was analysis and words count of each CSR theme related to any of the CSR categories was added to the scoring sheet. 4. In the present study. p.3 .

the family group affiliation measured using dummy variable which took a value of one. Profitability: Similar to previous studies by Hakston and Milne (1996) and Haniffa and Cooke (2005). Singh and Gaur.3 Moderating variable: Family group affiliation Consistent with previous studies. The companies were reclassified into high profile sectors and low profile sectors. For example Haniffa and Cooke (2005) and Amran and Devi. Ratanajongkol. In the first stage. if the company affiliated to family group. similar to the measure used by many previous studies. Foreign Share Ownership: The measure of foreign share ownership is the percentage of shares held by foreign shareholders. and zero otherwise.1996 . 2000. if the company affiliated to high profile sectors (manufacturing/ telecommunication).ePROCEEDINGS FOR 2011 INTERNATIONAL RESEARCH CONFERENCE AND COLLOQUIUM Contemporary Research Issues and Challenges in Emerging Economies    Industry type: was measured using dummy variable which took a value of one. The complete specification of the regression is: Model 1 CSRDL = ο+1SZE+ 2IND+ 3PRO+ 4FRGOWN +ε c) Moderated Multiple Regression To examine the moderating impact of family group affiliation on the relationship company‟s characteristics and corporate social responsibility disclosure. 2009) 4. industry type. 2001. which could prevent performing a basis for statistical analysis and also to avoid the trap of dummy variable.Data analysis was as follows: a) Paired T-Tests Paired t-tests were performed to examine whether corporate social responsibility disclosure increased from 2007 to 2009 in response to CSR Award announcement.al 2006 ) and also because manufacturing sector contained companies dominated by Yemeni society as high profile companies . 1992. Roberts .Naser.0 in order to answer the study‟s questions . Hackston and Milne .4. due to the small distribution of companies in different sectors. and zero otherwise (Khanna and Rivkin. b) Ordinary Least Squares Regression Ordinary least squares regression was performed to investigate whether there is enough evidence to support the existence of a relationship between firms‟ characteristics (such as size. moderated multiple regression analysis was conducted using two stage regressions (Li and Atuahene-Gima. 4. the measure of company profitability used in this study is return on equity (ROE). Manufacture classification was chosen because high profile sector (manufacturing /telecommunication) sector was found previously be related with the high level of CSR disclosure (Patten 1991. profitability and foreign share ownership) and the level of corporate social responsibility disclosure. (2008). to determine the presence of moderating effect an interaction term (independent × moderator variable) is added which was represented by Equation 2 below: Model 3 (MMR model): Model 3 CSRDL = ß0 + ß1SZE + ß2IND + ß3PRO + ß4FOROW + ß5 (SZE*FAMGP) + ß6 (IND*FAMGP) + ß7 (PRO*FAMGP) + ß8 (FOROW*FAMGP) + ε 10 . 2001).5 Data Analysis All data were analysed using the Statistical Package for Social Studies (SPSS) version 17. the dependent variable is regressed with the independent variables and moderator variable to represent the variables in the ordinary least-squares (OLS) model: Model 2 (OLS model): Model 2 CSRDL = ß0 + ß1SZE + ß2IND + ß3PRO + ß4FOROW + ß5FAMGP + ε In the second stage.et.

06 1. The minimum disclosure level obtained is 36 words for the year 2007. CSRDL = = = = = = = corporate social responsibility disclosure level constant the natural log of total assets 1 indicates industry type is high profile (Manufacturing / telecommunication) .15 Min 36 37 37 36 Max 2479 3705 6670 6670 11 . This score suggests a very low level of social responsibility disclosure.29 1695. D Skewness Year count 2007 2008 2009 Pooled 73 73 73 219 629 977 1670 1092 373 610 869 654 633.03 1. On the other hand.2 presents the level of total social responsibility disclosure in the three years. and 0 otherwise Return on Equity percentage of shares held by foreign shareholders 1 indicates company affiliated to family group . Figure. The Table 3 also shows that the level of social responsibility disclosure in the three media over the three years varies widely. the maximum total social responsibility disclosure in words has increased dramatically from 2479 words to 3705 words and to 6670 in 2007.14 1.24 3. Also in each year of investigation a wide range of social responsibility disclosure level can be noticed. 2008 and 2009 respectively. The minimum words of social responsibility disclosure increased slightly from 36 words in 2007 to 37 words for the following years. and the maximum is 6670 words for the year 2009.ePROCEEDINGS FOR 2011 INTERNATIONAL RESEARCH CONFERENCE AND COLLOQUIUM Contemporary Research Issues and Challenges in Emerging Economies Where.58 0.1 Descriptive Statistics of Social Responsibility Disclosure Level Table3 shows that the mean of corporate social responsibility disclosure word count (CSRD) in annual reports.73 Kurtosis 0. website and newspapers over the three years is about 1092 words.16 0.24 1260.00 981. and 0 otherwise SZE IND PRO FRGOWN FAMGP DISCUSSION OF RESULTS 5.05 1. Table 3 Descriptive Statistics of Social Responsibility disclosure Level Mean of word N Median Std.

The same structure was found in the year 2008 but only a little change in the year 2009.On the other hand.514 73.ePROCEEDINGS FOR 2011 INTERNATIONAL RESEARCH CONFERENCE AND COLLOQUIUM Contemporary Research Issues and Challenges in Emerging Economies Figure 2 Level of CSR disclosure Table 4 presents the variation in the level of social responsibility disclosure categories over the period of study. and 615 words for the years 2007.28 66.84 12 . community involvement has the highest mean. while the increasing score in the human resources information was 179 words. the increasing score of words count in community involvement information was 365 words. Deviation 227. For the year 2007. However. it helps in understanding the effect of Yemeni culture on the CSR disclosure decision. 490 words and 798 words for the same years. In general. environmental information has the lowest mean in all years starting from 16 words in 2007 to 49 words in 2009. For example. the increasing score differs across the categories. the community involvement category has the highest score. In addition. the study starts by determining the difference in CSR disclosure across categories. and environmental information 16 words. 345 words. Such analysis provides a clear understanding of the CSR disclosure policy that active companies prefer to apply during the period of study. about 365 words. To do this. across the three years. 2008 and 2009 respectively. followed by human resources 179 words. product and service 68 words. Table 4 Level of Social Responsibility disclosure and its categories Year Categories Human Resources 2007 Community Involvement Product and Service Environmental Mean of Word count 179 365 68 16 Min 3 0 0 0 Max 1007 1370 250 530 Std. ranging from 365 words in 2007 to 798 words in 2009. It may be worth analyzing the level and trend of each category. However. the structure of total social responsibility disclosure is similar in each of the three years. It can be seen from table 2 that there is a gradual increase in the mean of words count of each of the three groups.42 410.

96 80.36 164.23 105.24 542.27 981.78 230.29 720.56 841.59 517.ePROCEEDINGS FOR 2011 INTERNATIONAL RESEARCH CONFERENCE AND COLLOQUIUM Contemporary Research Issues and Challenges in Emerging Economies Total Human Resources 2008 Community Involvement Product and Service Environmental Total Human Resources 2009 Community Involvement Product and Service Environmental Total Human Resources Total Community Involvement Product and Service Environmental Total 629 345 490 119 22 977 615 798 206 49 1670 379 551 131 29 1092 36 3 0 0 0 37 3 0 0 0 37 3 0 0 0 36 2479 2534 1600 607 510 3705 3230 2897 995 700 6670 3230 2897 995 700 6670 633.03 145.06 Figure 3 social responsibility disclosures categories 13 .93 641.418 119.00 472.56 1260.61 1695.

80 1345.00 Annual Report 2008 Newspaper Website 60 256 661 20 0 0 282 1304 2376 47. For example.ePROCEEDINGS FOR 2011 INTERNATIONAL RESEARCH CONFERENCE AND COLLOQUIUM Contemporary Research Issues and Challenges in Emerging Economies Table 5 shows the variation in the level of social responsibility disclosure in the annual reports. It can be seen from table 3 that there is gradual increasing in the average of the numbers words of each of the three reporting media. the websites contained highest number of CSR words. from 661words in 2007 to 1083 words in 2009. the structure of total social responsibility disclosure is similar in each of the three years. However. and annual report 43 words. Deviation Year media Annual Report 2007 Newspaper Website 43 139 446 17 0 0 119 696 1990 22. while the increasing in the number of words in the annual reports was 43. This analysis gives a clear understanding to the disclosure media that active Yemeni companies prefer to use as media for CSR disclosure and the changes in this preference. This study analyses the level and trend of each media for reporting by determining the average of numbers words of each channel in each year and over the three years. Table 5. 60.37 835. newspaper.15 169. and website for over the period of study. this increasing in the number of words differs among the reporting media. However. The same structure was found in the years 2008 and 2009.86 593. websites has the highest mean of words count in all years. Descriptive Statistics of Total Social Responsibility disclosure for annual reports.516 531. and 1083 for the same years.600 Total 977 37 3705 981. and website media Reporting Mean of Word count Min Max Std. about 446 words followed by newspaper 139 words. 661.29 Total 629 36 2479 633. the increasing in the number of words in website was 446. 2008 and 2009 prospectively.62 Total 1670 37 6670 1695.95 296. Overall.24 14 . and 68 words for the years 2007. For the year 2007. Newspaper.29 Annual Report 2009 Newspaper Website 68 518 1083 16 0 0 342 2347 4202 64.

Branco and Rodrigues.3 Multivariate Regression Analysis 5.06 5. Table 7 Result of OLS Regression Analysis Variables Coeff Constant 1097.000 Mean Difference t Sig.798 . (2-tailed) -7.1 Ordinary least-squares regression Table 7 below shows that for OLS Regression Analysis (Model 1).000 5. presenting significant increases in words count of corporate social responsibility disclosure level each year . However. 15 . Table 6 Result of Paired T.2005.ePROCEEDINGS FOR 2011 INTERNATIONAL RESEARCH CONFERENCE AND COLLOQUIUM Contemporary Research Issues and Challenges in Emerging Economies Annual Report TOTAL Newspaper Website 57 304 730 16 0 0 342 2347 4202 49.459.04 396.Haniffa and Cooke .test to see the changes in corporate social responsibility disclosure levels from 2007 to 2009. foreign ownership did not show any significant relationship with corporate social responsibility disclosure level.1996.258 .38 1007.61 Total 1092 36 6670 1260.In addition the result in Table 6 shows that there is a highly positive significant (1% level) relationship between company size and corporate social responsibility disclosure level.2 Paired T-Tests To examine the response to CSR Award.220 . the study used paired t. industry type.2008 ). profitability and foreign share ownership). The result also shows a significant relationship between industry type and corporate social responsibility disclosure level at 1% in the positive direction. which means that 45.562 Company’s characteristics 17.3. adjusted was 0.tests in Table 6 show that the mean word count of corporate social responsibility disclosure level from 2007 to 2009 ranged from 644 words to 1670 words with mean differences ranged from -333 to -692 .9% CSR disclosure variance is explained by firms‟ characteristics (size.Test N=73 CSRDL2007 Pair 1 Pair 2 CSRDL2008 CSRDL2008 CSRDL2009 Mean 644 977 977 1670 -333 -692 -6. Profitability was also found to be significantly related to corporate social responsibility disclosure level at 1% level in Yemen. The results of paired t. From 2007 to 2008 and from 2008 to 2009 corporate social responsibility disclosure level in three medium raised significantly at the 1 % level.This value is in line with results found in previous studies (Hackston and Milne .000*** Model 1 t-statistics Sig.

352 4.083 .519 Adj.ePROCEEDINGS FOR 2011 INTERNATIONAL RESEARCH CONFERENCE AND COLLOQUIUM Contemporary Research Issues and Challenges in Emerging Economies Firm Size Industry Type Profitability (ROE) Foreign ownership 405. R² change = . Hence H6 is supported.000 Interaction Effects Firm Size× Family group Industry Type× Family group 291.947 1.904 71. 209) = 37.253 329. and (foreign ownership * family group) with social responsibility disclosure level is significant at level 5%. [F (4.106 16 .000*** . R² = 0.531 298.520 Sig.289 Model 3 t-statistics 7.000 Coeff 621.459 0. The results presented in Table 8 shows that for Model 2.01 level 0.3. p = 0. while. . model3 examines the moderating impact of family group affiliation with social responsibility disclosure level. profitability.477 133.517 3.328 42.939 104.990 1. This result implies that the impact of company size. p = .000*** .000].399 2.000*** .556 82.884 306. Table 8 also shows that the R² change model 2 to model 3 is statistically significant.268 335.600 3.809 4.330 3.0000]. 470 and [F (5.000 .108 .362 .036*** 459.448 45.714.095. Model 3 presents the results after the interaction term (independent × moderator variable) was added in the equation.000*** 359.2 Moderated Multiple Regression Model 2 examines the association of independent variables and moderated variable with social responsibility disclosure in Yemen.000*** .220 5.395 .418 4.959 . 213) = 37.568 1.185 .288 .250 4.503 284. .714.000*** . . Table 8 Result of MM Regression Analysis Variables Coeff Constant Company’s characteristics Firm Size Industry Type Profitability (ROE) Foreign Ownership Moderator variable Family Group affiliation 174.353 2.417 Sig.686 1.631 3.011 .This means that 47% of the differences in the social responsibility disclosure are explained by the independent and the moderator variables. (profitability * family group) with social responsibility disclosure level is significant at level 1%.199 1097.280 203.The result in Table 8 of model 3 also shows that the coefficient of the interaction of (firm size * family group). This R² change confirms that there is significant moderating impact of family group affiliation on the association between the independent variables and social responsibility disclosure level .000*** .562 Model 2 t-statistics 17. F-value *** Significant at the 0.303*** 5.000*** .625 . foreign ownership and on social responsibility disclosure is stronger in companies affiliated to family group.

However.855 .564 . This study found a strong relationship between size and the CSR disclosure level in Yemen and there are strong supports for this finding from many previous studies. This result is consistent with Choi et al.For example. Hackston and Milne (1996).005** Adj. and profitability) and level of CSR disclosure in Yemen. This result was expected in Yemen as it is a low developed county with secretive culture. based on the mean number of words. advertisements. Overall. 2000).000*** . Therefore the increase in CSR disclosure in Yemen between 2007 and 2009 could be linked to CSR Award announcement . (1987).734 4. and brochures). F-value *** Significant at the 0.457 37. (1998). This result is consistent with the study conducted by Hinson et al (2010) where they have found that the community involvement information is most frequently disclosed theme in Ghana. Ordinary least squares (OLS) analysis was preformed to examine the relationship between explanatory variables (company‟s size. the current social responsibility disclosure level suggests that companies in Yemen still have a long way to go before their CSR disclosure could be comparable with other countries.01 level ** Significant at the 0. industry type. They have argued that in a poor country like Ghana that depends on donation for its development by focusing on community involvement will have an immediate gain to legitimatize their activities. it shows that legitimacy theory can be used as the provenance to explain Yemeni companies are trying to prove that they are doing good and are responding to government‟s calls in order to gain favourable public expectations. Paired t-tests results show that Yemeni shareholding companies increased their social responsibility disclosure in response to CSR Award announcement. Zeghal and Ahmed (1983) found that Canadian companies disclosed 14826 words of CSR activities in three medium of disclosure (annual reports.05 level .364*** CONCLUSION This study focuses on the level of corporate social responsibility information disclosed in the three medium of communications (annual reports. Douglas et al 2004). Adams et al. This result also coincides with previous studies (Williams and Ho Wen Pei.470 . websites.This result is in line with Haniffa and Cooke (2005) finding that obtaining awards such as the Best Corporate Social Reporting Award and the Environmental Reporting Awards was the reason behind the increased of CSR disclosure in Malaysia. weak accounting systems and no stock market in addition to the lack of powerful NGOs groups in contrast to those in the industrialized countries (Abu-Baker and Naser.ePROCEEDINGS FOR 2011 INTERNATIONAL RESEARCH CONFERENCE AND COLLOQUIUM Contemporary Research Issues and Challenges in Emerging Economies Profitability × Family group Foreign Ownership × Family group . Patten (1991). Hamid and Atan (2011) also noted that in Malaysia the introduction of these awards in 2002 was the reason behind the increased level of CSR disclosure. (2002) argument that the level of economic developments influences the development of the accounting system which in turn affects disclosure system. The result of this study also shows that the community involvements category followed by human resources category were the most commonly disclosed categories with a mean of 551 and 379 words respectively. Zain (1999) and Haniffa and Cooke (2005) .714*** 291. Yemeni companies provided more of CSR disclosures on web sites than the annual reports and newspapers. Zain and Janggu (2006) and Branco and Rodrigues (2008 ) suggested that large companies are highly visible and they have to take consideration towards social responsibility activities 17 .546 11.033 2. Regarding the medium of disclosure.945 173. the descriptive results of this study show that the level of CSR disclosure in Yemen is very low with a total of 6670 words disclosed in the three medium of disclosure compared with the level of CSR disclosure in other countries in terms of CSR word counts .1999. The adoption of CSR Award by Yemeni government was an attempt to attract Yemeni companies to engage in more CSR activities. and newspapers) in Yemen. For example Authors such as Cowen et al. by increasing their social responsibility disclosure in response to the CSR Award announcement.

There is also significant relationship between the profitability and CSR disclosure level in Yemen which in line with arguments of Haniffa and Cooke (2005) and Zain and Janggu (2006) that profitable companies in Malaysia disclose high CSR information in their annual reports to publicise their image and legitimise their activities. interestingly. foreign ownership does not have a significant relationship with CSR disclosure level in Yemen. and this result is consistent with prior studies‟ findings such as . Ratanajongkol. Thus the culture of giving is core value of these families and this supports the contention that the core values of family business such as quality. A possible explanation of the significant moderating impact of family group affiliation is that. that family ownership is associated with the extent of voluntary. Some results. In the case of Yemen the probable explanation for this result is that due to the weak investment and economical environment in Yemen. which proposed that high profile industry discloses high amount of CSR information due to their visibility. which could lead to more sustainability management activities and ultimately higher sustainability performance (Anderson & Reeb.For instance. there is an absence of real investments by multinational companies from developed countries which have long history of sustainable developments meanwhile the top investors in Yemen come from neighbouring countries such as Saudi. There are important potential implications from the results of this study. Hackston and Milne (1996) . Dyer and Whetten. Huang et a. 2005). this study shows that rules of CSR disclosure developments in developed and developing countries are also applicable in one of least developed country in particular Yemen. They have attributed this moderating impact to the organizational culture and core values of family firms. This finding is in contrast with several studies that show strong support for a positive relationship between the foreign ownership and CSR disclosure (Haniffa and Cooke. (2000). . (2006) found that family firms exhibit greater social responsibility concern than non family firms. However.ePROCEEDINGS FOR 2011 INTERNATIONAL RESEARCH CONFERENCE AND COLLOQUIUM Contemporary Research Issues and Challenges in Emerging Economies and disclosure in order to enhance their reputation. Uhlaner et. 2006. (1992). First. ethical business practices and corporate reputation are the expression of the family‟s values (Aronoff . hard work. Roberts .al.Newson and Deegan (2002) and Amran and Devi (2008).l 2009. This finding on the impact of industry type provides support for the legitimacy theory argument. on the relationships between firms‟ characteristics and the level of CSR disclosure in Yemen. the rich families have a strong commitment to philanthropic activities. This result is consistent with previous studies which provide strong support for the significant role of family businesses towards CSR (Huang et a.l (2009) found that family business positively and significantly moderates the relationship between the pressure of internal stakeholder and the adoption of green innovations in Taiwan. 2003). 2004). Dyer and Whetten. Concerning the impact of moderating effects of family group affiliation. who had found a positive relationship between high profile industry type and CSR disclosure. They concluded that the existence of family surname in firm name has increased the company‟s social responsibility. 2004). the result on CSR Award provides 18 . since Yemen is a poor country. This implies that CSR disclosure in least developed countries is following the international CSR disclosure. (2006) who found that manufacturing companies were related to the high level of CSR disclosure and Patten (1991). As for the company‟s size . Abu-Baker and Naser. He further argued that family firms have a more long term orientation. such as the response to CSR Award. the manufacturing industry type also found that it has significant relationship with CSR disclosure. Uhlaner et. Gallo (2004) reported that family firms are more socially responsible than non-family firms. company‟s characteristics variables impact and CSR disclosure categories preference are similar to international results. profitability foreign ownership and CSR disclosure. Second. In similar view.et al. It also has been found. Kuwait and Libya which do not have a remarkable sustainable developments. Hence comparison is possible. the results of moderated multiple regression (MMR) analysis indicated that the family group affiliation has significant moderating effect on the relationships between firm size.al (2004) studied the impact of family surname in firm name on corporate social responsibility in family firms in Netherlands.

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