Qual Quant (2014) 48:2501–2521

DOI 10.1007/s11135-013-9903-8

Corporate governance and corporate social responsibility

(CSR) reporting: an empirical evidence from commercial
banks (CB) of Pakistan

Mehmoona Sharif · Kashif Rashid

Published online: 7 July 2013

© Springer Science+Business Media Dordrecht 2013

Abstract The aim of this paper is to explore Pakistani listed commercial banks corporate
social responsibility (CSR) reporting information along with the probable effects of different
corporate governance (CG) elements on CSR disclosures. Furthermore, the relevance of
different theories in explaining the results of this study is also provided. For analyzing the
banks’ CSR reporting practice, which was done using content analysis, the annual reports for
the years 2005–2010, of all the commercial banks were examined. Non-executive directors
and foreign directors which are elements of CG were considered and multiple regression
analyses were carried out to check the impact of CG elements on banks’ CSR reporting
initiatives. The results of the study reveal that even though reporting of CSR is voluntary
in Pakistan, the participation of Pakistani commercial banks in different CSR activities is
not low. Furthermore, the level of CSR activities performed by the banks is impressive. The
results displayed that non-executive directors have a positive impact on the CSR reporting
supporting stewardship theory in CB of Pakistan. The major limitation of this study is that
the data is only based on annual reports of commercial banks of Pakistan. It is therefore,
not easier to generalize the findings of this research to other corporate sectors. Secondly the
annual reports of commercial banks for the years 2005–2010, a time period of just 6 years
were analyzed as access to data before and after the specified years was not readily available.
This paper relates CSR disclosure with possible impact of CG in the particular perspective of
a transitional economy’s banks such as Pakistan. By providing empirical facts of the effect of
CG structure on the CSR activities practices in developing countries’ banking sector setting,
this paper provides novel contribution to the current CSR literature.

Keywords Corporate governance · Corporate social responsibility · Commercial banks ·

Pakistan · Financial reporting and disclosure

M. Sharif · K. Rashid (B)

COMSATS Institute of Information Technology, Tobe Camp University Road,
Abbottabad 22060, Pakistan
e-mail: kashifm001@yahoo.com
M. Sharif
e-mail: moononstone@googlemail.com

123
2502 M. Sharif, K. Rashid

1 Introduction

Corporate social responsibility (CSR) reporting is one of the main topics of interest for
researchers for the last so many years (Mathews 1997). According to a survey conducted by
Price Water House Cooper’s International in 2002, more than 70 % of the international execu-
tives considered CSR as an essential requirement for companies’ survival and growth (Simms
2002). A prosperous, healthy and educated community is a sign of success and therefore an
important segment. This is only possible when there is a powerful and mutually beneficial
relationship between the communities and the corporate entities. Now-a-days organizations
strongly believe that the success of an entity is directly connected with the well being of the
society in which it operates, as business could not exist or prosper in isolation and it gives
something back to the society in recognition of the benefits and advantages drawn from it.
CSR reporting has become an integral part of corporate governance (CG) concern for
the social responsibilities. A number of earlier researchers have worked on the same topic
quite extensively to find out the relationship between CSR activities and the main economic
indicators such as firms’ market position, size, industry relationship, risk management, market
response, micro and macro environmental impacts, and companies’ goodwill (Roberts 1992;
Herremans et al. 1993; Tilt 1994; Newson and Deegan 2002). According to Guthrie and Parker
(1989), Patten (1992), Roberts (1992), Donaldson and Preston (1995), Deegan and Gordon
(1996), Deegan and Rankin (1997), Adams et al. (1998) and Neu et al. (1998), corporate
managers were quite motivated to practice CSR programs. Most of the earlier studies were
related to the firms’ specific characteristics. Very limited number of the firms considered the
CG attributes to know the positive relationship with CSR activities.
The research on CSR practices is mostly limited to the non financial sector in the developed
countries. Particularly, the banking sector is ignored (Deegan et al. 2002). Moreover, there is
a limited number of CSR related research particularly in the developing countries. Pakistan
is no exception to it. To address this issue, this study has been performed to explore the
effect of corporate governance on reporting of corporate social responsibility by the listed
commercial banks in Pakistan.
This study is exclusively based on the CSR practices and reporting it accordingly. The study
has further reviewed the literature related to legitimacy theory (LT) to confirm the validity
of CSR activities and reporting practices by the companies. This research work explores
the potential and actual practices carried out by the commercial banks in Pakistan compared
with the global social responsibility reporting indicators, in accordance with the Government-
Related Entities (GRE) framework for rating of financial institutions’ performance. Finally,
the research has studied the CSR reporting activities of the banks reporting five major areas
of social responsibilities namely environmental concerns, labor management practices and
work environment, production of quality products, human rights and social responsibility in
accordance with GRE G3 guidelines for performance indicators.
The current study aims at studying the CSR reporting system of commercial banks in
Pakistan for identification and evaluation of CSR related information variables on annual
reports. Secondly, to explore the variability of CSR reporting system for corporate governance
practices and lastly, to find out whether agency or stewardship theory prevails in this sector
or not.
After the introduction, the rest of this paper is pre-arranged as follows. Section 2 contains a
short analysis of literature on organizational legitimacy theory (LT) for the validation of CSR
reporting practice for firms. Section 3 discusses the impact of CG on CSR reporting. Section 4
discusses the literature review and explains the development of hypotheses. Similarly, Sect. 5
discusses in detail the research method applied in the study. Section 6 explains the results

123
Corporate governance and corporate social responsibility 2503

of the model for this study. Finally, Sect. 7 reviews the findings of the study along with the
implications and limitations of this study.

2 Legitimacy theory (LT) and banks’ CSR activities

For the clarification of social reporting practices, LT theory is most frequently used by the
organizations (Patten 1992; Deegan and Gordon 1996; Milne and Pattern 2002; O’Donovan
2002; O’Dwyer 2002; Moerman and Laan 2005; Murthy and Abeysekera 2008). LT theory
stresses upon the need for positive response to social expectations by the corporate manage-
ment (Patten 1992; Campbell 2000; Deegan et al. 2002). In spite of the fact that banking
sector offers productive and beneficial products to the society, yet it needs to seek the legal
authority regarding the social worth in the eyes of the society (Oliver 1991).
Similarly, people of Pakistan also consider the banking sector liable to report the informa-
tion related to their social activities to resolve the multidimensional social problems in the
country. All such kinds of activities have been formalized and are duly reported on annual
reports of the banks. Some of the main areas of social work include poverty alleviation, fight-
ing against illiteracy, provision of employment, health and hygiene, protection of human
rights, especially those of children and women (Lindblom 1993).
The concept of organizational legitimacy motivates the organizations for regularly report-
ing these CSR activities on voluntarily basis. Guthrie and Parker (1989) argue that the factor
of the legitimacy motivates corporate governance for practicing and reporting social activ-
ities. According to Branco and Rodrigues (2008) there is a positive relationship between
re-usability of organizations in the society and reporting on CSR information. In this regard
LT theory is exceptionally useful for bridging the gap between rationale disclosure and orga-
nizational legitimacy. For instance, happening of exceptional incidents like organizational
disasters that highlight the concerned organizations compel them to change their CSR report-
ing activities (Patten 1992; Deegan et al. 2000).
At the same time, some of the researchers are of the view that the legitimacy of a number
of companies regarding their corporate social responsibility is doubtful for society (Deegan
et al. 2000, 2002; Barako and Alistair 2008). This may be due to the poor communication
between companies and society. According to Buhr (1998) the companies can inquire the
required legitimacy by practicing the right things and avoiding the wrong things. According
to Branco and Rodrigues (2008), LT emphasizes on the need for using CSR reporting as
one of the options available for communication with the stakeholders. In case of banking
industry, customers are the major stakeholders having a huge and diversified market segment.
It means that the banks have depositors, regulators, shareholders, and managers as the main
stakeholders in the bank performance. Moreover, these stakeholders have the Mitchell et al.
(1997) power, urgency and legitimacy as described (Yamak and Suër 2005; Griffiths 2007).

3 CG impact on CSR reporting

It is very difficult to differentiate between corporate governance and corporate social respon-
sibility in the international economic perspective. Basically, corporate governance is based on
the ethical norms and accountability. Whereas, CSR takes into account the current business
practices taking care of socially responsible issues. In this way, corporate governance and
corporate social responsibility have a positive correlation between them. Initially, corporate
governance was related to conservative corporate decision-making, while corporate social

123
2504 M. Sharif, K. Rashid

responsibility was mainly concerned with the strategies having people as their focal point
(O’Dwyer 2002).
The mix of corporate governance and corporate social responsibility has given a new touch
to the understanding and analysis of corporate law and policy. This combination has given
rise to complex business norms. There are multiple sources of business laws and regulations
like securities, anti-trust regulation, labor and employment laws, taxation laws, consumer
protection laws, and other commercial laws. There is a combination of hard and soft laws
that is federal and state laws and codes and standards. As a result, rising the private sector
authority and decline in the state authority was observed. The combination of corporate
governance and CSR has given a rise to new constitution of firms. The demarcation between
corporate law related to investor manager relationship and non-corporate legal areas dealing
with other corporate matters no longer exists (Murthy and Abeysekera 2008).
CSR reporting shows a strong corporate commitment to the society. Traditionally CSR
reporting is practiced by the developed countries (Belal 2000), but now-a-days, it is gaining
significant importance and popularity in the developing countries as well. CSR reporting is
only confined to the non financial institutions in daughter countries. Especially, the banking
sector is ignored quite surprisingly. There is no particular study exclusively limited to the
commercial banking sector in Pakistan. An attempt has been made to address this issue in
the form of this study. This study has tried to investigate the CSR reporting practices and
the impact of corporate comments on CSR elements particularly with respect to commercial
banking sector of Pakistan.
Across the world, the customers of banks are becoming more aware about their rights and
claims regarding the corporate social responsibilities and have achieved considerable power
to influence the corporate performance (Patten 1992; Sharma and Talwar 2005; Belal and
Owen 2007; Khan et al. 2009). This has led to increasing the CSR activities carried out by
the banks across the world (Douglas et al. 2004).
According to Halabi et al. (2006) all the reports on leading Australian banks show that
some of the banks disclosed their CSR activities regarding human rights, labor management,
and environmental concerns. According to another study by Branco and Rodrigues (2008)
banks do practice CSR reporting activities in Kenya but at a very low level. The banks consider
that building a good reputation is must for gaining legitimacy with respect to CSR activities
and social values. A number of other studies (Macey and O’Hara 2001; Halabi et al. 2006)
have revealed that the companies having high public profile are more concerned for building
good social reputation with the help of involving the community in CSR activities.
Currently, the banking sector is more cautious about the important CSR activities as
part of corporate governance. A number of recent scandals in some of the well known
firms like Enron, WorldCom, Ahold and Parmalat, highlighted the ethical issues regarding
managerial boards, team of auditors, risk and controlling devices, wages and compensation,
management, and corporate culture. Competitively banking sector is under more stress than
other organizations to prove their transparency regarding the disclosure of relevant CSR
reporting information to strategic decision-makers and other stakeholders (Lindblom 1993).

4 Literature review and development of hypotheses

Corporate governance tries to create a balance among different economic, social, individual,
and community goals. It therefore, requires the effective and efficient use of resources to
become accountable to the concerned stakeholders as per their demand. According to Dahya
et al. (1996), corporate governance is “the manner in which companies are controlled and in

123
Corporate governance and corporate social responsibility 2505

which those responsible for the direction of the company are accountable to the stakeholders
of the company”.
Due to a number of scandals at international level regarding issues related to leadership
and organizational management, corporate governance has become the focal point for the
stakeholders. Corporate governance needs an efficient utility of resources by the corporate
managers in a way that is beneficial for all the stakeholders. As the ownership of operations is
shared by a number of entities including individuals, management, and society as a whole; it
is therefore, a multi-fold task for the corporate managers to take care of all the stakeholders’
interest and create equilibrium between the rights and obligations of them.
Corporate governance relates to the development of long-lasting relationship with external
and internal customers, particularly with managers in the form of compensation related to
monetary and non monetary benefits. Furthermore, it is related to the transactional relation-
ship between management and investors based on the authority and disclosure. No matter
what are the limitations of a corporation, the investors are only concerned with their own
interests that are the security of their investment and the maximization of their profit.
It is a natural phenomenon that investors cannot blindly trust the corporate management
unless and until there is a proper mechanism for neat, clean and transparent transactions
of corporate business. To address this problem the corporate management needs to develop
CSR reporting system, which is not only acceptable to the investors, and management of
the corporation, but also to the society on the whole. Mostly, it is observed that there is a
legitimate gap between shareholders and corporate management. This gap cannot be filled
by anybody else but the non-executive directors who serve as a neutral body between the
corporate management and shareholders.
Stewardship theory, having its roots from sociology and psychology is defined by Davis
et al. (1997) as steward are those individuals who maximize and protect the shareholders
wealth through firm performance, hence maximizing the steward’s utility functions. From this
perspective, the company’s managers and executives those are working for the shareholders
are stewards, who protect and generate profits for the shareholders. On the other hand, agency
theory which was initiated by Alchian and Demsetz (1972) and was further developed by
Jensen and Meckling (1976) has its roots in economic theory. Agency theory is defined
as the relationship amid the principals (shareholders) and agents (company executives and
managers). According to this theory, agents are hired to carry out the work by the principals
or owners of the company who are the shareholders. According to Clark (2004) principals
hand over the operation of the business to the managers or directors, who are shareholder’s
agents.
Agents are expected to act and take on decisions in the interest of the principal’s. According
to the agency theory, the agents might not always make decisions which are beneficial to the
principals (Padilla 2002). On the contrary, stewardship theory focuses upon top management
role as being stewards who integrate their own goals as being a part of the organization. The
stewardship perception suggests that stewards are pretty satisfied along with being motivated
to attain organizational success.
According to Tricker (1984) CSR reporting can greatly help in bridging the legitimacy gap
between shareholders and corporate management by the means of non-executive directors.
The non-executive directors serve as a check and balance mechanism to ensure the best
care of owners and other stakeholders. They serve as an advisory body for presenting the
companies’ performance especially the CSR activities. As the non-executive directors are
not directly involved in the activities of the corporations, it is therefore, obvious that they can
produce good results in ensuring a balance between shareholders, stakeholders and general
society interests related to the corporate governance and their CSR reporting activities.

123
2506 M. Sharif, K. Rashid

According to Zahra and Stanton (1988), the companies are more concerned about their
prestige and social responsibilities. One of the major threats to their corporate prestige on
social status is due to the difference of opinion, priorities and preferences between owners,
corporate management and other stakeholders. According to Fama and Jensen (1983) non-
executive directors also serve as mediators between owners and managers for resolving the
conflicts, if any. The presence of non-executive directors is a positive element regarding
the satisfactory settlement of different disputes amongst these parties. Without the presence
of non-executive directors in the corporate management, these little disputes may become
bigger threats for the corporate existence.
In the light of the above discussion, it becomes clear that non-executive directors have a
pivotal role in leading the banking sector towards CSR activities. Furthermore, they can create
a balance between companies’ activities, their legitimacy and social values. The presentation
of non-executive directors on the board of directors has more influence on companies for
practicing the CSR reporting activities. While, keeping the above discussion in mind, the
first hypothesis of this study is:
H1 There is a positive relationship between the percentage of non-executive directors on the
board and CSR reporting information by the banks.
In Pakistani banking sector, board diversity has tend to become an essential element of
CG structure in the recent year. This is because of the fact that foreign representation on the
board is being practiced these days (Haque et al. 2007). According to Fields and Keys (2003)
a company’s performance is indeed affected by the heterogeneity of innovations, experiences
and ideas that people transmit to a company. Financial performance of a business also rises
with ethnic representation on the board.
According to Ayuso and Argandona (2007) the typical role of foreign directors is to support
the CSR reporting by the organization particularly banking companies. Haniffa and Cooke
(2005) have given an empirical proof of a positive relationship between the percentage of
foreign directors on the board and the level of intentional disclosure of CSR. Another study
conducted by Branco and Rodrigues (2008) in Kenya disclosed that there was no relationship
between the percentage of foreign directors on the board of management and CSR reporting
activities. Foreign non-executive directors are quite actively involved in the CG restructuring
in the Pakistani banks. Keeping in view the above discussion, it is considered by this study
that non-Pakistani nationals working as non-executive directors on the board of directors of
banks’ operating in Pakistan have strong influence on the CSR reporting system.
Thus, according to the above discussed literature, it is implicit that foreign national on the
board of directors may influence banks CSR reporting. Hence, the following hypothesis is
examined:
H2 Higher the percentage of foreign nationals on the board, greater is the CSR reporting
information by the banks.
A strong relationship is also known to be found between the size of the firm (STA) and CSR
reporting information by the banks. According to Macey and O’Hara (2001), the size of the
bank has a direct relationship with the size of the investment, revenues and profit generated
by the banks. Larger the size of investment, revenues, and profit means larger the amount
of contribution in the corporate social responsible activities by the banks. Similarly rich
corporate cultured banks practicing all the ethical and moral norms and values are supposed
to be having greater concern for the social responsibility.
According to Trotman and Bradley (1981), due to their small scale of operations, lower
visibility along with the constraints of resource access, small firms are less likely to take part in
CSR initiatives. Larger firms on the other hand take on more activities and have a greater effect

123
Corporate governance and corporate social responsibility 2507

on the society. They tend to disclose more CSR information so as to legitimize their actions
and to hence reduce governmental intervention in their business actions (Cowen et al. 1987).
Thus, the third hypothesis of the study is formulated as follows:
H3 The larger the size of the firm, greater is the CSR reporting information by the banks.
According to the literature review, another strong and positive relationship has been found
between the variables of this study i.e., the profitability (ROE) and CSR reporting information
by the banks (Cerf 1961; Singhvi and Desai 1971; Belkaoui and Kahl 1981; Wallace and
Naser 1995; Hossain 2001). This is due to the fact that greater the level of profitability of
an organization, larger is the amount spared for social work and charity which consequently
leads to greater CSR and ultimately their reporting. According to Haniffa and Cooke (2005)
organizations generating profit consistently are keen to report the CSR to highlight their
performance in the eyes of the society (Malone et al. 1993; Wallace et al. 1994; Udayasankar
2008; Siregar and Bachtiar 2010).
According to Singhvi and Desai (1971) higher profitability persuades management to
provide more information to demonstrate its ability to maximize the shareholders’ value
and to enhance its managerial compensation. Likewise, management of a profitable firm
feels proud of its accomplishment and discloses further information to the public in order
to promote positive impression of its performance. The same is true for the selected banks
in Pakistan. Banks are involved in the kind of business where they expect returns. The
profit earning system depends on how the lending and borrowing activities of the banks are
conducted effectively. Thus, the fourth hypothesis of the study is presented as follows:
H4 There is a positive relationship between profitability and CSR reporting information by
the banks.
In the hypothesis stated above, it is further assumed that there is a positive relationship
between the profitability of corporations and the reporting of CSR activities in their finan-
cial statements. The performance of corporate social responsibility is directly related to the
amount of profit earned by the corporations. The corporate social responsibilities require con-
siderable amount of money and cannot be performed without generating reasonable profits.
Only marginal portion of the gross profit of corporations can be utilized to address the social
responsibilities. At the same time, only those corporations will be able to report their social
responsible activities in their financial statements that have reasonably invested in different
social activities and their contributions for social work is worth-mentioning and reporting
in the financial statements. On the other hand, the reporting of social responsible activities
serves as an indicator of corporations’ ability to generate reasonable profits and then appro-
priately distribute it amongst different stakeholders especially the society on the whole by
investing in social activities.
The literature review has further revealed that the financial strength of an organization is
indicated by the level of their gearing ratio i.e., debt to equity (DTE) ratio. It is obvious that
the size and apparent financial position of an organization is not the true mirror of its actual
status (Zeghal and Ahmed 1990; Deegan and Rankin 1996; Deegan and Gordon 1996). An
organization having billions of investment and periodic financial transactions never means
that it is having a very sound financial position unless and until its debt to equity ratio is
within limits and according to the acceptable standards. Basically, debt to equity ratio shows
the proportion of owners’ equity and the liabilities upon an organization.
If DTE ratio is positive, that means the organization has a sound financial position due to
limited liabilities in terms of debts on the organization. This also shows that comparatively
a stronger equity is available which leads towards the overall sound financial position and
better prospects for future growth.

123
2508 M. Sharif, K. Rashid

Fig. 1 Conceptual framework

It is further assumed that there is a positive relationship between gearing ratio i.e., debt
to equity (DTE) ratio of a company and their ability to perform and report corporate social
responsibility. The positive debt to equity (DTE) ratio serve as a clear indicator, that is, the
concerned company is in this well off state and has a fair relationship between her ability
to negotiate with the liabilities quite easily. Only those companies can spare some amount
of resources that has least liabilities to meet both in recent and remote future. Thus the fifth
hypothesis of the study is formulated as:
H5 There is a positive relationship between the gearing ratio (DTE) and CSR reporting
information by the banks.
The literature review is summarized in the conceptual diagram (Fig. 1).
The conceptual framework shows that the CG elements, structure related and performance
related variables can affect the CSR reporting of the banks. This study considers non-executive
directors and foreign national directors as elements of corporate governance along with firm’s
size and gearing level as structure-related variables. According to Wallace et al. (1994),
these variables are considered to be quite steady and constant over time. On the other hand,
return on equity is taken to be the performance related variable which is time specific and
it tends to represent information that is of importance to accounting information users. The
combination of non-executive directors and foreign national directors on the board of the
banks can have a significant impact on the CSR reporting in CB of Pakistan. Finally, firm
size, profitability and an optimal gearing ratio can also improve the CSR reporting in CB of
Pakistan.

5 Methodology

The source of data for this study was the annual reports of 22 commercial banks listed on
KSE 100 index. The annual reports for year 2005–2010 were downloaded from the web-
sites of the respective banks and examined accordingly. Previous studies carried out by
Guthrie and Parker (1990), Adams et al. (1995) and Gray et al. (1995a) were the source
of inspiration for selecting annual reports for the collection of data. Moreover, the annual
reports are the most readily available source for the required data. It is also the mat-
ter of fact that companies do not publish any information regarding reporting their CSR
separately.

123
Corporate governance and corporate social responsibility 2509

5.1 Variables relevant for the study

5.1.1 Dependent variable—CSR reporting

The data related to the variables of this study was collected, codified and analyzed by using a
commonly used technique for the analysis of data extracted from the annual reports i.e., the
content analysis technique. The technique involves coding the content of data into various
categories on the basis of selected criteria (Weber 1988). Content analysis consists of cate-
gories having classification of content units (Ali et al. 2008). For this purpose, the data was
collected from the previous research in the relevant field (e.g., Ernst and Ernst 1976; Cowen
et al. 1987; Guthrie and Parker 1989, 1990; Gray et al. 1995a,b) and was applied to Pakistani
business environment (Ali et al. 2008; Khan et al. 2009).
The research instrument of this study contains seven major categories of CSR reporting
namely contribution to health sector, contribution to education sector, activities for natural
disaster, other donations, and activities for employees, environmental issues, and product and
services. The study tried to confirm the clarity and uniqueness, relevant to Pakistani banking
sector environment, and mutual exclusiveness of the items of this research. Only those items
were included that were related to the banking industry of Pakistan. Finally, 60 CSR reporting
items were included in this study.

5.1.2 CSR reporting index (CSRRI)

The numbers “1” and “0” were used to code an item in this research. 1 means that a CSR
item is disclosed and 0 means that a CSR item is not disclosed. Each item scores were added
for final score for a bank. The CSR reporting disclosure model calculates the total disclosure
(TD) score for a particular bank additive as follows.

CSRRI = i /nj
d60 (1)

where, di is 1, if the item di is disclosed and 0 if the item di is not disclosed, nj is the maximum
number of items for jth firms nj ≤ 60. To calculate a particular bank score, each item scores
added are totally divided by the maximum likely score, and then is multiplied by hundred to
get the percentage scores. For this study, 60 items represent the maximum possible disclosure
score as the numbers of disclosure items combining all the broad themes form a total of 60.
The average score is calculated by dividing the number of banks disclosing a particular item
by the total number of items.

5.1.3 Independent variables

Following Table 1 describes the independent and control variables, and the methodology
used for their construction.

6 Results and discussion

As stated earlier, 60 CSR reporting items were considered for the study, the detail results of
which are shown in Table 2. The results show that even though reporting of CSR is voluntary
in Pakistan, the participation of commercial banks of Pakistan in different CSR activities is
not as low as expected in relation to the total list of items and the extent of CSR activities

123
2510 M. Sharif, K. Rashid

Table 1 Constructs of the independent variables

Independent variables Measurement

Non-executive directors (COMPNED) Composition of non-executive directors to total

directors on the board
Foreign directors (FOROWN) Composition of non-Pakistani directors to total
directors on the board
Size (STA) Size based on total assets = fixed assets + current
assets
Profitability (ROE) Return on equity = net profit after tax/total equity
Gearing (DTE) Debt to equity ratio = total long-term debt./total
equity

Table 2 Overall extent of CSR reporting from the years 2005 to 2010

Sr. no. No. of banks % Frequency

reported this
item

A: Contribution to health sector

1 Medical support for AIDS patients 8 36.36 8
2 HIV/AIDS assistance program 9 40.90 10
3 Health assistance to underprivileged and 17 77.27 70
disable children
4 Support to acid and burns victims 3 13.64 3
5 Donation to Leprosy centers for treatment of 8 36.36 8
leprosy patients
6 Organizing transplantation of organs and 9 40.90 19
plastic surgery operation
7 Donation of costly medical equipments in 9 40.90 17
different medical hospitals
8 Donation of cash money for setting up / 12 54.55 20
running cancer hospital
9 Donation of cash money for operation theater 8 36.36 13
for kidney hospital
10 Donation to rotary club to purchase 9 40.90 11
equipment to help the disadvantaged
children with hearing
impairment
11 Donation of cash money to women and child 10 45.45 17
hospitals to bear their operational cost
12 Donation to different eyes hospital 8 36.36 11
13 Financial support for performing 4 18.18 9
opthtamological operation of born blind
children
B: Contribution to education sector
14 Donation to different organizations working for 20 90.90 46
improving female education
15 Scholarships to the research students of different 12 54.55 34
universities
16 Scholarship to meritorious and poor students 16 72.73 80
17 Granted fund for blind education and 7 31.82 11
rehabilitation
18 Scholarships for physical disable students 9 40.90 23

123
Corporate governance and corporate social responsibility 2511

Table 2 continued
Sr. no. No. of banks % Frequency
reported this
item

19 Donation of books and other equipments to 10 45.45 23

different colleges and universities
20 Organizing different local and international students 8 36.36 11
competitions
21 Donation for the students of art and architecture 4 18.18 4
22 Internship facility for universities students 1 4.55 1
with/without cash allowance
23 Part time job facilities for the students 0 0.00 0
C: Activities for natural disaster
24 Donation for the flood and earthquake 22 100.00 65
affected people
25 Donation by the employees for 22 100.00 28
affected people
26 Donation for rehabilitations of homeless 13 59.09 19
people due to river erosions
27 Distribution of worm cloths among the 21 95.45 46
cold-affected people
28 Donations for internally displaced people (IDP’s) 16 72.72 24
29 Donation to Prime Minister/Chief Minister 11 50.00 18
relief fund for flood victims people
D: Other donations
30 Establishment of health care center for rural 14 63.64 21
people for free medical services
31 Donation to the families victim of terrorist attacks 1 4.55 1
32 Donation to hospitals for purchasing equipments 5 22.73 7
for reducing sufferings of poor Thalassemia
patients
33 Donation for improvement of street children’s 9 40.90 17
condition
34 Financial support to the natural affected 1 4.55 1
victims of neighboring countries
35 Sponsoring to different national and international 12 54.55 21
games and events
36 Donation to different sports organizations 15 68.18 25
37 Assistance to different Trusts who works 14 63.64 27
for destitute people of the society
E: Activities for employees
38 Staff engagement programs 21 95.45 26
39 Employees trainings cost 15 68.18 18
40 Number of employees 22 100.00 40
41 Career development 9 40.90 11
42 Employee benefits 22 100.00 61
43 Compensation plan for employees 20 90.90 32
44 Facilities to employee’s children 9 40.90 9
45 Number of employees trained 12 54.55 15
46 Amount of budget allocation on employees 8 36.36 10
training
47 Employees categories by function 16 72.72 24

123
2512 M. Sharif, K. Rashid

Table 2 continued
Sr. no. No. of banks % Frequency
reported this
item

48 Cost of employees safety measures 9 40.90 11

49 Information about support for day-care, 0 0.00 0
maternity and paternity leave
F: Environmental issues
50 Awards for environmental protection 2 9.09 2
51 Planting of trees to make the country green 7 31.82 11
52 Support for public/private actions designed 2 9.09 2
to protect the environment
53 Past and current operating costs of environmental 0 0.00 0
friendly equipment and facilities
54 Promoting environmental awareness to the 5 22.73 5
community through promotional tools
G: Product/services/statements
55 Explanation of major kinds of product/services 16 72.72 102
56 Improvement of product/service quality 21 95.45 87
57 Improvement of customer service 21 95.45 63
58 Receipt of awards (local/international) for 8 36.36 13
CSR activities
59 Value added statement 22 100.00 75
60 Providing information for conducting safety 0 0.00 0
research on the company’s products
Total 47.07

performed by the banks is truly inspiring. Even though taking on of CSR activities by the
banking sector are quite new measures in Pakistan, the results of the study reveal that there are
quite a few banks which are involved in the CSR activities at a larger extent contributing in the
different sectors. All the banks (100 %) reported CSR information on items such as donation
for natural disaster affected people, donation by employees for affected people, reporting
of value added statement, employee benefits, staff engagement programs and number of
employees employed.
In view of above statements, it is quite visible from our results that the commercial banks
of Pakistan make most of their contribution towards the activities for natural disaster and they
stand besides these affected people in accordance with their financial ability for satisfying
their commitment to the society. Two of the sample bank even reported to have provided
financial support to natural affected victims of neighboring country (earthquake victims of
Peoples Republic of China and Bangladesh). The continuance of reporting such exhilarating
events will make the bank and the country earn phenomenal respect and recognition, both
locally and worldwide.
Table 2 shows that on an average 17 banks (74.64 %) provide a helping hand in giving
health assistance to underprivileged and disabled children, 12 banks (54.55 %) donate cash
amounts for either setting up or running cancer hospitals, 10 banks (45.45 %) donate cash
money to women and children hospitals to bear their operational cost. About more than
one-third banks make their contributions to help set up HIV/AIDS assistance programs, to
organize transplantation of organs and plastic surgery operations, to donate costly medical

123
Corporate governance and corporate social responsibility 2513

equipments in different medical hospitals and to rotary club for the purchase of equipments
to help the disadvantaged children with hearing impairment.
It is observed that Pakistani commercial banks report extensively about their human
resource (SI no. 38–49). All the 22 banks (100 %) report about the number of employees
employed and the benefits program of employees. Around 21 banks (95.45 %) report about
their staff engagement programs. These organizations realize their responsibility towards
the financial, emotional and physical well being of their employees and their families. The
management believes in looking after its employees in terms of their physical, spiritual and
emotional well being at all times. Following best global practices, the management of these
organizations has set up a dedicated department to engage the employees in positive and
fun-filled activities.
The study reveals that the banks contribution towards the education sector is that almost
20 banks (90.90 %) make donations to different organizations working for improving female
education, by establishing and operating schools in the underdeveloped regions of Pakistan.
Around 16 banks provide scholarship to meritorious and poor students and 10 surveyed banks
(45.45 %) donate books and other equipments to different colleges and universities.
Furthermore, almost all the banks place a lot of emphasis on reporting information related
to the products and services that they provide (SI no. 55–60), especially towards their approach
for improving customer services and their products/services quality and reporting extra finan-
cial statement such as value added statement. Overall, it is quite evident from the reporting
score of 47.07 % that in Pakistani commercial banks CSR reporting in the annual report is
not as low as anticipated.
Although, there are a few CSR items (Table 3) which have not at all been reported by any
of the surveyed banks, the banks CSR participation towards various sector such as health,
human resource and others are very motivating. There might be several reasons behind not
reporting these items. For instance, banks might not be offering part time job facilities to
the students due to their corporate culture or banks firm thoughts which are directed toward
hiring more qualified personnel (Rashid 2005). Items relating to environmental issues (SI
no. 53 and 60) need to be addressed along with the other issues as well. Banks dedications
towards environmental issues are rather disappointing. This is the area where Pakistani banks
need to improve as part of their upcoming CSR initiative.

6.1 Banks ranking based on reporting of CSR items

According to the survey of the commercial banks of Pakistan, the overall ranking of these
banks is presented in Table 4. This ranking was based on the CSR reporting scores for each of
the banks, which presented insights about which of the banks reported more of environmental
and social information in their annual reports than others.

Table 3 CSR reporting items

SI no. CSR reporting items
not reported by any sample banks
23 Part time job facilities for the students
49 Information about support for day-care, maternity and
paternity leave
53 Past and current operating costs of environmental friendly
equipment and facilities
60 Providing information for conducting safety research
on the company’s products

123
2514 M. Sharif, K. Rashid

Table 4 Ranking of the banks based on the reporting of CSR items

Sr. no. Name of the banking Number of items % Ranking

organizations disclosed

1 Allied Bank (ABL) 50 83.33 1

2 Habib Bank (HBL) 48 80.00 2
3 Bank Al Falah (BAFL) 45 75.00 3
4 Meezan Bank (MEBL) 43 71.67 4
5 National Bank (NBP) 42 70.00 5
6 Habib Metro Bank (HMB) 42 70.00 5
7 United Bank (UBL) 40 66.67 6
8 Muslim Commercial Bank (MCB) 37 61.67 7
9 Askari Bank (AKBL) 37 61.67 7
10 Standard Chartered Bank (SCBPL) 35 58.33 8
11 Faysal Bank (FABL) 34 56.67 9
12 Bank Al Habib (BAHL) 33 55.00 10
13 Soneri Bank (SNBL) 28 46.67 11
14 Bank of Khyber (BOK) 26 43.33 12
15 My Bank (MYBL) 22 36.67 13
16 Summit Bank (SMBL) 19 31.67 14
17 NIB Bank (NIB) 16 26.67 15
18 JS Bank (JSBL) 15 25.00 16
19 KASB Bank (KASBB) 15 25.00 16
20 Bank Islami Pakistan (BIPL) 13 21.67 17
21 Samba Bank (SBL) 12 20.00 18
22 Silk Bank (SILK) 12 20.00 18

Allied Bank Ltd (ABL) managed to gain the top position by disclosing 50 items (83.33 %)
out of the 60 items. A thorough study of this bank’s CSR activities displayed it as a
respectable corporate body who has been constantly involved in the implementation of
different social and humanitarian programs. Allied Bank Ltd is socially committed to
contribute towards bringing a positive change in the communities it conducts business
in and they consider it as their moral and ethical responsibility to lend a helping hand
to the members of the community in need. Their CSR philosophy has focused around
some key areas over the years, such as education, healthcare, sports promotion, environ-
ment, promotion of art and artists, staff welfare and engaging the staff in healthy activities
and their CSR objective is to re-enforce the bank’s image as ‘Not just for profit’. They
firmly believe in behaving ethically by following best practices and contributing to the eco-
nomic development of the country at large. Being one of the leading banks in Pakistan,
they are committed to consider the interests of the society by taking responsibility for the
impact of their activities on customers, employees, environment in all aspects of the bank’s
operations.
Moreover, regarding the rankings, Allied Bank Ltd is followed by Habib Bank Ltd, Bank
Al Falah Ltd, Meezan Bank Ltd and so on. Due to the least display of CSR items, Samba
Bank Ltd and Silk Bank Ltd obtained the lowest ranking.

123
Corporate governance and corporate social responsibility 2515

Table 5 Descriptive statistics for

Independent Mean SD Minimum Maximum
independent variables
variables

COMPNED 0.53 0.17 0.20 0.91

FOROWN 0.10 0.19 0.06 0.30
STA (Log) 5.03 0.58 3.17 6.02
ROE 0.05 0.27 0.02 0.50
DTE 0.44 0.25 0.03 0.96

6.2 Multivariate analysis

The relationship between the dependent and different independent variables of the study
was tested by using regression analysis along with the measures of the overall level of
CSR reporting by the commercial banks of Pakistan. The model for the study is presented
below.

CSRRI = β0 + β1 COMPNED + β2 FOROWN + β3 STA + β4 ROE + β5 DTE + et (2)

where, CSRRI is the corporate social responsibility reporting index. COMPNED is the per-
centage of independent directors to total directors on the board. FOROWN is the percentage
of non-Pakistani directors to total directors on board. Furthermore, STA is the size of the firm
on the basis of total assets. ROE is the profitability on the basis of return on equity, DTE is
the gearing on the basis of debt to equity ratio. Finally, et is the disturbance term and β 1.... β5
are the beta coefficients.

6.3 Descriptive statistics and the correlation matrix

Descriptive statistics of the independent variables is depicted in Table 5. It is very obvi-

ous with a mean of 53 % that the independent variable COMPNED which is mea-
sured by the proportion of non-executive directors to total number of directors show
that majority of the banks have many non-executive directors on the board. The result
undoubtedly depicted that financial institutions are generally dominated by non-executive
directors.
Meanwhile, the mean value of foreign national (FOROWN) representation on the board
of directors is only 10 % with the maximum representation of around 30 %. This indicates
that the banks’ board does not comprise of many foreign nationals. On the other hand, mean
of size of the firm is 5.03 and profitability ratio and gearing ratio mean are 5 and 44 %,
respectively.
The correlation matrix for the dependent and independent variables is shown in the Table 6.
The correlation between all the variables except for FOROWN is found to be highly significant
at 0.01 levels. Parallel to the study’s hypothesis, CSR reporting is positively related with
the proportion of non-executive directors on the board with correlation coefficient of 0.874
( p < 0.001). Results of correlation coefficient of 0.096 ( p > 0.001) also depict a no
significant correlation between foreign national representation on the board and disclosure
of corporate social information. On the other hand, STA, ROE and DTE are also found to be
positively correlated with CSR reporting with a correlation coefficient of 0.821, 0.764 and
0.494, respectively.

123
2516 M. Sharif, K. Rashid

Table 6 Pearson correlations

CSRRI COMPNED FOROWN STA ROE DTE

CSRRI 1
COMPNED .874** 1
.000
FOROWN .096 .091 1
.168 .172
STA .821** .792** .074 1
.000 .000 .153
ROE .764** .679** .067 .616** 1
.000 .000 .051 .000
DTE .494** .424** .057 .532** .169 1
.000 .000 .132 .000 .053
** Correlation is significant at the 0.01 level (2-tailed)

Table 7 Multiple regression results using index (CSRRI) as the dependent variable

Variables Predicted sign Coefficient value t Statistic p Value VIF

Intercept −0.2736 −2.7505 0.0069

COMPNED + 0.5892 6.7288 0.0000** 3.23
FOROWN + 0.3923 5.3441 0.4339 1.99
STA + 0.0783 3.1034 0.0024** 3.29
ROE + 0.2628 6.2730 0.0000** 2.06
DTE + 0.1330 3.5534 0.0006** 1.50
R 2 (%) 85.81
Adjusted R 2 (%) 85.32
F-statistics 173.90 and p = 0.0000
Durbin–Watson 1.8610
** Correlation is significant at the 0.01 level (2-tailed)

6.4 Multiple regressions analysis

Multiple regression results are shown in the Table 7. The results reveal a significant rela-
tionship between the dependent and independent variables. The regression model illustrates
85.32 % (F = 173.90; p = 0.000) of CSR reporting variance for the explanatory variables.
The R 2 value of the model is approximately 86 %, indicating that 86 % change in our depen-
dent variable is explained by the independent variables. A highly significant ( p < 0.05)
relationship between COMPNED with the level of CSR reporting of surveyed banks is indi-
cated by the regression model. It depicts that the level of social information reporting is
higher in annual reports when the number of independent directors on the Pakistani board
is high. This result supports the study’s H1 which is consistent with the results of previous
disclosure research (Haniffa and Cooke 2002; Chen and Jaggi 2000). However, the results
of the study do not support H2 as the composition of foreign national directors on the board
is found to be insignificant ( p > 0.05).

123
Corporate governance and corporate social responsibility 2517

Table 8 Incremental regression results

Independent variables OLS 1 OLS 2 OLS 3 OLS 4 OLS 5

C −0.2736 −0.4561 0.0160 −0.5372 −0.40701

COMPNED 0.5892* – 0.7422* 0.8277* 0.6226*
STA 0.0783* 0.1739* – 0.1133* 0.1134*
ROE 0.2628* 0.3851* 0.2915* – 0.2234*
DTE 0.1330* 0.1600* 0.1784* 0.0708 –
R2 0.8581 0.8023 0.8463 0.8096 0.8426
Adjusted R 2 0.8532 0.7972 0.8423 0.8047 0.8385
* Shows that the variable is significant at the 0.05 level (2-tailed)

Foreign national representation on the board is not significantly associated with the degree
of CSR reporting reported by the banks. This result is consistent with the earlier study
conducted by Branco and Rodrigues (2008). The three additional variables of the study i.e.,
firm size, profitability and gearing ratio are also found to be statistically significant with
the level of CSR reporting, hence leading to the acceptance of H3, H4 and H5. According
to Cormier and Gordon (2001) and Roberts (1992), large organizations having a higher
profitability and gearing ratio tend to do more of CSR reporting because of visibility and
accountability. This indicates that Pakistani commercial banks utilize annual reports as a
prospect to put across their image and legitimize their activities.
The correlation matrix visual examination of the explanatory variables is considered as an
important way to identify collinearity problem. Farrar and Glauber (1967) and Studenmund
(1992) state that correlation coefficient is thought to be problematic if it exceeds 0.80. A
more indicative and accurate technique mostly used is the variance inflation factor (VIF)
for each of the independent variable (Kennedy 1992). If the VIF exceeds 10, collinearity is
considered as a problem (Gujrati 2005). The VIF for this study vary from 1.50 to 3.29. Thus,
according to the correlation matrix and VIF of the variables of the study, it is unlikely that
multi-collinearity manipulates the regression results, since the maximum VIF of 3.29 is less
than the threshold of 10.

6.5 Incremental regressions results

The incremental regression analysis is performed to check the relative significance of the
independent variables of the study on the value of the R 2 . The independent variables are
excluded one by one from the study and an analysis of its effect on the value of the R 2 is
observed. As it can be seen in the Table 8, OLS 1 represents the original regression results
of the model. A considerable change in the value of the R 2 is noticed when the variable
COMPNED is eliminated from the model (reduction from 85.82 to 80.23 % in OLS 2).
This depicts that representation of non-executive directors on the board is the most important
variable in affecting the degree of CSR reporting information by Pakistani commercial banks.
All the results of this study show a prevalence of stewardship theory as the non-executive
directors are acting as stewards. Board composition of non-executive directors is positively
associated with firms’ financial performance because higher level of external environment
through which the firm can gain more information, resource and legitimacy than others can
improve the value of a firm. The majority of past research studied the linkages among board
composition, leadership structure and corporate financial performance (CFP) leading to CSR,

123
2518 M. Sharif, K. Rashid

concentrating on a particular aspect of governance, such as size, compensation, anti-takeover

provisions, shareholders’ activism, investors’ protection, and so on.
Berle and Means (1932) found a relationship between ownership and management towards
CFP, and argued that CFP is increased when management is separated from ownership. The
reason for this phenomenon is that external directors are more professional and are in a better
position to exert control over management. Therefore, according to the stewardship theory,
effective boards will be comprised of external directors, since non-management directors are
believed to provide superior performance benefits to the firm as a result of their independence
from the firm’s management.
This position is supported by some empirical results. For example, Ezzamel and Watson
(1993) found that outside directors were positively associated with profitability among a
sample of the U.K. firms, and in an examination of 266 U.S. corporations, Baysinger and
Butler (1985) found that firms with more external board members realized higher returns
on equity. Fama (1980) maintains that independent directors are better in managing and
monitoring management self interest and opportunism. Similarly, several other researchers
have also noted a positive relationship between external director representation and CFP
(Schellenger et al. 1989; Rosenstein and Wyatt 1990).

7 Conclusion

This study has examined the corporate social responsibility reporting level given in the annual
reports of commercial banks in Pakistan. The study basically took into account the main
elements that could have an impact on CSR reporting activities by the commercial banks in
Pakistan namely; presence of non-executive directors on the boards of management, presence
of non-Pakistani directors on the board, firm size, profitability ratios and the gearing ability
of the banks. The results of the study revealed that although CSR reporting by the Pakistani
banks was quite moderate; yet good enough to include them in the list of socially responsible
corporations. A reasonable variety of CSR reporting was observed.
The main categories of CSR reporting included health, education, natural disaster, activ-
ities for employees, environmental issues, product/services/statements and other donations.
On the basis of the findings of this study, it is concluded that commercial banks operating in
Pakistan are among the corporations that are keeping up their corporate social responsibili-
ties. All the categories of social work mentioned above are getting reasonable share from the
commercial banks.
Unfortunately, Pakistan is amongst the lists of the countries that are struck by poverty,
poor health, illiteracy and natural disasters. There is no doubt in the fact that country like
Pakistan fully deserves to have the corporations’ involvement in the eradication of social
problems. The findings of the research exposed the facts that commercial banks of Pakistan
are reasonably contributing to CSR activities related to a number of sectors mentioned above.
Five hypotheses were set for this study and four of them were significantly accepted. The
conceptual framework of the study supported the results of the hypotheses i.e., a positive
relationship was found between the percentage of non-executive directors on the board who
act as stewards and CSR reporting information (H1), firm size and CSR reporting (H3), prof-
itability and CSR reporting information (H4), and between gearing ratio and CSR reporting
information by the banks (H5).
On the basis of the findings, this study has made a number of implications for the CSR
literature. Firstly, has tried to give an insight into the CSR reporting activities of commercial
banks in Pakistan and has enhanced the currently available literature on the topic. It has also

123
Corporate governance and corporate social responsibility 2519

paved the way for further research and comparative studies on the CSR topic in the rest of
developing countries. Secondly, an example has been set regarding the research on the topic
of CSR exclusively in banking sector. Thirdly, the findings of this study have recorded that
a number of commercial banks in Pakistan are considerably contributing in CSR activities
related to health, education, and disaster management. Fourthly, the study has highlighted
the importance of non-executive directors and their valuable contribution in influencing the
banking sector for CSR activities. The limitation of the study suggests that data set for wider
time period and under boom and recession in the economy can lead to the different nature of
the relationship among the variables of the study and alternate policy implications.

References

Adams, C.A., Coutts, A., Harte, G.: Corporate equal opportunities non disclosure. Br. Account. Rev. 27(2),
87–108 (1995)
Adams, C.A., Hill, W.Y., Roberts, C.B.: Corporate social reporting practices in Western Europe: legitimating
corporate behaviour? Br. Account. Rev. 30(1), 1–21 (1998)
Alchian, A.A., Demsetz, H.: Production, information costs and economic organization. Am. Econ. Rev. 62,
772–795 (1972)
Ali, Md M., Khan, Md H.U.Z., Fatima, J.K.: Intellectual capital reporting practices: evidence from Bangladesh.
Dhaka Univ. J. Bus. Stud. 29(1), 23–45 (2008)
Ayuso, S., Argandona, A.: Responsible corporate governance: towards a stakeholder board of directors?
Working Paper No. 701, IESE Business School, Barcelona, July (2007).
Barako, G.D., Alistair, M.B.: Corporate social reporting and board representation: evidence from the Kenyan
banking sector. J. Manag. Gov. 12, 309–324 (2008)
Baysinger, B.D., Butler, H.H.: Corporate governance and the board of directors: performance effects of changes
in board composition. J. Law Econ. Organ. 1, 101–124 (1985)
Belal, A.: Environmental reporting in developing countries: empirical evidence from Bangladesh. Ecomanag.
Audit. (UK) 7(3), 114–121 (2000)
Belal, A., Owen, D.: The views of corporate managers on the current state of, and future prospects for, social
reporting in Bangladesh: an engagement-based study. Account. Audit. Account. J. 20(3), 472–494 (2007)
Belkaoui, A.R., Kahl, A.: Corporate financial disclosure in Canada. Research Monograph No. 1 of Canadian
Certified General Accountants Association, Vancouver (1981)
Berle, A., Means, G.: The modern corporation and private property. Macmillan, New York (1932)
Branco, C.M., Rodrigues, L.L.: Social responsibility disclosure: a study of proxies for the public visibility of
Portuguese banks. Br. Account. Rev. 40, 161–181 (2008)
Buhr, N.: Environmental performance legislation and annual report disclosure: the case of acid rain and
Falconbridge. Account. Audit. Account. J. 11(2), 163–190 (1998)
Campbell, D.J.: Legitimacy theory or managerial reality construction? Corporate social disclosure in Marks
& Spencer Plc corporate reports, 1969–1997. Account. Forum 24(1), 80 (2000)
Cerf, A.R.: Corporate reporting and investment decisions. University of California Press, Berkeley (1961)
Chen, C., Jaggi, B.: Association between independent non-executive directors, family control, and financial
disclosures in Hong Kong. J. Account. Public Policy 19, 285–310 (2000)
Clark, T.: Theories of corporate governance: the philosophical foundations of corporate governance. Routledge,
London (2004)
Cormier, D., Gordon, I.M.: An examination of social and environmental reporting strategies. Account. Audit.
Account. J. 14(5), 587–616 (2001)
Cowen, S.S., Ferreri, L.B., Parker, L.D.: The impact of corporate characteristics on social responsibility
disclosure: a typology and frequency-based analysis. Account. Organ. Soc. 12(2), 111–122 (1987)
Dahya, J., Lonie, A.A., Power, D.M.: The case for separating the roles of Chairman and CEO: an analysis of
stock market and accounting data. Corp. Gov. Int. Rev. 4(1), 71–77 (1996)
Davis, J.H., Schoorman, F.D., Donaldson, L.: Toward a stewardship theory of management. Acad. Manag.
Rev. 22, 20–47 (1997)
Deegan, C., Gordon, B.: A study of the environmental disclosure policies of Australian corporations. Account.
Bus. Res. 26(3), 187–199 (1996)

123
2520 M. Sharif, K. Rashid

Deegan, C., Rankin, M.: Do Australian companies report environmental news objectively? An analysis of
environmental disclosures by firms prosecuted successfully by the Environmental Protection Authority.
Account. Audit. Account. J. 9(2), 52–69 (1996)
Deegan, C., Rankin, M.: The materiality of environmental information to users of annual reports. Account.
Audit. Account. J. 10(4), 562–583 (1997)
Deegan, C., Rankin, M., Tobin, J.: An examination of the corporate social and environmental disclosures of
BHP from 1983–1997: a test of legitimacy theory. Account. Audit. Account. J. 15(3), 312–343 (2002)
Deegan, C., Rankin, M., Voght, P.: Firms’ disclosure reactions to major social incidents: Australian evidence.
Account. Forum 24(1), 101–130 (2000)
Donaldson, T., Preston, L.: The stakeholder theory of the corporation—concepts, evidence, and implications.
Acad. Manag. Rev. 20(1), 65–92 (1995)
Douglas, A., John, D., Brian, J.: Corporate social reporting in Irish financial institutions. TQM Mag. 16(6),
387–389 (2004)
Ernst and Ernst: Social responsibility disclosure in 1976 survey of Fortune 500 annual reports. Ernst and Ernst,
Cleveland (1976)
Ezzamel, M.A., Watson, R.: Organizational form, ownership structure, and corporate performance: a contextual
empirical analysis of UK companies. Br. J. Manag. 4(3), 161–176 (1993)
Fama, E.: Agency problems & theory of the firm. J. Political Econ. 88, 288–307 (1980)
Fama, E., Jensen, M.: Separation of ownership and control. J. Law Econ. 26, 301–325 (1983)
Farrar, D., Glauber, R.: Multicollinearity in regression analysis: the problem revisited. Rev. Econ. Stat. 49(1),
92–107 (1967)
Fields, M.A., Keys, P.Y.: The emergence of corporate governance from Wall St. to Main St.: outside directors,
board diversity, earnings management, and managerial incentives to bear risk. Financ. Rev. 38, 1–24 (2003)
Gray, R., Kouhy, R., Lavers, S.: Corporate social and environmental reporting: a review of the literature and
a longitudinal study of UK disclosure. Account. Audit. Account. J. 8(2), 47–77 (1995a)
Gray, R., Kouhy, R., Lavers, S.: Constructing a research database of social and environmental reporting by
UK companies. Account. Audit. Account. J. 8(2), 78–101 (1995b)
Griffiths, M.: Consumer debt in Australia: why banks will not turn their backs on profit. Int. J. Consum. Stud.
31(3), 230–236 (2007)
Gujrati, D.: Basic econometrics, 4th edn. McGraw-Hill, New York (2005)
Guthrie, J., Parker, L.: Corporate social disclosure practice: a comparative international analysis. Adv. Public
Interest Account. 3, 159–175 (1990)
Guthrie, J.E., Parker, L.D.: Corporate social reporting: a rebuttal of legitimacy theory. Account. Bus. Res.
19(76), 343–352 (1989)
Halabi, A.K., Kazi, A.U., Dang, V., Samy, M.: Corporate social responsibility: how the top ten stack up.
Monash Bus. Rev. 3(2), 20–24 (2006)
Haniffa, R.M., Cooke, T.E.: Culture, corporate governance and disclosure in Malaysian corporations. Abacus
38(3), 317–349 (2002)
Haniffa, R.M., Cooke, T.E.: The impact of culture and governance on corporate social reporting. J. Account.
Public Policy 24(5), 391–430 (2005)
Haque, A.K.E., Jalil, M.B., Naz, F.: State of corporate governance in Bangladesh: analysis of public limited
companies—financial, nonfinancial institution and state owned enterprises. Working Paper Series No. 2.
Centre for Research and Training, Dhaka (2007)
Herremans, I.M., Akathaporn, P., McInnes, M.: An investigation of corporate social responsibility reputation
and economic performance. Account. Organ. Soc. 18(7/8), 587–604 (1993)
Hossain, M.: The disclosure of information in the annual reports of financial companies in developing countries:
the Case of Bangladesh. Unpublished MPhil thesis, The University of Manchester (2001)
Jensen, M.C., Meckling, W.H.: Theory of the firm managerial behavior, agency costs and ownership structure.
J. Financ. Econ. 3(4), 305–360 (1976)
Kennedy, P.: A guide to econometrics. MIT Press, Cambridge (1992)
Khan, MdHUZ, Halabi, A.K., Samy, M.: CSR reporting practice: a study of selected banking companies in
Bangladesh. Soc. Responsib. J. 5(3), 57–344 (2009)
Lindblom, C.K.: The implications of organizational legitimacy for corporate social performance and disclosure.
Paper presented at the critical perspectives on accounting conference, New York (1993)
Macey, J., O’Hara, M.: The corporate governance of banks. Fed. Reserve Bank N. Y. Econ. Policy Rev. 9(1),
97–107 (2001)
Malone, D., Fries, C., Jones, T.: An empirical investigation of the extent of corporate financial disclosure in
the oil and gas industry. J. Account. Audit. Finance 8, 249–273 (1993)
Mathews, M.R.: Twenty-five years of social and environmental accounting research: is there a silver jubilee
to celebrate? Account. Audit. Account. J. 10(4), 481–531 (1997)

123
Corporate governance and corporate social responsibility 2521

Milne, M.J., Pattern, D.M.: Securing organisational legitimacy: an experimental decision case examining the
impact of environmental disclosures. Account. Audit. Account. J. 15(3), 372–405 (2002)
Mitchell, R.K., Agle, B.R., Wood, D.J.: Toward a theory of stakeholder identification and salience: defining
the principle of who and what really counts. Acad. Manag. Rev. 22(4), 853–886 (1997)
Moerman, L., Van Der Laan, S.: Social reporting in the tobacco industry: all smoke and mirrors? Account.
Audit. Account. J. 18(3), 89–374 (2005)
Murthy, V., Abeysekera, I.: Corporate social reporting practices of top Indian software firms. Australas.
Account. Bus. Finance J. 2(1), 36–50 (2008)
Neu, D., Warsame, H., Pedwell, K.: Managing public impressions: environmental disclosures in annual reports.
Account. Organ. Soc. 23(3), 265–282 (1998)
Newson, M., Deegan, C.: An exploration of the association between global expectations and corporate social
disclosure practices in the Asia-Pacific region. Int. J. Account. 37(2), 183–213 (2002)
O’Donovan, G.: Environmental disclosures in the annual report. Extending the applicability and predictive
power of legitimacy theory. Account. Audit. Account. J. 15(3), 344–371 (2002)
O’Dwyer, B.: Managerial perceptions of corporate social disclosure. An Irish story. Account. Audit. Account.
J. 15(31), 406–436 (2002)
Oliver, C.: Strategic responses to institutional processes. Acad. Manag. Rev. 16(1), 145–179 (1991)
Padilla, A.: Can agency theory justify the regulation of insider trading. Q. J. Austrian Econ. 5(1), 3–38 (2002)
Patten, D.M.: Intra-industry environmental disclosures in response to the Alaskan oil spill: a note on legitimacy
theory. Account. Organ. Soc. 17(5), 471–475 (1992)
Rashid, N.: The human resources opportunities for universities students: a study of private sectors in
Bangladesh. J. Bus. Adm. 5(1), 23–32 (2005)
Roberts, R.W.: Determinants of corporate responsibility disclosure. Account. Organ. Soc. 17(6), 595–612
(1992)
Rosenstein, S., Wyatt, J.G.: Outside directors, board independence, and shareholder wealth. J. Financ. Econ.
26, 175–191 (1990)
Schellenger, M.H., Wood, D.D., Tashakori, A.: Board of directors composition, shareholder wealth, and
dividend policy. J. Manag. 15, 457–467 (1989)
Sharma, A.K., Talwar, B.: Corporate social responsibility: modern vis-à-vis Vedic approach. Meas. Bus. Excell.
9(1), 35–45 (2005)
Simms, J.: Business: corporate social responsibility—you know it makes sense. Accountancy 130(11), 48–50
(2002)
Singhvi, S., Desai, H.: An empirical analysis of the quality of corporate financial disclosure. Account. Rev.
46(1), 129–138 (1971)
Siregar, S., Bachtiar, Y.: Corporate social reporting: empirical evidence from Indonesia Stock Exchange. Int.
J. Islam. Middle East. Finance Manag. 3(3), 241–252 (2010)
Studenmund, A.H.: Using econometrics: a practical guide, 2nd edn, pp. 1–662. HarperCollins, New York
(1992)
Tilt, C.A.: The influence of external pressure groups on corporate social disclosure: some empirical evidence.
Account. Audit. Account. J. 7(4), 56–71 (1994)
Tricker, R.I.: Corporate governance—practices, procedures and powers in British companies and their boards
of directors. Gower Publishing, Aldershot (1984)
Trotman, K.T., Bradley, G.W.: Association between social responsibility disclosure and characteristics of
companies. Account. Organ. Soc. 6(4), 355–362 (1981)
Udayasankar, K.: Corporate social responsibility and firm size. J. Bus. Ethics 83, 167–175 (2008)
Wallace, R.S.O., Naser, K., Mora, A.: The relationship between the comprehensiveness of companies annual
reports and firms characteristics in Spain. Account. Bus. Res. 25, 41–53 (1994)
Wallace, R.S.O., Naser, K.: Firm-specific determinants of comprehensiveness of mandatory disclosure in the
corporate annual reports of firms listed on the stock exchange of Hong Kong. J. Account. Public Policy
14(4), 311–368 (1995)
Weber, R.P.: Basic content analysis. Sage University paper series on quantitative applications in the social
sciences. Sage Publications, Beverly Hills (1988)
Yamak, S., Suër, O.: State as a stakeholder. Corp. Gov. 5(2), 111–120 (2005)
Zahra, S.A., Stanton, W.W.: The implications of Board of Directors—composition on corporate strategy and
performance. Int. J. Manag. 5(2), 229–236 (1988)
Zeghal, D., Ahmed, S.A.: Comparison of social responsibility information disclosure media used by Canadian
firms. Account. Audit. Account. J. 3(1), 41–53 (1990)

123
Reproduced with permission of the copyright owner. Further reproduction prohibited without
permission.