A study of Corporate Social Disclosure in the Finance Sector in Bangladesh

Mohammad I. Azim*

* Correspondence should be send to: Dr Mohammad Azim, CPA, CMA Accounting and Finance Swinburne University of Technology Room Number: BA1222 (Internal Mail Number: H23) Faculty of Business and Enterprise Hawthorn VIC 3122 AUSTRALIA Tel: +61 3 9214 4500 Fax: +61 3 9819 2117 Email: mazim@swin.edu.au

A study of Corporate Social Disclosure in the Finance Sector in Bangladesh

Abstract Purpose: This paper investigates finance companies’ corporate social reporting in Bangladesh, a developing country. A favorable investment climate is one of the preconditions for a country to prosper economically. This can be ensured by good corporate social reporting by finance sector companies. In Bangladesh, finance sector companies together hold 43.82% of total market capitalization on the Dhaka Stock Exchange and 26.54% of GDP, which is proportionately large for a country like Bangladesh. No studies have previously explored the commitment to environmental and social disclosure by finance sector companies operating in Bangladesh. Design/methodology/approach: Content analysis instruments are used to analyse corporate social reporting by listed finance companies in Bangladesh. Findings: Analysis of annual reports published in 2007-2008 reveals that 41% of listed finance sector companies made some kind of CSR disclosures. As a developing country, this figure is quite impressive compared to CSR disclosures in other sectors, like ceramics, engineering, IT, paper and printing. However, extensive survey of the contents, form, nature and extent of corporate social reporting of finance companies reveals that three quarters of all disclosures are generalized qualitative statements without any attempt at quantification. More than half of disclosures are located in the director’s report, and the average length of disclosures amounted to less than half a page. Originality/value: This paper contributes to the literature as no previous studies have reported on finance sector companies and their record in corporate social reporting in developing countries, such as Bangladesh. Keywords: Corporate social reporting, Corporate social responsibility (CSR), Finance sector, Developing country, Bangladesh. Paper type: Research paper


Ahmed and Islam. 2003). 2002. Likewise. Simms. quantity aspect of such reporting and also where future improvements can be made. Before making investment decisions many investors are concerned with social and environmental disclosures by finance companies as their day-to-day correspondence with this sector is important for their sustainability and growth. In the absence of legislative requirements. communicate with the community and stakeholders (Anand. Practicing social responsibility costs money. and China have a small number of companies that report corporate environmental and social disclosure. This sector plays an important role in country’s economic condition. insurance. 2002): having better internal control and decision-making systems. The reason for selecting such companies is to build our knowledge of corporate social responsibility (CSR) in banking. finance companies can improve their image and obtain a competitive advantage. There were 8 and 13 percentage point increases in stand-alone reports in Japan and the UK 3 . Although not all benefits can be quantified in monetary terms (Evans. An international survey of corporate sustainability reporting conducted by KPMG in 2008 found that 70 per cent of the world’s 250 largest companies issued separate reports on corporate social responsibility (CSR) compared to 52 per cent in 2005. the two top countries in terms of separate CSR reporting are Japan (88% in 2008. Currently in Bangladesh. By disclosing information on social and environmental issues. 2002) and construct a competitive advantage (King. 1995). or loss of customers (Deegan and Gordon. Introduction This exploratory study investigates the extent of corporate social reporting by finance companies listed on the stock exchange in Bangladesh. public disfavor. A well-functioning finance sector in any country can contribute directly to a healthy economy. However. increased regulation. voluntary disclosure demonstrates a commitment to society (Mathews. failing to report on social responsibility also has costs—in terms of fines. 71% in 2005). investment and leasing companies. 1996). changes are occurring in the way companies report CSR. companies can minimize the risk of powerful consumer boycotts (Adams. 2008). At the national level. 2008). They are also concerned with a level of commitment for sustainable development. and continuously improving products and services (Adams. 2002). From initially using a section in the annual report.A study of Corporate Social Disclosure in the Finance sector in Bangladesh 1. negative publicity. The recent escalation in CSR disclosures by corporations worldwide signals the significance of CSR for sustainable development (KPMG. producing costsavings. Worldwide there is a trend indicating rising levels of CSR reporting. There is a need for an in-depth study of the quality vs. By disclosing information on social and environmental issues. South East Asian countries such as India. Nevertheless. CSR is a matter of self interest for the corporate sector (Azim. 2009). Pakistan. 80% in 2005) and the United Kingdom (84% in 2008. 2002). Corporate social responsibilities are not the only ethical dilemma that financial institutions face in an atmosphere of corrupt corporate practice. Ethics and transparency are important themes in the finance sector. companies that report on social responsibility and account for social and environment impacts may gain specific benefits by: attracting and retaining talented people (Adams. 2002). companies are moving to stand-alone reports (KPMG.

CSR is defined as CSR is a concept whereby financial institutions not only consider their profitability and growth. Section 3 documents the regulatory environment and disclosure rules in Bangladesh. Hossain. The remainder of this paper is organized as follows. In recent years there is a pressure from various agencies for companies to act responsibly and be accountable for the impacts they have on the social. Imam (2000) takes a sample of 40 listed companies (out of 207 listed companies for 1996–1997). The results are presented in Section 5 and the final section highlights the implications of results obtained. For instance. Section 2 discusses the literature on corporate social responsibility. The concept of CSR is still very new in Bangladesh. those studies failed to come to a unified conclusion that is applicable to all listed companies. 2001). Banks must take on new responsibilities that go beyond a simple policy of “paternalism” vis-a-vis their suppliers. Their study shows that the selected banking companies did some (albeit little) CSR reporting on a voluntary basis and the user groups favoured CSR reporting. Khan. employees. 2008). is a form of corporate self regulation integrated into the business culture. customers and employees. McKenna and Brown. 2006). which is also known as corporate citizenship or sustainable responsible business (SRB). Halabi and Samy (2009) collected annual reports of 20 selected banking companies. institutions such as the Global Reporting Initiative (GRI) have elaborated guidelines for preparing social or sustainability reports. such as poverty and infrastructure (Kok. Companies are also expected to participate in solving social problems. Islam and Andrew (2006) use a sample of 150 companies for 2002–2003. The current study focuses on the corporate social reporting used by all such companies listed as being part of the finance sector on the DSE. and Belal (2000) samples 30 companies (from both private and public sector). and would like to see more disclosure. however. 4 . In the last five years. Wiele. customers. shareholders. suppliers. Many companies use this guideline as a framework to build their social reports (Raman. this represents 19. political and ecological environments. Furthermore it analyzes the type and extent of such reporting in annual reports and suggests future improvement. such as that practiced up until recent times (Noyer . Conclusions reached in these studies may not be representative of the listed companies of the Dhaka Stock Exchange (DSE). Previous studies mainly focused on the overall disclosure by listed companies. There is no known research that examines the corporate social disclosure in the finance sector in Bangladesh or how to improve it. Literature Review Corporate Social Responsibility (CSR).respectively during the last 3 years. this study uses selected banks only. but also the interests of society and the environment by taking responsibility for the impact of their activities on stakeholders. 2. Section 4 outlines the data and research design. However. and civil society represented by NGOs.30% of companies. which are listed on the Dhaka Stock Exchange (DSE) and also use a questionnaire to investigate the level of users' understanding and their perceptions of CSR reporting.

2004). financiers). the accomplishment of organisational purpose” (p. and (iii) this is an expensive process. Organizations will be penalized if they do not operate in a manner consistent with community expectations. 2007) 5 . FIGURE 1: Stakeholders of an organization. (ii) do not want to disclose this information since it signals bad performance. Legitimacy theory has been used by several researchers as their framework to examine corporate social disclosure practices. Stakeholders include a wide range of people and interest groups who are involved in some capacity with organizations (Price. a stakeholder approach can assist managers by promoting an analysis of how the company fits into its larger environment or social context. This theory has been used to support the reasoning of such disclosures. Deegan (2002) suggests that organizations need to take community expectations into account if they want to be successful. managers. suppliers. stockholders) and immediately beyond the company (customers. The contemporary stakeholder literature can be traced back to the seminal work of Freeman (1984). legitimacy and stakeholder theories) why companies should engage in social responsibility reporting. Legitimacy is defined as: a generalized perception or assumption that the actions of an entity are desirable. Some companies do not because they: (i) do not have the information. 25). Previous studies have used either legitimacy theory or stakeholder theory to develop themes of disclosure measurement and to analyse the extent to which companies disclose their corporate social responsibility. 1995. and definition (Suchman. or appropriate within some socially constructed system of norms. From an analytical perspective. (Source: Foster and Jonker. Stakeholders are the central focus of stakeholder theory. These themes are illustrated in Figure 1. values. This study focuses on two important theories that explain the extent of corporate social disclosure: legitimacy theory and stakeholder theory. p. proper. He drew attention to the role of external stakeholders which were defined as “any group who can affect. 573). beliefs. or is affected by. how its standard operating procedures affect stakeholders in the company (employees.There are many theoretical reasons (such as political economy.

As the organization changes over time. suppliers. Mathews. Guthrie and Parker (1990) found that 85% of US. 2002.Freeman suggests that each firm should have a "generic stakeholder map" with specific stakeholders. General categories such as owners.. Mathews (1995) classifies the above arguments into three categories: (i) social disclosures having a positive impact on how an organization performs. and industry affiliation (Cormier and Magnan. Little disclosure exists in sensitive areas such as trade union activities. 1998b) and between developed and developing countries (Imam. This view is supported by Carroll (1999) who explains that corporate social disclosure relates to the wider society. Thailand and China (specifically. 2000). In turn. The literature recognizes that CSR practices differ from country to country (Adams et al. Hong Kong). the vast majority of disclosures are qualitative in nature. 2001). political. Furthermore the nature and patterns of CSR vary between types of industry (Gray et al. and 7% reported energy and product related issues.70 pages were used in the UK and Australia respectively. 1995) over the last decade. trade associations. Companies in the US used 1.89 and . This study indicated that more than 40% of these companies reported human resource issues. Corporate social responsibility has attracted considerable academic research (Deegan. profits. Gray. redundancy schemes. the specific stakeholder map will vary. 2003). governments. and 56% of Australian companies made some social disclosures in their annual reports. employees. 13% reported environmental activities. a few studies have focused on companies in countries such as Malaysia. employee share ownership. pay awards. regulatory. the finance community. In a comparative study on 150 companies in the US.. It also revealed the average number of pages that organizations in these countries allotted in their reports for social disclosures. equal opportunities. which is represented by stakeholders. and costs (Adams et al. 1998a. and (iii) voluntary disclosure signifies the recognition of that organization’s accountability to society. political groups. Research on voluntary disclosure has attempted to examine the nature and patterns of CSR and investigate the determinants of CSR such as size. Surveys of CSR practices in Western countries reveal that companies place the greatest emphasis on disclosing human resources such as employee numbers and remuneration. and competitors would augment more specific stakeholders. A study of 100 public companies in Malaysia showed that 66% of companies did some kind of social reporting (Kin. Stakeholder theory has become important for companies that want to secure their relationship with stakeholders through corporate social disclosure. 1998b). the rational manager would not make major corporate disclosure decisions for his or her organization without considering the impact on each of these specific stakeholders. UK and Australia. This is because the stage of economic development is likely to be an important factor affecting CSR practices. Wilson (2001) argues the importance of stakeholder theory as a concept whereby companies are able to integrate social and environmental information in their business operations and in their interaction with stakeholders. 2001). Due to geographical. and as decisions change. 2002.. Moreover.26 pages while 0. (ii) disclosure may legitimate the organization’s behavior by influencing other stakeholders. Of these. 64 companies reported human resource issues and 22 companies disclosed community involvement issues. environmental. 6 . unions.. and employee training (Gray et al. customers. 98% of UK. activist groups. economic. In the context of emerging economies. 31% reported community involvement. 1990). disability policies. social and cultural differences it would not be appropriate to generalize the results of studies of developed nations to newly developed countries.

The finance sector in Bangladesh comprises the: (i) money and capital markets. and 29 non-bank financial institutions (NBFIs) as of 2008. Such disclosures were general statements indicating company support for environmental protection and describing projects to reduce pollution and save energy and resources. the involvement of stakeholders through a robust process of dialogue. Ansar-VDP Unnayan Bank and Karma Shangsthan Bank are operating in Bangladesh. Overall. (2006) examined corporate social reporting in Thailand. as well as report readers and users like employees. GRI develops these reporting guidelines using a global consensus-seeking process that involves reporting organizations such as companies. A number of broadly recognized standards are particularly relevant to CSR. The number of pages dedicated to such disclosures ranged from 0. GRI issued its first set of guidelines in 2000. AAS 1000 and 1000S focus on the processes of reporting and auditing. with Thai companies reporting more on human resources. and.pdf 7 . Money market1: The financial system in Bangladesh includes Bangladesh Bank (the Central Bank). and (iii) microfinance. 2008).bangladesh-bank. 2002a. Disclosures appeared in the director’s report or chairperson’s statement. credit rating agencies and the stock exchange. 1 The following is based on: http://www. including the GRI Sustainability Reporting Guidelines. insurance companies. 2004). they found that the level of corporate social reporting is increasing.b). 30 domestic private commercial banks. These are all state owned. microfinance institutions (MFIs). (ii) insurance and pensions schemes. 3. is likely to result in a company properly discharging accountability rather than simply complying with a list of disclosure items (Adams. Over and above the institutions cited above. As expectations for disclosure of information on environmental and social performance have grown.Ratanajongkol et al. scheduled banks. The GRI Guidelines focus on issues that should be reported (Maitland. investors. the second in 2002 (known as the G2 guideline) and the third in late 2006 (G3 Guideline) (KPMG. no company disclosed financial data concerning environmental performance. non-bank financial institutions. and the ISO 14001 Series. in particular.25 to 3 pages. A focus on processes. and non-governmental organizations. A similar study in Hong Kong revealed that 6% of companies disclosed social activities with an emphasis on staff development and community relations (Lynn. 1992). In addition to the Central Bank of Bangladesh there are 4 state-owned banks (SCBs). so have demands that companies provide information in a standardized way that allow readers to compare company performance. However. Accountability Assurance Standard 1000 & 1000S. co-operative banks. there are three development financial institutions operating in Bangladesh. namely House Building Finance Corporation (HBFC). Ng (2000) found that 9% of the 200 HK listed companies reported environmental information in published accounts. They analyzed the extent and nature of corporate social reporting of 40 Thai companies over a 3-year period.org/mediaroom/tenders/fsectorinbb. 9 foreign commercial banks. 5 state-owned specialized banks. Figure 2 illustrates the nature of the finance sector in Bangladesh. A brief overview of the finance sector in Bangladesh Corporate disclosure is said to be a function of the finance sector and plays an important role in a country’s development.

1938 with regulatory oversight provided by the Controller of Insurance with authority granted by the Ministry of Commerce. and particularly focus on rural women as clients. the Grameen Bank and its founder. 8 debentures and 34 treasury bonds. At the end of 2008 the total number of enlisted securities with DSE stood at 328. The member-owned Microfinance Institutions (MFIs) have an explicit social agenda to help the poorer sections of population. dealing in the secondary capital market. except for the state-owned Jiban Bima Corporation (GBC) –a foreign owned American Life Insurance Company . 2006. The authority’s main responsibilities include issuance and cancellation of the license for microcredit. stateowned Shadharan Bima Corporation (SBC) is the most active in the insurance sector. of which 273 are listed companies. Other than the capital market. some scheduled banks. National [Commercial Bank?] and some foreign banks are engaged in long-term industrial financing. Bangladesh Small Industries and Commerce (BASIC) Bank Ltd. floats and manages closedend and open-end mutual funds and closed-end unit funds.pdf 8 . Bangladesh Shilpa Rin Sangstha (BSRS).Capital Market2 The capital market in Bangladesh is regulated and supervised by the Securities and Exchange Commission (SEC) under the SEC Act. with the close cooperation of Bangladesh Bank.org/mediaroom/tenders/fsectorinbb. Regarding the general insurance companies. The Investment Corporation of Bangladesh (ICB) monitors the capital market and it was established in 1976. ICB underwrites issues of securities. 1993. Muhammad Yunus. A total of 68 insurance companies operate in Bangladesh. The SEC so far has issued licenses to 27 nonbank institutions to participate in the capital market of which 19 institutions are Merchant Banker and Portfolio Manager while 7 are Issue Managers and l (one) acts as Issue Manager and Underwriter. The Dhaka Stock Exchange (DSE) was established as a public limited company in April 1954. Dr. Insurance3 The insurance sector is regulated by the Insurance Act. Among these life insurance companies. Its objective is to encourage and broaden the base of industrial investment. The Board consists of the Governor of Bangladesh Bank as ex-officio chairperson.bangladesh-bank. supervising and facilitating all MFI activities. provides substantial bridge financing programs. The government. ICB also operates in both DSE and CSE as a dealer. Grameen Bank was established in 1983 under a special law with the 245 The following is based on: http://www. established a regulatory framework which culminated in the enactment of the Microcredit Regulatory Authority Act. of which 21 provide life insurance and 47 are in the general insurance field. such as Bangladesh Shilpa bank (BSB). and overseeing. In recognition of the robust poverty eradication program through microfinance activities. An Executive Board consisting of eight members is responsible for executing the management’s general and administrative tasks. and maintains investment accounts. Now it has been recognised globally that microfinance can be easily implemented and thus replicated in many regions of the world. six government officials nominated by the government and one executive vice-president who serves as the board’s member secretary. were awarded the 2006 Nobel Peace Prize. while the Chittagong Stock Exchange (CSE) was established in April 1995. Microfinance Institutions 4 Microfinance Institutions (MFI) in Bangladesh have been unregulated since their inception.the rest are privately owned. 13 mutual funds. A total of 44 insurance companies are listed in the capital market. It does this to ensure the supply of securities as well as generate demand for securities.

because it makes sound business sense. there is intensifying pressure from stakeholders to do so (Belal. Any company that does not develop and promote its CSR policy to all stakeholders will face increasing threats to its reputation. Of these. Besides Grameen Bank. Bangladesh Bank) It is appropriate to provide a brief overview of the importance of CSR in Bangladesh. Finance sector in Bangladesh Money Market Capital Market Microfinance Securities Market Insurance and pension and Provident Funds • Bangladesh Bank • All banks • Non-bank financial institutions • Money changers • Credit rating agencies • Securities and Exchange Commission • Stock exchanges: Dhaka Stock Exchange and Chittagong Stock Exchange • Investment Corporation of Bangladesh • Merchant bank[s?] • Controller of Insurance • General and life insurance companies • Government Pension Scheme • Central Provident Fund • Private sector pension funds • Nongovernmental organizations affairs bureau • Palli Karma Shahayak Foundation • Grameen Bank • Bangladesh Rural Development Board and other non-governmental organizations. 9 . The typically landless borrowers of Grameen Bank are mostly women who are owners of the bank and it is a pioneering organization. microfinance institutions. Secondly. awareness of corporate social reporting has rapidly increased.initial support from the Bangladesh Bank. All companies need to consider their CSR for two basic reasons. FIGURE 2: Finance sector in Bangladesh (Source: Policy Analysis Unit. Firstly. The following figure shows how the finance industry in Bangladesh is organized. 2001). there are more than 1000 semi-formal institutions operating mostly in the rural sector of the country. and PROSHIKA are considered the three largest NGO-MFIs. BRAC. ASA. Although a relatively new concept in Bangladeshi corporate culture.

for the financial year 2002–2003. 1997). p. since the adoption of International Financial Reporting Standards (IFRS) in Bangladesh on 5 July 20065. CSR is still voluntary with the exception of disclosure of expenditures on energy usage required under the Companies Act of 1994 and the Securities and Exchange Rules of 1987. Only 10 percent of companies provide consumer related disclosure (Imam. 5 International Accounting Standard (IAS) came into effect on 1 January 2005. 10). if management believes they will assist users in making economic decisions. neither is there a separate Bangladesh Accounting Standard (BAS) regarding social and environmental reporting (IASCF. The disclosures mostly comprise narrative qualitative information (Imam. The government of Bangladesh has not imposed or proposed requirements for disclosure of social and environmental performance. Though some progressive companies disclosed some information on community. 2001). it brings in new business and improves stakeholder return (Kabir. Belal (2001) concluded that …although a number of companies are making social disclosures. However. Presentation of Financial Statements (BAS 1) encourages companies listed on the Stock Exchange of Bangladesh to publish additional statements on their non-financial activities. In this study listed companies dominate the survey (28 out of 30) representing 15 percent of the total listed companies in Bangladesh (196 at June. the quality of information disclosed is very low. Belal’s (2001) study represents 30 annual reports collected on an ad hoc basis directly by contracting the company source or collected from Dhaka Stock Exchange.. These conclusions echo that of Imam (2000). 2000.. The nature of disclosure is mainly descriptive (Belal. Imam conclude that …. it is not surprising that in previous research only a few companies did disclose their CSR. p. In the absence of independent verification. the credibility of information disclosed is questionable. However. Using annual reports of 40 companies listed on the DSE. Imam (2000) found that in 1996–97 annual reports: ….33% of Bangladeshi companies disclose social and environmental information in their corporate annual report (Hossain et al. 10 . no provisions regarding CSR exist in the Companies Act 1994 (GoB..286). p. 140). Therefore. the sample listed companies tend to represent a relatively minor quantity of disclosure when compared with corporate financial disclosures. 2000. in Bangladesh. a total of 25 per cent of the sample companies made community and 22. The Bangladesh Companies Act 1994 sets the general framework for corporate financial reporting. 1994). environmental and consumer related disclosure. (2006) also used the annual reports of 107 non-finance companies.enhances reputation. Hossain et al. 2001. 2003).5 per cent environmental disclosure. Since corporate social reporting disclosure is voluntary in Bangladesh. that information was not at all adequate in discharging social responsibilities. showing that: an average 8. 136). 2006. 2003). p. Until recently. which require the total amount spent on energy to be shown as a separate expenditure in the notes to the financial statements (Belal.

separate sections of annual reports and separate sustainability reports were selected. Gray et al. For this study. some researchers do not consider font size. 1994). Guthrie and Parker (1990). (1995b) the number of pages. regarding pages. 11 finance and investment companies and 6 leasing companies. Gray. We were able to collect information of another 44 finance companies (highlighted in bold in the Appendix). Owen and Adams (1996). an appropriate document is chosen. annual reports constituted the main primary source. Content analysis employs a three-step process (Raman. 1995b. They also mentioned that if we compare the findings between developed and some developing countries. This technique has been used in other studies (Guthrie and Parker. and Gray et al. Different researchers use different units of measure. Separate corporate social disclosure reports by publicly listed limited companies in the finance sector published between 1 July 2007 and 30 June 2008 were also reviewed. Results show that 18 companies or 41% made disclosures relating to corporate social performance. Raman (2006) argues that pages are preferred since they can be easily counted and involve less 11 . 2006). This technique is defined ‘as a method of copying the text (or content) of a piece of written work into various categories on the basis of selection criteria’ (Krippendorf. Hackston and Milne (1996) the number of sentences. 1990. Raman. These 18 reporting companies were systematically analyzed using content analysis. Three companies (Fidelity Assets & Securities Company Ltd. Unerman. the disclosure of social and environmental information made by the listed companies in their corporate annual reports in Bangladesh is “very disappointing” (Hossain et al. section 189 (1 & 2) (GoB. Directors are responsible for preparing financial reports and according to the Company Act 1994 directors should forward the 'statutory report' to shareholders (members) at least 21 days before the day of the annual general meeting (AGM). p. Raman. Annual report is a common and popular means of communication to stakeholders and they command credibility (Guthrie and Parker. the reports should be signed by the chairperson or other authorized person(s) as mentioned in Company Act 1994. annual reports are considered appropriate documents for analysis. 4. First. Methodology and data collection In order to understand CSR disclosure by finance sector companies. and page margins. director’s reports. 2006). 21). Others argue that words would have no meaning unless they are part of a sentence (see Raman. Indeed there has been considerable debate about these different measures (Gray et al..Hossain et al. The second step is to determine the unit for measuring contents. 47 finance companies were listed on the Dhaka Stock Exchange (see Appendix for full list). 1995a. 1995a. 1980... 2000). Zeghal and Ahmed (1990) used the number of words. Milne and Adler. 1999. 2006). chairperson’s reports. This industry grouping is done by the Securities and Exchange Commission in Bangladesh and it includes 30 banks. First Security Islami Bank Limited and ICB Islamic Bank Limited) are excluded because these companies are listed in 2007–2008 and there is no annual report published in this study period. Taking 2007-2008 as the target year. 2006). Adams. 2004. For example. Deegan and Rankin (1997) and other scholars studied corporate social disclosure practices using annual reports as the key source of information. For example. To analyze the extent of social responsibility reporting by Bangladesh companies. 2006). line spacing. 1990. Again. 1983. (2006) conclude that these disclosures were voluntary in nature and largely qualitative. Singh and Ahuja.

Community Involvement. started doing this) It is difficult therefore to prepare a corporate social responsibility worksheet according to a standard breakdown such as GRI performance indicators or Global Compact principles. Amount measures the proportion of pages devoted to social responsibility issues. energy.90 Finance companies For the purpose of this study. Guthrie and Parker (1990). products. Products and Miscellaneous. The earlier work of Ernst and Ernst (1978). and page margins. “If anything. Attempting to reduce the degree of subjectivity and bias. 12 . and Gray et al. The form of disclosure includes quantified data. Hossain et al. Previous CSR studies (Imam. Form. and miscellaneous. Guthrie and Parker (1990). Belal. or agreement of what constitutes a socially responsible corporate activity. The third phase in content analysis involves identifying themes or categories into which blocks of content can be classified. the amount of disclosure reported in the survey is understated because of the selective approach employed in identifying and categorizing disclosures and the possibility of human error”. Ernst and Ernst’s analysis of annual reports of Fortune 500 companies revealed specific indicators of different categories of social involvement. community involvement. 2001. TABLE 1: CSR by the Listed Companies in 2007 -2008 Number of sample Companies companies listed on the disclosures DSE Number of companies Number companies 44 18 making CSR Sector of % 40. The lack of a widely accepted definition of ‘social responsibility’. 2000. (1995a). Table 2 below indicates the theme of CSR presented in our social responsibility worksheet. Ernst and Ernst (1978) claimed. Probably the most well-known studies in this area are by Ernst and Ernst (1978). Since different companies use different measurements. either monetary or non-monetary. Location refers to directors’ and/or chairpersons’ reports. Theme was based on variables such as environment. for example Standard Chartered Bank. and Gray et al. 5. Human Resources. separate sections of annual reports and separate or stand alone reports. Empirical findings of the study The findings from annual reports are shown in Table 1 below. none of the listed companies implemented GRI G3 disclosure in their annual report (only a few nonlisted companies. to be consistent with the measurement we typed them in a Word file and measured the portion of pages used by them. 2006) did not take this fact into consideration. does hamper this exercise and allows for the possibility of multiple interpretations. Fair Business Practices. 2000. In this study the unit of measure is number of pages. Currently. a corporate social responsibility worksheet was constructed with the following headings: Environment. human resources. Energy.judgment.. (1995a) is used to organize information into four categories: Theme. Amount and Location. and qualitative or declarative data. line spacing.

scholarships. Health related activities 21. Environment and fair business practices are a distant third. Although employees feature prominently. Conservation of natural resources 4. Other energy related disclosures Fair business practices 8. Pollution control 2. Most information disclosed in annual reports relates to employees and their interests. city beautification. Employment of women 11. environmental factors were included as were photographs of social activities. health care. Other product related disclosures Other social responsibility disclosures 26.TABLE 2: Theme of Corporate Social Disclosures Number of companies disclosing A. Interestingly. a number of banks devoted considerable space to community involvement activities such as tree plantation. Reducing pollution from product use 25. Other environmental disclosures Energy 5. Education and the arts 22. Other community activity disclosures Product Safety 23. Community activities 20. Advancement of minorities 10. Safety 24. Additional information 0 9 0 0 0 0 0 B C 0 1 3 0 0 1 0 5 1 17 7 15 14 16 0 0 0 0 0 0 D E F G In Table 2. and concerts. Prevention or repair of environmental damage 3. Employee training 18. Employment of other special interest groups 13. and (ii) human resources. Environment 1. Employee health and safety 17. Other disclosures 27. Employment of minorities 9. Energy efficiency of products 7. the top two themes of corporate social responsibility disclosure in annual reports are: (i) community involvement. Other human resource disclosures Community involvement 19. Socially responsible practices abroad 15. Advancement of women 12. Support for minority [businesses?] 14. Conservation 6. sponsoring sports tournaments. 13 . art competitions. Other statements on fair business practices Human resources 16.

56% of disclosures are generalized qualitative statements without supporting evidence.55% provided only monetary disclosures.67% used a specific section of the annual report. 5. and 5.11 5. Around twenty-eight percent of reports contained monetary or non-monetary quantification.67 11.11 0 16. the most popular place for locating social responsibility disclosures are the Director’s report (61. of companies reporting 11 0 3 2 1 1 18 Percentage 61. with 61.11 5. TABLE 5: Number of Pages Devoted to Corporate Social Responsibility Disclosures Pages devoted One sentence – one quarter of a page Quarter of a page – half a page Half page – three quarters of a page Three quarters of a page – one page More than 1 page Total No. Content analysis revealed that 55.55 5.11%).11% disclosing more than one page. Chairperson’s report.56 100 Table 3 outlines the results of the degree of quantification.11 55. Eleven percent of companies used non-monetary quantification.11 11.TABLE 3: Form of Corporate Social Responsibility Disclosures Quantification categories Both monetary and non-monetary quantification Monetary quantification Non –monetary quantification Qualitative (declarative) Total No. Some companies use both Directors’ and Chairpersons’ reports (11.55% used both directors’ reports and separate section of the annual report.55 100 The locations of disclosures are shown in Table 4. To be consistent for comparison reason we typed all the social and environmental disclosure sections from the annual report into a separate Word file using 14 . TABLE 4: Location of Corporate Social Responsibility Disclosures Locations Directors’ report Chairpersons’ report Separate section of annual report Both in Directors' and Chairpersons’ report Both in Directors’ and separate section Both in Directors’ and separate report Total No.11 100 In Table 5. Alternative formats include a separate report (Director’s report. and 11.11%). Finally.55 11. 5.78 5. As per Table 4.11% of companies disclosing less than one quarter of a page.11 11. and none used the Chairperson’s report. the mean amount of disclosure varied between one quarter of a page and half a page. of companies preparing CSR 5 1 2 10 18 Percentage 27.55% used directors’ and separate (stand alone) reports. while 16. separate section of annual report and separate or stand alone report) or a combination of different formats.55 11. of companies reporting 11 2 2 1 2 18 Percentage 61.

social and community development. Again the government of Bangladesh appears to be more committed to protecting the environment.2 cm each. 2006). rising foreign investment. social and environmental disclosure is still at a minimum level compared to other countries. Three quarters of disclosures are generalized qualitative statements without any attempt to convert this qualitative information into quantitative terms: more than half of CSR is located in the director’s report.With a re-activated capital market. An increasing number of companies and businesses in Bangladesh are engaged in corporate social responsibility (Sobhan. The need for finance institutions to conduct sustainable development in Bangladesh is urgent and banks. employees’ training needs. Internationally this trend has improved over last few years. and the average length of disclosures amounts to less than half a page. employees’ health and safety. A number of local entrepreneurs have formed their own philanthropic foundations or trusts. Owing to the presence of a unionized labor force and the Government Labor Policy’s emphasis on a well trained workforce. 1995. However. 2001). non-compliance with the legal requirements often encourages companies to not engage in social and environmental commitments or at least disclose them very inadequately. so the credibility of the information is questionable. It is a major source of long-term funds for the economy. pressure groups in recent times are evolving and they can put pressure on industries for more social disclosure to benefit consumers (Belal. Again there is no independent verification of this information. an unstable political situation. 2001). community activities. 12pt Times New Roman. employee disclosures can occur to a greater extent in Bangladesh than in other developing countries. 6. in particular. Finance companies in Bangladesh emphasize the disclosure of human resources factors. such as.an A4 format. Given the presence of widespread corruption. evident in the creation of the Environment Protection Act. can help by playing a meaningful and practical role. Additionally more companies are playing a major part in providing relief and rehabilitation in the aftermath of natural disasters. a large number of companies are engaged in philanthropic activities. increase in public awareness and the government’s emphasis on social welfare. Given this standard paper size the measurement of ‘pages’ attributed to a particular form of disclosure can be expected to remain reasonably constant.e. Furthermore it has been demonstrated that almost half the total number of finance companies provide social disclosure. most corporate social disclosures are qualitative in nature. and setting up facilities that provide healthcare services (Sobhan. As far as Bangladesh is concerned. It creates 15 . bottom. They act as a medium for the transfer of resources from net savers to net borrowers. the government.5 cm. deteriorating law enforcement and the influence wielded by the country’s social elite. and health related activities. These conclusions are similar to Imam (2000) and Belal (2001) who find that quantification of CSR disclosure is limited when they examine selected listed companies in Bangladesh. consumers and the wider community. Conclusion Finance institutions are now considered to be an integral part of the Bangladeshi economy. Moreover. margins: top -2. However. left and right . i. Corporate social responsibility can act as a strategic tool to facilitate the private sector’s active involvement in activities to maximize benefits for all stakeholders. 2006). Companies operating in the finance sector in Bangladesh are expected to acknowledge their wider obligations to investors and other stakeholders such as employees. finance companies are expected to provide more and more social disclosure (Belal.

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City Bank Dhaka Bank Dutch-Bangla Bank Eastern Bank Export Import (EXIM) Bank of BD 1st Lease International IDLC IFIC Bank International Leasing & Financial Serv. Peoples Leasing and Fin. Bangladesh Industrial Fin. Jamuna Bank Ltd. [Ltd. Ltd. Mercantile Bank Ltd. NBL NCCBL One Bank Limited Phoenix Finance and Investments Ltd. Prime Bank Prime Finance & Investment Ltd. Mutual Trust Bank Ltd.47 Listed Finance Institutions (listed on the Dhaka Stock Exchange) at June 2008: AB Bank Al-Arafah Islami Bank Bank Asia Ltd. Therefore they did not publish annual reports during this period. of BD Ltd. The Premier Bank Ltd. Co.?] Industrial Prom. MIDAS Financing Ltd. LankaBangla Finance Ltd. Premier Leasing International Ltd. 20 . Social Investment Bank Southeast Bank Standard Bank Limited Trust Bank Limited UCBL United Leasing Union Capital Limited Uttara Bank Uttara Finance Fidelity Assets & Securities Company Ltd* First Security Islami Bank Limited* ICB Islamic Bank Limited* Note: * These companies were listed on the Bangladesh Stock Exchange during the 2007-2008 financial year. BRAC Bank Ltd. Ltd. Co. Services Ltd. BD Finance and Investment Co. & Dev. Pubali Bank Rupali Bank Shahjalal Islami Bank Ltd. [Islamic?] Bank Islamic Finance & Investment Ltd.

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