Antecedents of corporate social responsibility disclosure: evidence from the UK extractive and retail sector
DOI | https://doi.org/10.1108/IJAIM-08-2021-0158 |
Published date | 11 February 2022 |
Date | 11 February 2022 |
Pages | 161-188 |
Subject Matter | Accounting & finance,Accounting/accountancy,Accounting methods/systems |
Author | Yan Wang,Kemi Yekini,Bola Babajide,Miriama Kessy |
Antecedents of corporate social
responsibility disclosure:
evidence from the UK extractive
and retail sector
Yan Wang
Department of Accounting and Finance,
Nottingham Business School, Nottingham Trent University, Nottingham, UK
Kemi Yekini
School of Finance and Management SOAS,
University of London, London, UK, and
Bola Babajide and Miriama Kessy
Department of Accounting and Finance, Leicester Castle Business School,
De Montfort University, Leicester, UK
Abstract
Purpose –This study aims to examine thelevel of corporate social responsibility (CSR) disclosureamong
the UK extractive and retail sectors and consequentlyascertain whether corporate board characteristics and
firm characteristicscan explain observable differences in the extent of CSR disclosure.
Design/methodology/approach –Based on the KPMG survey2017, the sample comprises all the firms
in the extractive industries,such as mining and oil and gas and also retail industries,such as food and drug
retailersand general retailers for the sample period of 2005 to 2018.
Findings –The findings show that the level of CSRdisclosure from extractive sector is much higher than
that of their counterpartsin retail sector. In addition, the multiple regression resultsshow that CSR disclosure
is positively and significantly associated with board gender diversity, board independence, board size.
Nevertheless, the results show that board meetings and Chief Executive Officer duality do not have a
significantimpact on CSR disclosure.
Originality/value –This study contributes to the existing literature on CSR in that it advances the
understanding of the interaction between governance mechanisms and specificfirm characteristics of two
distinctsectors of the UK economy and how this in turn influences the CSR in the two sectors.
Keywords Gender diversity, Corporate governance, Board characteristics,
Corporate social responsibility disclosure, UK retail and extractive sector
Paper type Research paper
1. Introduction
In recent years, there has been proliferation of studies on corporate social responsibility
(CSR), partly due to recent corporate scandals which resulted in a growing interest in the
subject from various stakeholders, and the need for transparency in corporate reporting
(Rashid, 2021;Yekiniet al.,2021).A recent survey (KPMG International, 2017) indicates that
there has been a general increase in global awareness and the importance of CSR reporting
(CSRR), with almost 95% of the global largest companies reporting on CSR information of
Corporate
social
responsibility
161
Received11 August 2021
Revised23 November 2021
Accepted26 December 2021
InternationalJournal of
Accounting& Information
Management
Vol.30 No. 2, 2022
pp. 161-188
© Emerald Publishing Limited
1834-7649
DOI 10.1108/IJAIM-08-2021-0158
The current issue and full text archive of this journal is available on Emerald Insight at:
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some sort in their annual reports. In the UK, many initiatives and regulations have been
introduced to promote the importanceand development of CSR. Some of these are the Equal
Pay Act 1970, the Health and Safety at Work Act 1974, the Sex DiscriminationAct 1975 and
the Race Relations Act 1976. In addition, in the year 2000, the world’sfirstMinister for CSR,
Kim Howells, was appointed in the UK. This resulted in a variety of measures being put in
place by the UK Government to ensure transparentand comprehensive annual reporting by
corporations to address a wider rangeof stakeholders, with government institutions been at
the forefront of reporting (Yekini et al., 2015). Several other initiatives were also introduced
to encourage transparent reporting, one of which is the FTSE4GOOD index of the London
stock exchange and the Business in the Community (KPMG International, 2017). Currently,
the UK is a prominent promoter of CSRR and one of the top 10 countries with the highest
CSRR rate in the world (Sughra and Crowther,2015).
The survey by KPMG International (2017, p. 20) shows the Extractive sector as the
leader in CSRR, while the retail sector has thelowest CSRR rate. Nevertheless, both sectors
play important roles in CSR activities in the UK, while both also suffer increased attention
and criticism from the public. In 2015 Retail was rankedas the second most unethical sector
in the UK (IBE, 2016) and involved in 62 media coverage. The key issues identified were
mistreatment of stakeholders, particularly late payments to suppliers and breachof human
rights (Guardian, 2017). In contrast, the Extractive sector reported substantially less ethical
issues (IBE, 2016), yet, the industry is classed as one of the most socially and
environmentallyharmful (Jenkins and Yakovleva, 2006). Furthermore, while the retailsector
has been greatly criticisedfor abuse of power and misleading customers the majority of CSR
scandals, such as environmental disasters and human rights incidents (Telegraph, 2010),
have arisen from miningor petroleum industries.
In this paper, we explore the two sectors –extractive sector with the highestCSRR rate
and the retail sector with the lowest CSRR rate according to KPMG global survey2017. Our
main focus is to examine howcorporate board characteristics and firm characteristicsin the
two sectors have affected CSR disclosure. We are keen on investigating the applicability of
the KPMG findings in the UK context since both sectors have received greater media
coverage and criticism than other sectors in the UK. Furthermore, it will be interesting to
explore why retail is at the bottom of the KPMG table while been ranked the 2nd most
unethical sector in the UK. Our research agenda is, therefore, to identify how corporate
governance mechanisms differ between the two industries, and to what extent they
influence CSRR. Therefore, using secondary data and quantitative analysis, we collected
data over a period of 2005 to 2018 from the sectors of food and drug retailers, general
retailers, oil and gas Producers and mining. We find that the level of disclosure from
extractive sector is higher thanthat of the retail sector. The multiple regression results show
that CSR disclosure is positively and significantly associated with board gender diversity,
board independence (BI), board size.Nevertheless, the results show that board meeting and
Chief Executive Officer (CEO) duality do not have a significant impact on CSR disclosure.
Further investigation on the interactions of corporate governance mechanism on CSR
disclosure across both sectorsrevealed mixed results. While some board characteristics (e.g.
board diversity and board size) have a positive and significant influence on CSR disclosure
across both sectors, resultson board meeting and CEO duality are mixed. On the other hand,
our results show that BI has a significant effect in retail, butnot in extractive industry.
We seek to extend and make serval contributions to the existing literature. Firstly, this
study advances our understanding of the interaction between governance mechanisms and
firm characteristics of two distinct sectors of the UK economy. Our findings indicate that
industry profile is the leading factor affecting CSR disclosure, leading to significant
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