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:

https://www.emerald.com/insight/1834-7649.htm

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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