Corporate Governance and Corporate Social Responsibility Disclosure: Evidence from the US Banking Sector

This paper fills the gap in the literature by examining the impact of corporate governance, with particular reference to the role of board of directors, on the quality of CSR disclosure in US listed banks’ annual reports after the US sub-prime mortgage crisis.

Corporate Governance and Corporate Social Responsibility
Disclosure: Evidence from the US Banking Sector
Mohammad Issam Jizi• Aly Salama•
Robert Dixon• Rebecca Stratling
Received: 4 February 2013 / Accepted: 14 October 2013
Springer Science+Business Media Dordrecht 2013
Abstract There isa distinctlack of research into the
relationship between corporate governance and corporate
socialresponsibility (CSR)in the banking sector.This
paper fills the gap in the literature by examining the impact
of corporate governance,with particular reference to the
role of board of directors, on the quality of CSR disclosure
in US listed banks’ annual reports after the US sub-prime
mortgage crisis.Using a sample of large US commercial
banks for the period 2009–2011 and controlling for audit
committee characteristics,board meeting frequency,and
banks’profitability,size and risk,we find evidence that
board independence and board size,the two board char-
acteristics usually associated with the protection of share-
holder interests,are positively related to CSR disclosure.
This indicates that,with regard to CSR disclosure,more
independentboards of directors and larger boards are the
internal corporate governance mechanisms which promote
both shareholders’ and other stakeholders’ interests.Con-
trary to our expectations,CEO duality also impacts posi-
tively on CSR disclosure.From an agency-theoretical
viewpoint, this suggests that powerful CEOs may promote
transparency about banks’ CSR activities for their private
benefits. While this could indicate that powerful CEOs are
under particular pressure to appease stakeholders’ concer
thatthey mightabuse theirpowerby providing a high
degree of CSR disclosure,it could also be a sign of man-
agerialrisk aversion ormanagers’privatereputational
concerns.
Keywords Corporate governance CSR disclosure
US Banks Content analysis Financial crisis
Introduction
Financial institutions, in particular banks, have come unde
increasing pressure,since the sub-prime mortgage crisis
and the following creditcrunch to take a more long-term
view of their investors’businessinterestsand to
acknowledge and respond to theirobligations to society
(Matten 2006; Money and Schepers 2007; Gill 2008; Grove
et al. 2011). Due to the extensive negative external effect
poorly managed and controlled bankscan imposeon
society,the perceptionof the firms’ corporatesocial
responsibility (CSR)activities is importantnot only for
investors’and customers’risk assessment,but also for
regulators’ good-will and for the public’s confidence in the
financial system.
Extensive priorresearch suggeststhatCSR reporting
can impact positively on stakeholders’ perceptions of firm
performance,firm value and firm risk,and thereby on
firms’profitability,costof capitaland share price (Gray
et al. 1995b;Simpson and Kohers 2002;Scholtens 2008;
Godfrey et al. 2009; Salama et al. 2011; Ghoul et al. 2011
Cormier etal. 2011;Lourenco etal. 2012).Moreover,as
CSR reporting contributes to the reduction of information
asymmetry between managersand investorsas well as
other stakeholders,comprehensive CSR reporting aids the
M. I. Jizi (&)
Lebanese American University,Business School,Beirut,
Lebanon
e-mail: [e-mail]
A. Salama R.Dixon R. Stratling
Durham University,Durham Business School,Durham,UK
e-mail: [e-mail]
R. Dixon
e-mail: [e-mail]
R. Stratling
e-mail: [e-mail]
123
J Bus Ethics
DOI 10.1007/s10551-013-1929-2

supervision and controlof managers.Effective boards of
directors are therefore expected to promote CSR reporting
(Jamali et al.2008).
Given the potentialimpactof CSR reporting on firms’
sustainability,there is a surprising dearth of research into
the impactof corporate governance on CSR disclosure.
Existing research mainly concentrates on the influence of
CSR committees on CSR disclosure (Gill2008;Spitzeck
2009;Li et al. 2010;Kolk and Pinkse 2010) and largely
neglects investigating whetherkey characteristics ofthe
board of directors impact on the reporting of CSR-related
issues.As the board ofdirectorsis responsible forthe
developmentof sustainablebusinessstrategiesand the
supervision of the responsible use of the firms’ assets, it is
the board which takes the crucial decisions in relation to a
firm’s CSR policies. If firms engage in CSR activities and
reporting notmerely asa temporary fad orto appease
managers’personalmoralconcerns(Porterand Kramer
2006; Hennigfeld et al. 2006), but to acknowledge societal
concernsand maintain positiverelationshipswith key
stakeholders in order to improve the sustainability of the
business,one would expect that firms with more effective
boards structures will be particularly diligent in providing
information on CSR-related issues.Accordingly,and in
light of increasing public, customer and investor pressures,
corporate governance features,such as board characteris-
tics, which were originally designed mainly to protect
shareholder interests (Fama 1980; Hermalin and Weisbach
1998, 2003), might be effective in encouraging managerial
stewardship for the benefit of a wide range of stakeholders.
Understanding the link between corporate governance,
in particularboard characteristics,and CSR reporting is
importantfor banks,because of their potentialsignificant
negative external effects on society. Since the credit crunch
of 2007–2008, stakeholders’ perceptions of firms’ risk and
performance have become particularly important to banks’
sustainability,since they rely on depositors and govern-
mentagenciesas key sourcesfor funding and liquidity
(Grove etal. 2011;Veronesiand Zingales 2010),and as
investors have become increasingly risk averse (Gemmill
and Keswani2011).However,there is a distinctlack of
empirical research into the relationship between corporate
governance and CSR in the banking sector. This paper fills
the gap in the literature by investigating whether corporate
governance characteristics, in particular key features of the
board of directors,impact on CSR disclosure in US com-
mercial banks’ annual reports, for the period after the credit
crunch of 2007–2008. We use banks’ annual reports, rather
than CSR or corporatesustainabilityreports,because
annual reports are the key documents scrutinised by a wide
rangeof stakeholders(e.g. Toms 2002;Campbelland
Slack 2008). Additionallydisclosureof CSR-related
information in annual reports allows boards to signal their
balance between financial and social objectives (Gray et a
1995a).Unlike previousresearch into CSR disclosure,
which relied on counting relevant words or sentences (e.g
Li et al. 2008;Kothariet al. 2009;Haniffa and Cooke
2005),we use contentanalysis to measure the compre-
hensiveness and quality of disclosed information in banks’
annual reports.The rationale for this is that the quality of
disclosure is more essentialthan the quantity (Hasseldine
et al. 2005;Toms 2002).In line with definitions,frame-
works and methods employed in the mainstream CSR lit-
erature (Gray etal. 1995a,b; Haniffa and Cooke 2005;
Branco and Rodrigues 2006; Scholtens 2008; Holder-Webb
et al.2009), we develop a CSR disclosure measure based
on the contentof four CSR categories—community
involvement,environment,employees,and productand
customer service quality—and score the contentof infor-
mation in each of the categories based on the existence a
comprehensiveness of information disclosed.
Our findings suggest that board independence and boar
size positively affectCSR disclosure by large US banks.
This indicates that, possibly due to the increasing realisati
of the long-term benefits ofCSR, corporate governance
mechanisms that were chiefly designed to protect minorit
shareholderinterestsmightalso encouragemanagerial
stewardship for the benefitof all stakeholders.However,
contrary to our expectations, Chief Executive Officer (CEO
duality,also,appears to be positively related to CSR dis-
closure.We are unable to identify whetherstakeholders
benefit from the ability of powerful CEOs to pursue private
interests by engaging in CSR activities and CSR reporting,
or whether the market pressures and public scrutiny force
powerful CEOs to engage in CSR disclosure as a means of
allaying fears that they might exploit their position.
The remainder of this paper proceeds as follows.The
next section providesa discussion ofthe relationship
between corporate governance and CSR disclosure. This is
followed by the hypotheses development.Afterwards,we
discussour research design,in termsof sampledata,
measurement of variables and the model, before we prese
the results and their analysis. The conclusion is given in th
final section.
Corporate Governance and CSR
According to the World Bank, ‘CSR is the commitment of
businesses to contribute to sustainable economic develop
ment by working with employees,their families,the local
community and society atlarge to improve their lives in
waysthatare good forbusinessand for development’
(Starks 2009,p. 465).
CSR can have both financialand strategic advantages
for firms. By engaging in social activities and reporting on
M. I. Jizi et al.
123

CSR, firms develop the trust and goodwill of stakeholders,
which can providethem withcompetitiveadvantages
(Aguilera etal. 2006;Money and Schepers2007;Gill
2008; Kolk and Pinkse 2010). Research suggests that CSR
reporting promotes firms’ image and enhances their repu-
tation, (Gray et al. 1995b; Li et al. 2010; Vanhamme et al.
2012)as relationships with stakeholders are based on a
positive exchange of benefits (Bear etal. 2010).Socially
responsible firms tend to experience greater brand loyalty
(Mackenzie2007),customersatisfaction and employee
commitment (Matten 2006). CSR engagement also reduces
the risk thatfirms’ performance is negatively affected by
labourdisputes,productsafety scandalsand consumer
fraud (Waddock and Graves1997).Accordingly,firms
which are perceived to have high CSR standards are sub-
jectto lowerfirm specific risks due to lowercash flow
variability (Salama et al.2011).
As CSR engagement and CSR reporting can impact on
firms’risks and profitability,investors increasingly con-
sider firms’ social behaviour in their investment decisions
(Simpson and Kohers 2002;Aguilera etal. 2006;Matten
2006).Research by Ghoul et al.(2011) on US firms indi-
cates that investment in employee relations, environmental
policiesand CSR productstrategieshelpslowerfirms’
costs of capital.Investors,therefore,increasingly require
boards and managers to engage in CSR and report on this
engagement (Scholtens 2008; Kolk and Pinkse 2010).
However,firms’ engagementin CSR is notmerely of
interestto long-term profitmaximisingshareholders.
Firms’ dependenceon otherstakeholdersand on the
frameworks and resources provided by civil society means
that there is a reciprocal expectation that firms ‘balance the
multiplicity of stakeholder interests’ and ‘are responsible to
society asa whole’ (van Marrewijk 2003,pp. 96–97).
Expectationsabout firms’ social responsibilitiesare,
therefore,affected by their potential impact on stakehold-
ers and civic society.This is one of the reasonswhy
industries,which can impose significantnegative external
effects on society, such as the financial service sector, tend
to be comparatively tightly regulated and scrutinised.The
huge negative external effects failing banks in the US and
Europe recently imposed on society are the driving force
behind attempts by national and international regulators to
improvebanking standardsand explain why theCSR
activitiesof bankshavecomeunderincreased public
scrutiny (Grove et al.2011).
While governments have the responsibility to set regu-
latory frameworks for the operation of firms at national and
internationallevel,it is the board ofdirectors,which is
ultimately responsible for the developmentof sustainable
business strategies and the oversightof managers’ use of
the firms’ resources (OECD 1999). Both at national and at
firm-level,‘good corporate governance’is expected ‘to
ensure that corporations take into account the interests of
wide range of constituencies, as well as of the communitie
within which they operate,and that their boardsare
accountable to the company and the shareholders’ (OECD
1999, p. 5). However, with regard to firms’ engagement in
CSR, there is so farlittle research into whether‘good’
corporate governance at board level has any impact (e.g.
and Harjoto 2011). This is of particular concern, given the
potentialconflictsof interestamong shareholders,other
stakeholders and the public atlarge.As mostfirm-level
corporate governance mechanisms were originally devel-
oped to protect shareholder interests (Fama 1980),it is by
no meansa foregone conclusion that‘good’ corporate
governanceis also beneficialto the interestsof other
stakeholders and civic society.
Hypotheses Development
In situations where goods,labour and capitalmarkets are
not perfectly competitive,agency theory suggeststhat
managers might be able and willing to abuse their power t
exploit the firms’ shareholders as well as other stakeholde
(Hermalin and Weisbach 1998; Haniffa and Cooke 2002).
In such circumstances, when external corporate governan
fails, internalcorporate governance mechanisms,in par-
ticular boards of directors, are expected to play a key role
in supervising managersand holding them to account
(Fama 1980; Hermalin and Weisbach 2003; Li et al. 2008;
Guest2009).While directors in non-financialcompanies
are usually expected to oversee managers predominantly
the interestof shareholders,financialservices regulation
extendsthe fiduciarydutiesof directorsof banksto
depositorsand regulators(Pathanand Skully 2010),
although the election of the directors remains the purview
of shareholders.
The way that boards discharge their duty of supervision
and control depends not only on their fiduciary duties,but
also on their membership and organisation.For example,
Pathan’s (2009) research on large US bank holding com-
panies indicates that between 1997 and 2004,CEO power
and board structure were related to banks’ risk taking. The
findings do not only show that board characteristics,such
as board independence and CEO duality,can impacton
firm behaviour;butthey also demonstrate the importance
of differencesin stakeholderinterests.The pre-credit
crunch study indicates thatstrong,independentboards of
directors successfully put pressure on banks’ managemen
to increase risk taking for the short-term benefit of share-
holders and the detrimentof depositors,bondholders and
risk-averse CEOs.By contrast,banks with strong CEOs
tended to have a lower risk profile, as managers were able
to accommodatetheir personalinclinationfor risk-
Evidence from the US Banking Sector
123

aversion,which incidentally also benefitted otherstake-
holders such as depositors and bondholders.
In the context of CSR disclosure, differences in interests
of managers,shareholders and other stakeholders are also
likely to play a role in how corporate governance structures
affect firm behaviour.However,in this case,as discussed
earlier, it appears that shareholders’ and other stakeholders’
interests might be more closely aligned.
Board Independence
From an agency theoreticalperspective,boardswith a
high proportion of independentdirectors are presumed to
be moreeffectivein monitoring and controlling man-
agement.They are, therefore,expectedto be more
successfulin directing managementtowardslong-term
firm valueenhancing activitiesand a high degreeof
transparency.Independentdirectorsare supposed to be
able to assess managementperformance more objectively
than executivedirectors,as they are less closely
involvedin the developmentof firm strategiesand
businesspolicies.In addition,independentdirectorsare
less dependenton the CEO’s goodwillthan executive
directorsand affiliatednon-executivedirectorswith
business links to the firm.Therefore,a higher proportion
of independentdirectors on the board is expected to lead
to bettermonitoring and controlof management(John
and Senbet1998; Ahmed et al. 2006; Cheng and
Courtenay 2006).
Moreover,independentnon-executive directors’ remu-
neration is not tied to the firm’s financial performance and
growth,unlike the remuneration of top executives and the
businessprospectsof affiliated non-executive directors.
Consequently, independent directors are expected to be less
focussed on short-term financialperformance targets and
more interested in measures which enhance firms’long-
term sustainability,such as engaging in and reporting on
CSR (Ibrahim et al. 2003). Banks with independent boards
are, therefore, expected to display a greater engagement in
CSR and CSR reporting (Jamaliet al. 2008;Arora and
Dharwadkar 2011).
Indeed,empiricalresearch suggeststhatindependent
directors are more supportive of firms’ investment in CSR
activities(Johnson and Greening 1999)and pay more
attention to the perception of the firm’s social impact than
executive or affiliated non-executive directors.Moreover,
prior studies indicate thatboards of directors with a high
proportion ofindependentdirectorstend to facilitate a
comparatively high degree of transparency and voluntary
disclosure (Cheng and Courtenay 2006;Patelliand Pren-
cipe 2007;Donnelly and Mulcahy 2008;Li et al. 2008;
Chau and Gray 2010).This suggeststhatindependent
directorsare likely to supportthe disclosureof CSR
activitiesto reduceinformationasymmetrybetween
insiders and outsiders.This leads to our first hypothesis.
H1 A higher degree of board independence is positively
related to CSR disclosure.
Board Size
Considering group dynamics,smallerboardsare often
expected to be more effective at monitoring and controllin
management than larger boards.Due to their limited size,
they are expected to benefitfrom more efficientcommu-
nication and coordination,as well as higherlevelsof
commitment and accountability of individual board mem-
bers (Ahmed et al.2006; Dey 2008).
However,the drawback ofsmallboardsis thatthe
workload of individualmembers tends to be high,which
mightlimitthe monitoring ability of the board (John and
Senbet 1998). Moreover, smaller boards can draw on a les
diversified range of expertise than larger boards, which ca
impact on the quality of the advice and monitoring offered
(Guest 2009).
Empiricalresearch suggeststhatboard size isdeter-
mined by a variety of factors including industry,firm size
and the complexity of the firm’s business (Krishnan and
Visvanathan 2009;Pathan 2009).As commercialbanks
are complex organisations that are subject to wide-rangin
regulation (Grove etal. 2011),we expectthatin this
context,workload considerationsare of ultimate impor-
tance.Hence,we expectthatlarger boards willbe better
able to directmanagementto engage in CSR activities
and to effectively communicate theirsocialperformance
to the bank’sstakeholders.This leadsto our second
hypothesis.
H2 Board size is positively related to CSR disclosure.
CEO Duality
Agency theory suggeststhatmanagers’private interests
are likely to impact on the degree to which they engage in
CSR activities and CSR disclosure.In this context,CEO
duality can be seen both as a sign and an instrumentof
managerialpower.CEOs are more likely to be appointed
as chairs ofthe boards ofdirectors ifthey have a suc-
cessfultrack record or if they controla large proportion
of the firm’s shares(Hermalinand Weisbach1998).
Moreover,as chairs of boards of directors have the ability
to setthe board’s agenda and influence the information
provided to the other board members,CEOs who also act
as chairs can hide crucialinformation more easily from
other,in particularnon-executive,directors (Haniffa and
Cooke 2002;Li et al. 2008;Krishnan and Visvanathan
2009).Being chairmightalso enable CEOs to influence
M. I. Jizi et al.
123

board appointments in theirfavour(Haniffa and Cooke
2002).Therefore,non-executive directors mightbe more
likely to acceptmanagerialdecisions againsttheirbetter
judgement,because they try to avoid confrontations with
powerful CEOs,for example,to retain their places on the
board (Dey 2008). Empirical research suggests that boards
of directors’attentionto monitoringare negatively
affected by CEO duality (Tuggle etal. 2010),as is the
level of voluntarydisclosure(Donnellyand Mulcahy
2008;Chau and Gray 2010).
As previously discussed,while it is often assumed
thatbank CEOs are less risk happy than their diversified
shareholders,changesin banks’executive remuneration
mighthave changed this.Empiricalstudies suggestthat
executive remuneration in US holding banks has become
increasingly risk sensitive,which hasencouraged man-
agersto take more risks in orderto maximisetheir
short-term pay.Research by Baiand Elyasiani(2013)
shows thatbetween 1992 and 2008,the risk sensitivity
of CEO pay in US bank holding companiesincreased
significantly,and thatthis is related to an increase in
bank risk.Similarly,research by Hagendorffand Va-
llascas (2011)finds thatbetween 1993 and 2007,CEOs
of US banksincreasinglyengagedin risky business
transactions,as the proportion ofequity-based pay in
their performancecontractsrose. This suggeststhat
managers’ typicalinclination to limittheirrisk exposure
to protecttheirhuman capitalhas been eroded by the
structureof their executivepay packages.As CSR
engagementand disclosuretend to reducefirms’ risk
profiles(Simpsonand Kohers 2002;Scholtens2008;
Salamaet al. 2011;Ghoul et al. 2011),CEOs might
view CSR reporting asdetrimentalto maximising their
remuneration.
Moreover,if powerfulCEOs are able to use CSR to
furthertheirown interests and moralconvictions,rather
than the interests of shareholders and other stakeholders;
they are likely to be reluctantto provide comprehensive,
high quality disclosure of CSR activities.Since the provi-
sion of information increases the effectiveness of external
controlnotonly by informed investors,financialanalysts
and the business press (Healy and Palepu 2001;Li et al.
2008;Beyeret al. 2010),but also by otherkey stake-
holders, and the public, powerful CEOs are expected to use
theirinfluence to curtailvoluntary disclosure,including
CSR disclosure.
Given the developmentof executive remuneration in
banks during the last 15 years and the ability of CEOs, who
also actas chairs of the boards of directors,to influence
board behaviour,we expect that:
H3 CEO duality is negatively related to CSR disclosure.
Research Design
Sample
The paper seeks to investigate whether CSR reporting in
annualreports of US listed nationalcommercialbanks is
related to the firms’ corporate governance in the wake of
the financialcrisis of 2007–2008.We,therefore,examine
the CSR disclosuresin US nationalcommercialbanks’
annualreports from 2009 to 2011.In orderto focus on
financial institutions which provide similar services and are
subjectto the same regulationsand disclosure require-
ments,we exclude creditunions,saving institutions and
centralreserve depositories from our considerations.This
leaves us with a sample of193 banks with totalassets
varying from $48 million to $2223 billion.To ensure that
banks have a similar level of regulatory scrutiny and publi
visibility,we furtherrefine oursample by excluding all
banks which recorded less than $1 billion in total assets in
2009.The initial sample selected according to the defined
criteria consisted of107 US listed nationalcommercial
banks per-year.
The CSR data were collected from banks’ 2009,2010
and 2011 annualreports.The data on board composition
and activity were also collected from the banks’annual
reports, as well as related proxy statements. Financial dat
were collected from the Thomson One Banker database
and,if necessary,from the banks’ 10-K forms and web-
sites. If one or more of the variables were not found in the
mentioneddata sources,the correspondingbank was
omitted from the sample. This left us with 98 observations
for 2009, 97 observations for 2010 and 96 observations fo
2011.
Measuring CSR Disclosure
In line with previous research,this paper focuses on self-
reported information on CSR provided by the firms in their
annualreports (Gray etal. 1995b).The information con-
tained in the annual report is under much more control of
the CEO and the board of directors, than information by th
press or interest groups which many CSR ratings agencies
rely on (Johnson and Greening 1999;Barnea and Rubin
2010;Bear et al. 2010;Jo and Harjoto 2011).This is
importantgiven ourresearch questions.Moreover,com-
pared with specialised CSR reports, annual reports tend to
have a much wider readership among shareholders,stake-
holders and information intermediaries,such as financial
analysts and credit rating agencies. Finally, the majority o
the content of annual reports tends to be audited,whereas
auditing ofCSR reports tends to be much more limited
Evidence from the US Banking Sector
123

(Pflugrath etal. 2011;Perego and Kolk 2012).This sug-
gests that the CSR information provided in annual reports
has a greater reliability than that published in CSR reports.
Previous studies which aimed atevaluating CSR dis-
closure have tended to use two main approaches. The first
is to use CSR ratings provided by CSR rating agencies
(Johnson and Greening 1999; Barnea and Rubin 2010; Bear
et al.2010).We reject this option as the underlying ratio-
nale for the ratings tends notonly to remain obscure,but
also affected by information disclosed by the firm.The
second approach is to measure the disclosure content using
word or page counts (Liet al. 2008;Kothariet al. 2009;
Haniffa and Cooke 2005).However,such quantity scores
say little aboutthe quality and comprehensiveness of the
disclosure (Hasseldine etal. 2005).If, as previously dis-
cussed, CEOs might be incentivized to use CSR disclosure
to maximise media coverage, while at the same time trying
to limitstakeholderscrutiny oftheirpolicies,measuring
the quality and comprehensiveness rather than the quantity
of CSR disclosure is particularly important.
Therefore,in line with the guidance provided by Gray
et al. (1995a),we constructa CSR disclosure measure
based on the definitions,frameworksand methods
employed in the mainstream CSR literature.We examine
the contentof fourCSR categories:community involve-
ment,environment,employees,and product and customer
service quality (Gray etal. 1995b;Haniffa and Cooke
2005; Branco and Rodrigues2006; Scholtens2008;
Holder-Webb et al.2009).
The content of information on the four CSR categories is
assessed using scores based on the existence and compre-
hensiveness of information disclosed in each category (see
appendix Table 5).Each CSR category is rated from zero
to three according to the richness of information disclosed.
One additionalpointis given per category if quantitative
figures are disclosed and another point if comparative fig-
ures are disclosed.Therefore,a maximum offive points
can be assigned to each category and twenty points as a
totalscorefor CSR disclosurequality.The disclosure
measure (CSRDS) is the ratio of points awarded over the
maximum points a bank could achieve.
CSRDS ¼ X points ofcommunity;environment;ð
employees and product &
customer services categoriesÞ =20
The reliability and consistency of coding is crucial in the
application of content analysis to ensure that the assigned
scores are reproducible and reliable.Although reliability
testing cannot provide full assurance of scoring objectivity
(Linsley etal. 2006),Kripendroff’salpha iscommonly
used to assess the level of agreement between two or more
coders (Newson and Deggan 2002; Hasseldine et al. 2005;
Holder-Webb et al. 2009). Previous studies tend to sugges
that alpha valuesof 75 % or aboveare considered
generallyacceptable(Hasseldineet al. 2005;Holder-
Webb et al.2009).
To ensure the reliability of the assigned CSR disclosure
scores,a randomly selectedsampleof twenty annual
reportswas selected.The corresponding annualreports
were provided to two independent coders. The coders wer
informedaboutthe scoringprocedureand were then
required to assess the CSR contentof the annualreports
and allocate relevantscores.The scores provided by the
two independent coders along with the score computed by
one of the authors were used to testthe scoring process
reliability.The results of the testwere satisfactory as the
Krippendorff’s alpha for inter-coding agreement showed a
value of 80 %.
Control Variables
To avoid model misspecification, we control for additional
variables, which might also impact on CSR disclosure. As
CSR reporting is largely voluntary disclosure,we expect
that corporate governance structures,which impact on the
provision and quality ofvoluntary disclosure,will also
affect CSR disclosure.In this context,agency theory sug-
gests that effective audit committees are likely to improve
the reliability of corporate reporting and thereby to reduce
information asymmetry between managementand outside
investorsand otherstakeholders(McMullen 1996).The
effectiveness ofauditcommittees is likely to depend on
their size and expertise. Due to the scope and complexity
the tasks of audit committees,larger audit committees are
expected to be more effective and to put more pressure o
managers to disclose information voluntarily to increase
transparency (Li et al. 2008; Goh 2009). This is especially
relevant to banks, which conduct particularly complex and
risky business operations (Laeven and Levine 2009; Patha
2009). The literature on voluntary disclosure and disclosur
quality also suggests thatauditcommittee members with
financialexpertise tend to have a positive impacton the
extent and reliability of corporate reporting (Be´dard et al.
2004;Karamanou and Vafeas 2005;Hoitash and Hoitash
2009). Although it appears unlikely that the understanding
of audit committee members of CSR-related information is
linked to theirfinancialexpertise,we suggestthatsuch
members mighthave a more positive attitude to informa-
tion disclosure in general.
According to Lee etal. (2004),the numberof audit
committee and board meetingsmightbe a measure of
diligenceand, therefore,board and audit committee
effectiveness. With regard to corporate reporting, Kent an
Stewart’s (2008) research indicates thatthe frequency of
board and audit committee meetings is positively related
M. I. Jizi et al.
123

voluntary disclosure. Thus, we control for board and audit
committee meeting frequency.
Managers of firms who perform wellfinancially might
have spare resources under their control, which can be used
to engage more actively in CSR and CSR reporting to
placate stakeholders orpursue managerialinterests.It is
therefore essentialto controlfor firms’financialperfor-
mance (Haniffa and Cooke 2002,2005;Lim etal. 2007;
Arora and Dharwadkar 2011).
The need ofmanagersof highly leveraged firmsto
generate and retain cash to service the debtmightreduce
their ability to fund CSR and CSR reporting (Reverte 2009;
Barnea and Rubin 2010).We therefore controlfor firm
leverage.While empirical research by Haniffa and Cooke
(2002, 2005) and Reverte (2009) has found no indication of
a relationship between leverage and CSR disclosure,Bar-
nea and Rubin’s (2010) research suggests a negative rela-
tionship between leverage and CSR disclosure.
As managers mightuse CSR disclosure to impacton
stakeholders’perceptionsof firm risk, we controlfor
banks’ systematic risks.Prior empirical research indicates
thatfirm risk tends to be positively related to CSR dis-
closure (Deegan and Gordon 1996; Jo and Harjoto 2011).
Large firms have greater impacton communities than
smallerfirms (Barnea and Rubin 2010).Consequently,
large firms tend to be more exposed to the influence of
powerful stakeholder groups representing employees,cus-
tomers, investors, public authorities, etc., are likely to face
tighter regulatory requirements,and tend to be subjectto
greater public scrutiny (Reverte 2009;Barnea and Rubin
2010). Therefore, firm size is likely to influence the amount
of CSR disclosure needed to address the concerns of var-
ious stakeholder groups (Branco and Rodrigues 2006).As
our sampleconsistsof largeUS nationalcommercial
banks,the study uses a relative rather than absolute mea-
sure to controlfor bank size (De Haan and Poghosyan
2012; Holder-Webb et al.2009).
The Model
To test the hypotheses,the Model (1.2) is set out below.
CSRDSt ¼ a þ b1BSt þ b 2BIt þ b 3DUALt þ b 4ACSt
þ b 5ACFEt þ b 6BMt þ b 7ACMt þ b 8ROAt
þ b 9Levt þ b 10SIZEt þ b 11BETAt þ e
where CSRDS CSR disclosure score measured as the ratio
of disclosure contentpoints overthe maximum score a
bank can achieve,BS board sizeas measured by the
number of board members,BI board independence mea-
sured by the number of independent directors over the total
number of board members,DUAL chair/CEO duality: 0 if
the CEO is not acting as the chair of the board of directors;
1, otherwise,ACS auditcommittee size measured by the
number of members on the auditcommittee,ACFE audit
committee financialexpertise measured by the number of
financial experts on the audit committee,BM board meet-
ings measured by the number of board meetings per year
ACM audit committee meetings measured by the number
audit committeemeetingsper year, ROA profitability
measured by netincome overtotalassets,LEV leverage
measured by totaldebtover assets,SIZE bank’ssize
measured by calculating the distance of each bank’s log
total assets from the sample mean,scaled by the log total
assets’ standard deviation,BETA Bank’s risk measured by
systematic risk,a the intercept,b1…. Bn the regression
coefficients,t period indicator,e9 the error term
Results and Discussion
Descriptive Statistics
CSR Disclosures
Banks disclose CSR with differentintensity and vary in
their focus among the four identified CSR categories.The
percentage ofbanksthatdisclose CSR in theirannual
reports increases from 93 % in 2009 to 97 % in 2010 and
2011.The mean of the aggregate disclosure score is 4.47
points(i.e. a ratio measure of0.22),and the standard
deviation is 3.35.The highest CSR disclosure score is 16
points out of 20 (i.e.0.8) across the four CSR categories.
The majority ofthe examined banks’annualreports
(87 %) disclosed information related to their staff.This is
in line with Branco and Rodrigues’ (2006) contention that
banksare particularly motivated to disclose CSR infor-
mation in relation to employees,since they are essential
assets for banks and impact on investors’ assessment of t
firms.
Forty-seven percent(47 %)of the examined annual
reports disclosedinformationrelated to community
involvement.A similar proportionof annualreports
(44 %)disclosed information on socialproducts,service
quality and customersatisfaction.Only twelvepercent
(12 %)of the annualreportsexamined disclosed infor-
mation related to environmentalprojects and initiatives.
Table 1 summarises the descriptive statistics for the CSR
disclosures.
Between 2009 and 2010,we found a slightincrease in
the disclosureof CSR relevantcontentin the annual
reports,as well as a rise in the number of banks that dis-
closed CSR-related information in theirannualreports.
However,both disclosure levels and the number of banks
disclosing CSR-related information remained largely the
same between 2010 and 2011.
Evidence from the US Banking Sector
123

Corporate Governance Variables
The proportion of independentdirectors on the boards of
the banks in our sample varies between 50 and 94 % with a
mean of 81 %. This finding is comparable to that by Pathan
and Skully (2010),which suggests that between 1997 and
2004, the proportion of independent directors on the boards
of US bank holding companies ranged from 10 to 96.55 %,
with a mean of 64.55 %.The main reason for these dif-
ferences is probably the increased regulatory pressure on
listed companiesto improveboard independence.For
example, from 2004 onwards, changes to Section 303A of
the NYSE’s Listed Company Manual, meant that the most
listed companieswererequired to havea majority of
independentdirectorson theirboards.1 In 32 % of our
observations,there is only one executive directoron the
board.
The boards of nationalUS banks,which are regulated
and supervised by the Office ofthe Comptrollerof the
Currency (OCC), have to consist of among five and twenty-
five directors.Our sample suggeststhatthe board size
actually varies among five and twenty-one members. With
12.5,the mean of the board size in 2009 is similar that in
2010 (12.29) and 2011 (12). This is in line with research by
Pathan and Skully (2010) who find that between 1997 and
2004,boardsof US bank holding companieshad 5–31
directorswith a mean of12.92.The lower maximum
number of directors on bank boards compared to Pathan
and Skully (2010) mightpartially be explained by differ-
ences between the samples, as bank holding companies are
not subjectto OCC regulations,and mightalso confirm
their observation that the board size of medium and large
banks is declining over time (Linck et al. 2008; Pathan and
Skully 2010).
The third board characteristic examined is CEO duality.
In 43 % of the examined banks,the CEO also holds the
position of the chairman of the board.This compares to
58 % in Pathan and Skully’s (2010) sample. As boards tend
to be put under pressure by shareholders to abandon CEO
duality if firm performance is poor (Hermalin and Weis-
bach 1998;Linck et al. 2008),the fallin CEO duality
might be related to the poor bank performance during and
after the US sub-prime mortgage crisis.Table 2 summa-
rises the descriptive statistics of the control variables.
Data Analysis
The descriptive statistics show that CSR disclosure scores
range from zero to 0.8, with a mean of 0.22. Five percent
observations did not disclose CSR-related information and
therefore score zero.As our dependentvariable iscen-
sored,we apply TOBIT regression modelsin the first
instance.2 The TOBIT regression model(Tobin 1958)is
commonly used in studying cases of censored data.If the
values of the dependentvariable in some of the observa-
tions are grouped at a limiting amount, which is commonly
zero, TOBIT regressions become more powerful than other
regressions,since they make use of all observations
regardless of whether they are atthe limitor above.This
distinguishes the TOBIT regression from other regressions
thatestimate the bestfit only based on values which lie
above the limit (McDonald and Moffitt 1980).
The TOBIT model equation is formed as follows:
yt ¼ Xtb þ u t if Xtb þ u t [ 0
¼ 0 if Xtb þ u t 0
t ¼ 1; 2; ; N
where N denotes the number of observations; yt denotes the
dependentvariable attime t;Xt denotes the independent
variables at time t; b are the coefficients, and ut represents
the error term (McDonald and Moffitt 1980).
We use a Spearman correlations matrix and VIF-tests to
testfor the existence ofmulti-collinearity between the
examined independentvariables.Table 3 shows the cor-
relations between the independent variables. The results d
not indicateany seriouscollinearityin the examined
Table 1 Summary CSR descriptive statistics
Description Total CSR disclosureCommunity involvementEnvironmentEmployeesProduct and customer services
Percent of total sample (295)95 % 47 % 12 % 87 % 44 %
Maximum disclosure scorea 16 (0.8) 5 5 5 5
Minimum disclosure scorea 0 (0.0) 0 0 0 0
Modea 2 (0.10) 0 0 0 2
Meana 4.47 (0.22) 1.30 0.80 0.28 2.08
SDa 3.35 (0.17) 1.64 1.13 0.88 1.14
a Data of the disclosure ratio in brackets
1 See:Securities Exchange ActRelease No.48745 (November4,
2003); 68 FR 64154 (November 12,2003) (SR-NYSE-2002-33).
2 We also employ OLS regressions with robust standard errors to test
the sensitivity of the estimated regression results.
M. I. Jizi et al.
123

models.We testfor heteroscedasticity using White’s test.
The results do not suggest a threat of heteroscedasticity.
The analysis of the impact of corporate governance on
banks’CSR disclosure forthe three-yearperiod is con-
ducted using two models,in order to isolate any potential
effectsof auditcommitteecharacteristicson voluntary
disclosure.The results ofthe regressions are interpreted
and reconciled below.Table 4 below shows estimates for
two TOBIT models (1.1.and 1.2).
All of the key corporate governance variables,board
independence, board size and CEO duality are statistically
significantin each of the regressions.While the explana-
tory power of the modelincreases when auditcommittee
characteristics are added to the model,the results for the
board characteristics remain consistent.
Our results,therefore,supporthypothesis1, which
expected board independence to be positively related to
CSR disclosure. This is in line with previous research into
independentdirectors’attitudetowardsCSR activities
(Johnson and Greening 1999;Ibrahim etal. 2003)and
independentdirectors’ influence on transparency and vol-
untary disclosure (Cheng and Courtenay 2006; Patelli and
Prencipe 2007; Donnelly and Mulcahy 2008; Li et al. 2008;
Chau and Gray 2010). These findingsindicatethat
independent directors promote both shareholders’ and oth
stakeholders’ interests with regard to CSR disclosure.
Hypothesis2, which predicted thatfirmswith larger
boards are likely to disclose more CSR-related information
is also supported.Our findings are in line with previous
research into the relationship between board size and vol-
untary disclosure(e.g.Lim et al. 2007;Donnelly and
Mulcahy 2008). The results indicate that, possibly because
banks are complex organisations,having a larger number
of directors share the work has a positive impacton the
firm’s attitude towards its stakeholders.
Hypothesis 3,which expected CEO duality to be nega-
tively related to CSR disclosure,is notsupported.To the
contrary,in line with findings by Bear etal. (2010),our
results consistently suggesta statistically significantposi-
tive relationship between CEO duality and CSR disclosure.
One possible explanation mightbe thatmore powerful
CEOs promoteCSR and CSR disclosurein order to
become more successful and to increase their pay or tenu
prospects, to appease personal moral concerns, or to redu
the supervision and controlexerted by financialor goods
markets,the board of directors or regulators (Barnea and
Rubin 2010).For example,Jiraporn and Chintrakarn
(2013) suggestthatCEOs view CSR opportunistically to
Table 2 Summary descriptive statistics for control variables
BS BI DUAL BM ACS ACFE ACM ROA LEV SIZE BETA
Mean 12.4 0.81 0.43 10.96 4.49 1.78 8.44 -0.11 0.90 0.86 -0.30
Median 12 0.82 0 11 4 1 8 0.52 0.90 0.79 -0.015
SD 3.1 0.10 0.50 4.96 1.17 1.26 3.53 1.74 0.06 0.54 3.92
Skewness 0.29 -0.83 0.28 1.57 1.03 1.42 0.57 -2.14 -10.27 2.20 -0.06
Kurtosis 2.97 2.99 1.08 7.43 4.12 5.25 2.56 8.06 151.49 9.69 8.61
Minimum 5 0.50 0 4 3 0 3 -9.53 0.8 0 -15.61
Maximum 21 0.94 1 34 9 7 21 3.69 1.05 3.47 19.79
Table 3 Spearman Correlations Matrix
Variables VIF BS BI DUAL BM ACS ACM ACFE ROA LEV SIZE BETA
BS 1.27 1.00
BI 1.13 -0.00 1.00
DUAL 1.10 0.10 -0.00 1.00
BM 1.28 -0.16 0.01 -0.23 1.00
ACS 1.29 0.39 0.32 0.11 -0.07 1.00
ACM 1.08 0.15 0.07 0.01 0.18 0.10 1.00
ACFE 1.13 0.16 -0.01 0.10 0.10 0.05 0.19 1.00
ROA 1.18 0.03 0.13 0.010 -0.24 0.07 -0.05 -0.04 1.00
LEV 1.08 -0.14 -0.26 -0.04 0.012 -0.14 -0.21 -0.01 -0.23 1.00
SIZE 1.44 -0.19 0.04 -0.09 0.03 -0.06 -0.10 -0.10 0.16 0.04 1.00
BETA 1.21 -0.07 0.04 0.04 0.15 -0.11 0.03 -0.04 -0.22 0.30 -0.38 1.00
Evidence from the US Banking Sector
123

gain media coverage and enhance theirown reputation.
Using CEO pay as a measurefor CEO power, their
research suggeststhat,unlessCEOs are already firmly
entrenched, more powerful CEOs are likely to engage more
actively in CSR.Moreover,as previously discussed,par-
ticularly in the contextof banks,powerfulCEOs might
have an incentive to limit their firm’s risk exposure against
the interests ofshort-term oriented shareholders (Laeven
and Levine 2009;Barry etal. 2011) in order to improve
their job security and to protect their human capital (Fama
and Jensen 1983;Pathan 2009).As banks’ risk exposure
can not only be reduced via finance and investment strat-
egies (Pathan 2009),butalso via CSR activities aimed at
engaging key stakeholders(Gill 2008;Scholtens2008;
Kolk and Pinkse 2010;Ghoulet al. 2011;Salama etal.
2011),powerfulCEOs mighthave an interestto increase
the bank’s CSR activities and reporting.
Another explanation why powerful CEOs might pursue
a high degree of engagement with and disclosure of CSR
might be related to the increased scrutiny they are exposed
to. If goods,labour and capitalmarkets are competitive,
agency theory suggests thatfirms’corporate governance
mechanismsmightbe endogenously determined (Fama
1980; Hermalin and Weisbach 2003).This implies that,if
investorsand otherstakeholdersare aware ofa CEO’s
powerful position, they may demand additional safeguards
to reduce the risk that managers abuse their power. In this
context firms with CEO duality might use CSR disclosure
to improve the effectiveness of outside control by informed
investors, financial analysts, the business press, etc. (Healy
and Palepu 2001; Li et al.2008; Beyer et al.2010),or to
signal high ethicalstandardsand good faith to their
stakeholders (Gray et al. 1995b; Meek et al. 1995; Aguiler
et al. 2006;Money and Schepers 2007;Kolk and Pinkse
2010).
While one might argue that in either case,stakeholders
stand to benefitfrom CEO duality with regards to CSR
disclosure,as the rationale forthe disclosure isfunda-
mentally different, it would be important to know whether
the influence of powerful CEOs on CSR disclosure is dri-
ven by personalinterests,by risk managementconsider-
ationsor by competitiveand publicpressure.As we
measure not simply the quantity of CSR disclosure but its
quality and comprehensiveness, and as our models contro
for firm risk, our findings most plausibly point towards the
latter option.This could be related to the increasing pres-
sure on banks,since the sub-prime mortgage crisisby
investors, regulators and the public to pay more attention
the long-term sustainability of the business and to respond
to their obligations to society (Matten 2006;Money and
Schepers 2007; Gill 2008; Grove et al. 2011). However, as
our data do not allow us to develop a definitive answer to
the question,it would beworthwhile in thefutureto
explore this issue explicitly.
With regard to the other control variables, we found tha
board meeting frequency and auditcommittee meeting
frequency arestatistically significantly related to CSR
disclosure. This is in line with findings by Kent and Stewart
(2008) which suggesta positive relationship between the
numberof board meetingsand thelevel of disclosed
information.The numberof board and auditcommittee
meetings appears to be a good proxy for the diligence and
Table 4 The relationship between governance structure and CSR disclosure
Independent variables Model (1.1) TOBIT
regression board structure
Model (1.2) TOBIT
regression full model
Model (2.1) linear panel
regression board structure
Model (2.2) linear panel
regression full model
Coeff.p value Coeff.p-value Coeff.p-value Coeff.p-value
Constant -0.30 (0.116) -0.32* (0.088) -0.34* (0.055) -0.34** (0.046)
BS 0.013*** (0.000) 0.012*** (0.001) 0.011* (0.067) 0.01* (0.072)
BI 0.26*** (0.010) 0.27*** (0.009) 0.23** (0.022) 0.25** (0.035)
DUAL 0.06*** (0.004) 0.05*** (0.006) 0.06* (0.058) 0.056** (0.045)
BM 0.01*** (0.000) 0.006** (0.006) 0.01** (0.017) 0.006*** (0.024)
ACS -0.012 (0.197) -0.01 (0.189)
ACFE 0.02** (0.026) 0.017** (0.002)
ACM 0.01*** (0.004) 0.01* (0.087)
ROA 0.023*** (0.000) 0.022*** (0.000) 0.022** (0.032) 0.02** (0.033)
LEV 0.012 (0.945) 0.02 (0.915) 0.08 (0.486) 0.075 (0.418)
SIZE 0.040** (0.036) 0.035* (0.060) 0.055 (0.516) 0.048 (0.479)
BETA 0.006* (0.039) 0.006** (0.022) 0.004 (0.120) 0.005** (0.048)
Chi2 0.000 0.000 0.000 0.000
Wald Chi2/R2 56.45 76.33 0.17 0.22
* p \ 0.1, ** p \ 0.05,*** p \ 0.01; p-values in brackets
M. I. Jizi et al.
123

effortof the relevantboard members (Lee etal. 2004),
which has a positive impact on firms’ CSR reporting.
Our research also indicatesthatROA is statistically
significantly related to CSR disclosure. This is in line with
findings by Johnson and Greening (1999),Simpson and
Kohers (2002),Haniffa and Cooke (2005),Scholtens
(2008),as well as Li et al.(2010),who suggest that firms
with a betterfinancialperformance are more capable to
investin socialactivities than firms suffering from poor
returns.In line with theexpectation thatmanagersof
comparatively risky businesses mightuse CSR disclosure
to mitigate stakeholders’risk perceptions(Deegan and
Gordon 1996;Jo and Harjoto 2011);we find beta to be
positively statistically significantly related to CSR disclo-
sure. Leverage does not appear to be significantly related to
CSR disclosure.This is in line with similarfindings by
Haniffa and Cooke (2005) and Reverte (2009).
Sensitivity Testing
To check therobustnessof the estimated relationships
between corporate governance and CSR disclosure, another
set of regressions is conducted using the fixed effect panel
linear regression with robuststandard errors (see Table 4,
models 2.1. and 2.2.). In line with our earlier results, board
independence,board size,CEO duality,auditcommittee
financial expertise, board and audit committee meeting fre-
quency and ROA are all statistically and positively related to
CSR disclosure. Firm risk, however, is only statistically sig-
nificantly related to CSR disclosure in the full model, which
takes account of board and audit committee characteristics.
As reverse causality mightbe a challenge to our ana-
lysis, we run a Chi square test to establish whether the CSR
disclosure score and ROA are interdependent.The Chi
square testreports a significance of 0.969,indicating that
reversecausality between ROA and CSR isunlikely.
Nevertheless,we re-ran the TOBIT regression,replacing
ROA by 1 year lagged ROA.The results were consistent
with the original regression.
Conclusion
Prior research into therelationship between corporate
governance and CSR is limited almostexclusively to the
investigation of the impacton CSR committees on CSR
activities and CSR disclosure (Liet al. 2010;Kolk and
Pinkse2010;Spitzeck 2009;Gill 2008).The lack of
research into the impactof firms’ other corporate gover-
nance structures on CSR reporting is an indication ofa
mental disconnect between what is considered to be ‘good
corporate governance’ and how to ensure that firms trans-
parently fulfil their social obligations to society.
Even if CSR reporting would be considered merely as a
meansto develop betterlong-term,mutually beneficial
relationshipswith key stakeholders(Gray etal. 1995b;
Meek et al.1995; Aguilera et al.2006; Money and Sche-
pers 2007; Kolk and Pinkse 2010),the economic value of
the related benefits suggests thatfirms’corporate gover-
nance structures should have a bearing on it.Moreover,
given the potentialimpactof firms on a wide range of
directand indirectstakeholders,it is of interestto inves-
tigatewhetherboard featureswhich weredesigned to
facilitate corporate governance in the interestof equity
investorscan also be effectivein promotingfirms’
engagementwith theirwidersocialresponsibilities.This
appears to be particularly relevantin the contextof large
banks,due to their ability to impose significantnegative
external effects on society.
Examining the CSR disclosure in annualreports ofa
sampleof large nationalUS commercialbanksusing
contentanalysis,our findingssuggestthatkey charac-
teristics ofthe board ofdirectors are significantly asso-
ciated with CSR disclosure.In particular,our research
indicatesthat board independenceand board sizeare
positively and significantly related to CSR disclosure by
US banks. These findingshighlightthat effectively
designed boards (Gray etal. 1995b;Ibrahim etal. 2003;
Lee et al. 2004;Guest2009)can contributeto safe-
guarding the interests of allstakeholders,and notmerely
the shareholderswho appointthem.This highlightsthe
need forstakeholders and theirrepresentatives to take a
much closer interest in corporate governance mechanisms
which are likely to affectthe effectiveness ofthe board
of directorsand notto limit theirconcernsto directly
CSR-related corporate governance features,such as CSR
committees.
Our findings also suggest that CEO duality is positively
and significantly related to CSR disclosure by US banks.
However,we are unable to establish the reasons for this
positive relationship. It would be helpful if future research
would explore whetherthis positive relationshipis
determinedby the competitivenessof relevantgoods,
labourand capitalmarkets(Fama 1980;Hermalin and
Weisbach 2003) in the banking sector,and therefore,an
indication of the effectiveness of a self-regulating system
of corporate governance,or whether itis a sign of man-
agerial risk aversion (Fama and Jensen 1983; Laeven and
Levine 2009; Pathan 2009; Barnea and Rubin 2010; Barry
et al. 2011).
In order to gain a better understanding of the circum-
stancesin which corporategovernancemechanisms
designed to protect shareholders can be helpful or harmfu
to the protection of the interests of other stakeholders,it
would be beneficialto explore the relationship between
corporate governance and CSR disclosure in a much wider
Evidence from the US Banking Sector
123

range of industries and countries,with differentlevels of
public scrutiny,regulation and competitive pressures.
While our research does not provide any evidence for a
significantchange in CSR disclosure by US commercial
banks between 2009 and 2011, it might further be of interest
to explore in future,how CSR disclosure and corporate
governance of US commercial banks have developed over a
longer time horizon, possibly including the period before the
sub-prime mortgage crisis.
AcknowledgmentsWe thank Thomas Clarke (the section editor)
and the three anonymous reviewers for their valuable and constructiv
comments,which indeed assistin enhancing the clarity and the
quality of the paper.
Appendix
See Table 5.
Table 5 CSR categories and sub-categories
CSR category CSR sub-category
1 Community involvement Contributions and donations to charities,NGOs and community activities
Provision if support to students to continue their education and sponsoring sport activit
Sponsoring health programmes
Sponsoring arts and culture
Supporting sports and/or recreational projects
Participation in social government campaigns
2 Environment Bank’s environmental policies and concerns
Implemented systems for environmental management
Environmental projects such as recycling and protection of natural resources
Energy saving in performing business operations
3 Employees Number of employees; health and safety policies and measures.
Equal opportunities in employment (e.g.minorities,women)
Training and education provided to employees (training policies and nature of training)
Employee assistance/benefits
Employee compensation
Employee expertise and backgrounds
Employee share purchase schemes
The confidence and self-esteem of employees
Employees’ appreciation
Issues related to the recruitment process
Photos to document employee welfare (e.g.at social activities,award ceremonies)
Discussion of employees’ welfare
Policies adopted regarding staff profit sharing
4 Social products and services qualityDiversity of social products (e.g.climate products,educational loans etc.)
Discussion of the types of social products
Geographical distribution and marketing network of the offered social products
Discussions in relation to customers feedback
Provision for disabled,frail and difficult-to-reach customers
Investments in social responsibility activities
Strategies and plans for future expansion in social products and services
Loyalty programmes and gifts to customers
Source based on categories identified by Gray et al. (1995b), Haniffa and Cooke (2005), Branco and Rodrigues (2006), Scholtens (
Webb et al.(2009)
M. I. Jizi et al.
123

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