Influence of Firm Characteristics on CSR Disclosure

This report discusses how characteristics of a firm can influence corporate social responsibility (CSR) disclosure. It analyzes the impact of firm size, industry, government ownership, firm age, raised capital, and audit firm size on CSR disclosure. The report highlights the importance of CSR disclosure for maintaining a positive image and attracting investors.

Running head: REPORT
Topic: Critically discuss how characteristics of the firm might influence corporate social
responsibility disclosure
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Name of the Student
Name of the University
Author Note

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Executive Summary
The corporate social responsibility activities are considered to be an essential part of the
organization and in line of this, it is important for all the firms as present in the business
environment, to ensure that they are being able to undertake an analysis, and ensure that all
crucial information is being disclosed adequately. However, the report is primarily focused on
the overall firms characteristics which have an influence on the disclosure of the information of
the firm and in line of this, it is important to understand that, the different characteristics of the
firm need to be analyzed to understand the CSR of a firm. The report seeks to examine these
characteristics and analyze the manner in which the disclosures are impacted.

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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Analysis...........................................................................................................................................7
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

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Introduction
The Corporate Social responsibility can be understood to be initiatives which are
generally adopted by the firms in order to serve the overall society in the right manner. The
organization is understood to be a social entity and with respect to this, it can be considered
critical for the firm to understand that in addition to the overall responsibility which a firm has
towards the different employees as present, the firm also has a critical role towards the society
(Brammer & Pavelin 2006). Earlier, the corporate social responsibility was largely understood to
be a voluntary initiative which was generally adopted by the different organizations as present,
however, currently it can be understood to be a compulsory and law bounded initiative which is
generally undertaken by the different firms which are present in the business environment. It
allows the society to prosper because the different initiatives as undertaken by them will benefit
the society at large and in line of this, the firm at the end of its financial year will be required to
submit certain disclosures of the corporate social responsibility initiatives which have been
adopted by it. The given report will lay down and discuss the manner in which the different
characteristics of a firm might have an overall influence on the corporate social responsibility
disclosure of firm.
Discussion
There has been a considerable increase in the overall scrutiny of the business practices
which are undertaken by a firm in order to demand for a better corporate social responsibility
activity. In line of this, it can be rightfully understood that if a firm aims to ensure success in the
long run than it needs to cater to the growing stakeholder awareness as well as activisms which
will allow the different firms to ensure that they become a part of the global supply chain and the
differences in the employee conditions can be managed (Huang 2013). Moreover, it can be

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largely understood that there is a crucial need to meet with the environmental needs of the
different firms and in line of this, it will also be important for the firm to ensure that, they
demonstrate not only a greater responsibility towards the Corporate social responsibility
activities but a greater accountability towards the Corporate social responsibility activities.
The reason why the corporate social responsibility activities can be deemed to be
important can be contributed to the fact that the firms who engage in corporate social
responsibilities tend to gain a considerable respect from the different individuals as present
(Lewis, Walls & Dowell 2014). In line of this, the stakeholder theory stands as a theoretical
perspective which can be offered for the stakeholder information needs and also the legitimacy
theory which means that it is considerably important for the firm in the business environment to
legitimize their presence as well as the different activities of the firm in order to ensure that, it is
successfully being able to stand in the competitive business environment.
According to Li et al.(2013), the number of companies who have considerably been able
to improve their overall business operations have increased considerably and in line of this,
evidence does not exist with respect to the manner in which the Corporate Social responsibility
activities re carried out by the firm. However, the aspect which is of most importance can be
understood to be the fact that, in a developing country where neither the stakeholder or the
legitimacy theory holds true which generally stands as a strong motivation for the different
disclosures which exist, the disclosure reasons might be different. According to McWilliams,
Siegel and Wright (2006), the most common type of firm characteristics which influence the
Corporate social responsibility initiatives and disclosures can be understood to be the size of the
firm, the type of the industry in which the firm operates, the ownership of the government, the
age of the firm and the capital which has been raised for the audit firm size. Hence, in the

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following section an analysis on the will be undertaken on the different firm characteristics and
the manner in which these characteristics tend to influence the overall performance of the
corporate social disclosures will be discussed.
The signaling theory, the agency theory, the political cost theory as well as the capital
needs theory often tend to explain the reason why a firm may choose to voluntary disclose for
the particular organization. Many companies also disclose information more than what is
actually legally required out of them (Reverte 2012). This is because, a firm aims to maintain a
friendly image in the society in the eyes of the public and in line of this, the firm also aims to
maintain the disclosure in the right manner in order to ensure that, it is successfully being able to
maintain a friendly relationship in the eyes of the different customers as present in the business
environment.
Firm size
The signaling theory, the agency theory and the cost benefit theories as present often
tend to indicate that, there exists a positive influence of the size of the firm on the overall
disclosure which the firm has in lieu of ensuring that, the voluntary disclosure often helps in
reducing the problems which exist and hence, in line of this, the large firms are often understood
to have more disclosure because, they are often under the belief that, it will reduce the overall
disclosure cost of the firm and in line of this, it shall also ensure that, it shall attract the different
investors as present in the business environment (Said, Hj Zainuddin & Haron 2009).
Industry size
Some industries have a nature such that, it tends to create more objects than rather have
an impact on the overall society. In line of this, there are industries which are thereby expected

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to disclose more information about their overall environment performance because, they can be
deemed to be stable in nature (Prado‐Lorenzo, Gallego‐Alvarez & Garcia‐Sanchez 2009).
Various industries like banking, financial services, media, energy and the chemical industry tend
to undertake operations which shall not have an overall impact on the operations of the firm but
there do exist some industries like the construction, mining and others which have a strong
impact and hence, if the industry size is too large, it is estimated to have an impact on the overall
performance of the firm and in line of this, those who have a smaller size, have less
environmental impact and in line of this, they are enabled to perform considerably poor.
Government ownership
The government bodies as well as the public tend to give more attention to the activities
of the different companies which are largely owned by the government. These can be considered
to be socially friendly companies and tend to have a society first agenda. Moreover, these
organizations tend to disclose all the information because they are under a strict rule and overall
guidance. Hence, it can be stated that the government ownership has a positive impact on the
overall CSR objective.
Firm age
The older firms as present are likely to know the overall details of the working of a
business in case they are largely familiar with the overall working environment of the firm. In
line of this, it has to be understood that, the different firms have the experience of belonging to
the surrounding environment and are expected to ensure that, they act as good citizens and are
successfully able to disclose more information (Muttakin, Khan & Subramaniam 2015). The old
companies value the disclosure as better acts and hence, in lieu of this, they often disclose the

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information as present in order to keep up with the goodwill of the firm and in addition to this,
they tend to ensure that, their disclosure will bring about better results for the organization.
Raised capital
When a firm is required to raise a considerable amount of capital then in such a case, they
are bounded to disclose more information as possible. In addition to this, it becomes
considerably crucial to understand that, the firm likes to maintain the transparency at the
workplace and in line of this, they have the adequate experience of belonging to the surrounding
environment and in line of this, when the firm needs capital, it would want that the firm is able to
ensure that it discloses its information so that the firm is able to get the capital it plans to raise
and attracts a large number of investors (Brammer & Pavelin 2008).
Audit firm size
The audit firm size also influences the overall disclosure which takes place on the side of
the firm. In line of this, they have mentioned that, the companies often seek to hire good quality
authors and seek to get good financial reports will expect more disclosed information about the
overall CSR performance which the firm tends to engage in (Hope &Thomas 2008). The smaller
auditing firms are generally not concerned with the source of customers but this is not true in
case of the large firms. Hence, when any firm is in a strong auditing association would be
required to disclose more information possible.
Analysis
Therefore, from the given analysis it can be rightfully understood that, there are a large
number of the firm`s characteristics which tend to have an overall influence on the Corporate
social responsibility disclosures of a firm (Gamerschlag, Möller & Verbeeten 2011). It has to be

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understood that, the only reason why a firm may not be willing to disclose the CSR as present
and the different initiatives which have been undertaken is because, it will negatively impact the
overall operations of the firm due to the reason that they are not undertake the CSR activities and
initiatives which are present. Moreover, in a scenario where a firm is undertaking various
Corporate Social Responsibility activities and conducting them in the right manner, then they
openly disclose the information to the audience. The disclosure of the information can be
understood to have various positive impacts on the overall operations of the firm by ensuring that
the firm is able to achieve its long term objectives and that its overall image in the eyes of the
customers can be maintained successfully (Dhaliwal et al. 2012). The disclosure not only goes a
long way in seeing to it that the firm is able to attain a sense of responsibility among the different
stakeholders of the firm as present but may also enable them to improve upon the goodwill of the
firm.
Conclusion
Therefore, from the given analysis, it can be rightfully understood, it needs to be regarded
that it is the firm`s ultimate responsibility to ensure that, they are being able to disclose all the
Corporate social responsibility information successfully to the different audiences as this helps to
determine the overall responses of a company towards the society and the manner in which a
firm is being able to ensure long term success for itself. In addition to this, it can also be
considered to be relative important to ensure that all the firms are following the adequate
guidelines with respect to the Csr activity disclosure. The main aim of the report was to outline
the different characteristic of the firm which may influence the overall disclosure of the firm
related to its corporate social responsibility activity. Hence, the report outlined the overall

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characteristics of the firm which tend to have a strong influence on the overall performance of
the firm and its overall disclosure and then provided an analysis of the same.

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References
Brammer, S. & Pavelin, S., 2006. Voluntary environmental disclosures by large UK
companies. Journal of Business Finance & Accounting, 33(7‐8), pp.1168-1188.
Brammer, S. & Pavelin, S., 2008. Factors influencing the quality of corporate environmental
disclosure. Business Strategy and the Environment, 17(2), pp.120-136.
Dhaliwal, D.S., Radhakrishnan, S., Tsang, A. & Yang, Y.G., 2012. Nonfinancial disclosure and
analyst forecast accuracy: International evidence on corporate social responsibility
disclosure. The Accounting Review, 87(3), pp.723-759.
Gamerschlag, R., Möller, K.& Verbeeten, F., 2011. Determinants of voluntary CSR disclosure:
empirical evidence from Germany. Review of Managerial Science, 5(2-3), pp.233-262.
Hope, O.K. & Thomas, W.B., 2008. Managerial empire building and firm disclosure. Journal of
Accounting Research, 46(3), pp.591-626.
Huang, S.K., 2013. The impact of CEO characteristics on corporate sustainable
development. Corporate Social Responsibility and Environmental Management, 20(4), pp.234-
244.
Lewis, B.W., Walls, J.L. & Dowell, G.W., 2014. Difference in degrees: CEO characteristics and
firm environmental disclosure. Strategic Management Journal, 35(5), pp.712-722.
Li, Q., Luo, W., Wang, Y. & Wu, L., 2013. Firm performance, corporate ownership, and
corporate social responsibility disclosure in C hina. Business Ethics: A European Review, 22(2),
pp.159-173.

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McWilliams, A., Siegel, D.S. & Wright, P.M., 2006. Corporate social responsibility: Strategic
implications. Journal of management studies, 43(1), pp.1-18.
Muttakin, M.B., Khan, A. &Subramaniam, N., 2015. Firm characteristics, board diversity and
corporate social responsibility: evidence from Bangladesh. Pacific Accounting Review, 27(3),
pp.353-372.
Prado‐Lorenzo, J.M., Gallego‐Alvarez, I. & Garcia‐Sanchez, I.M., 2009. Stakeholder
engagement and corporate social responsibility reporting: the ownership structure
effect. Corporate Social Responsibility and Environmental Management, 16(2), pp.94-107.
Reverte, C., 2012. The impact of better corporate social responsibility disclosure on the cost of
equity capital. Corporate Social Responsibility and Environmental Management, 19(5), pp.253-
272.
Said, R., Hj Zainuddin, Y. & Haron, H., 2009. The relationship between corporate social
responsibility disclosure and corporate governance characteristics in Malaysian public listed
companies. Social Responsibility Journal, 5(2), pp.212-226.