Corporate social responsibility disclosure and interaction effects of ownership structure on firm performance

Abstract

This study examines the effects of Corporate Social Responsibility (CSR) activity as a business strategy towards creating value for the company. Using the annual reports of 242 Malaysian listed companies, this study investigates the effects of CSR disclosure and firm performance in 2006 and 2008. This study also examines the interaction effects of ownership structure on this relationship. Results of this study provide evidence that CSR activity has the propensity to impact significantly on a company's success. The insignificant results reported in relation to the interaction effects of family and government ownerships further corroborate the strategic importance of CSR activities and disclosure decisions by managers in Malaysia. Overall, findings in this study indicate that CSR activities can potentially lead to strong financial performance. In addition, it also provides regulatory bodies with enhanced understanding in their efforts to improve CSR activities and disclosures even in agency setting characterised with the existence of dominant owners.