J Bus Ethics (2013) 114:207–223

DOI 10.1007/s10551-012-1336-0

Corporate Governance and Corporate Social Responsibility

Disclosures: Evidence from an Emerging Economy
Arifur Khan • Mohammad Badrul Muttakin •

Javed Siddiqui

Received: 2 November 2011 / Accepted: 2 May 2012 / Published online: 19 May 2012
 Springer Science+Business Media B.V. 2012

Abstract We examine the relationship between corporate Keywords Corporate social responsibility  Corporate
governance and the extent of corporate social responsibility governance  Legitimacy theory  Disclosure  Bangladesh
(CSR) disclosures in the annual reports of Bangladeshi
companies. A legitimacy theory framework is adopted to
understand the extent to which corporate governance Introduction
characteristics, such as managerial ownership, public
ownership, foreign ownership, board independence, CEO Although corporate governance and corporate social
duality and presence of audit committee influence organi- responsibility (CSR) reporting have separately established
sational response to various stakeholder groups. Our results themselves as well-researched areas, relatively less
suggest that although CSR disclosures generally have a attention has been paid in setting up a link between these
negative association with managerial ownership, such two. Since CSR disclosure is influenced by the choices,
relationship becomes significant and positive for export- motives and values of those who are involved in formu-
oriented industries. We also find public ownership, foreign lating and taking decisions in the organisations, consid-
ownership, board independence and presence of audit eration of corporate governance mechanisms, in
committee to have positive significant impacts on CSR particular, ownership structure and board composition
disclosures. However, we fail to find any significant impact could be important determinants (Gibbins et al. 1990;
of CEO duality. Thus, our results suggest that pressures Haniffa and Cooke 2005). The scant research in this area
exerted by external stakeholder groups and corporate (for example, Johnshon and Greening 1999; Jo and
governance mechanisms involving independent outsiders Harjoto 2011) have predominantly found CSR choice and
may allay some concerns relating to family influence on performance to be positively associated with internal and
CSR disclosure practices. Overall, our study implies that external corporate governance mechanisms, such as board
corporate governance attributes play a vital role in ensuring independence, board leadership and institutional owner-
organisational legitimacy through CSR disclosures. The ship. Also, available empirical evidence suggests that both
findings of our study should be of interest to regulators and corporate governance mechanisms and CSR are positively
policy makers in countries which share similar corporate related to the market value of the firm (Beltratti 2005).
ownership and regulatory structures. Institutional theory proposes that corporate governance
mechanisms are sometimes adopted for the purpose of
gaining legitimacy (Biggart 1991; Hamilton and Biggart
A. Khan (&)  M. B. Muttakin 1988). Also, CSR literature suggests that the need to allay
School of Accounting, Economics and Finance, Deakin
University, 221 Burwood Highway, Burwood, VIC 3125,
concern over threats to organisational legitimacy have
Australia largely acted as a potent driving force for such disclosures
e-mail: [email protected] (for example, Chen et al. 2008; Deegan et al. 2002;
Rahaman et al. 2004). Therefore, a strong relationship
J. Siddiqui
Manchester Business School, University of Manchester,
between CSR and corporate governance mechanisms can
Manchester, UK be envisaged.

123
208 A. Khan et al.

One important gap in both corporate governance and relationship with the level of CSR disclosures, such rela-
CSR literature is the paucity of such research in the context tionship is significant and positive for export-oriented
of emerging economies. Judge et al. (2008), in a cross- industries, suggesting that managers in export-oriented
country research, identify the institution of law and order firms may have external pressures to provide more CSR
and less prevalent corruption as antecedents to corporate disclosures. We also find greater public and foreign own-
governance legitimacy. This is consistent with Uddin and erships to have positive impacts on CSR disclosures. In the
Choudhury (2008), who point out that the traditional context of Bangladesh, we find internal corporate gover-
societies in developing economies, characterised by family nance mechanisms such as board independence, and pres-
dominance, corruption and political interference, are not ence of audit committees to have positive influences on
conducive for the adoption of western-styled rational cor- CSR disclosures. However, we do not find any significant
porate governance models. However, despite this, due to impact of CEO/chair role duality on the extent of CSR
institutional pressures mainly exerted by external aid disclosures. Overall, our results suggest that despite own-
agencies, many emerging economies across the world have ership concentration, corporate governance mechanisms
adopted the Anglo-Saxon model of corporate governance, involving independent outsiders are effective in influencing
and the effectiveness of such corporate governance mech- CSR practices in emerging economies. We also find firm
anisms in the context of such countries have been ques- age, profitability and size to be important determinants of
tioned [for example, India (Mukherjee-Reed 2002); South levels of CSR disclosures in Bangladesh.
Africa (West 2006); South Korea (Reed 2002); Bangladesh Our study makes a number of important contributions
(Siddiqui 2010)]. Therefore, the influence of corporate to the existing literature. By providing evidence that
governance mechanisms on CSR disclosures may be dif- managers in export-oriented industries, despite high own-
ferent in emerging economies. This provides the context ership concentration, have enough incentives to make high
for the study. levels of CSR disclosures, we offer empirical support to
For the purpose of this study, we investigate the effect of prior studies such as Belal and Owen (2007) and Islam and
corporate governance mechanisms on CSR in Bangladesh Deegan (2008), who mention pressures from international
during the period 2005–2009. Like many other emerging buyers as a crucial factor for CSR disclosures in Bangla-
economies,1 Bangladesh has also adopted a western-styled desh. Our results also imply that companies with high
corporate governance model requiring greater board inde- foreign ownership (and with foreign nationals in the
pendence, separation of the CEO and the chairman, pro- board) report more CSR disclosures as a proactive legiti-
vision of audit committees, etc. In more recent times the macy strategy to satisfy ethical foreign investors and to get
Securities and Exchange Commission of Bangladesh (SEC) more foreign capital (Haniffa and Cooke 2005). Overall,
has issued a ‘corporate governance notification’ (SEC this suggests that like many developed economies, man-
2006) consisting of some guidelines in regards to corporate agers in emerging economies such as Bangladesh also use
governance practices by the listed companies. A number of CSR disclosures as a strategic tool. Despite doubts over
prior studies (for example, Sobhan and Werner 2003) the role of independent directors in Bangladesh, we find a
report that due to family dominance, corporate governance positive relationship between board independence and the
mechanisms such as presence of independent directors in level of CSR disclosures. Also, presence of audit com-
the board tend to be largely ceremonial. Moreover, recent mittee is found to have significant positive relationship
studies on CSR in Bangladesh have identified family with CSR disclosures. However, the effectiveness of sep-
ownership as one of the major factors for the dismal level aration of CEO and chair as a corporate governance
of CSR disclosures (Belal and Owen 2007). Given the mechanism appear to be affected by the culture of
traditional nature of its society (Uddin and Choudhury selecting these two positions by members of the same
2008), the efficacy of such corporate governance mecha- family. Overall, our results seem to suggest that the
nisms, therefore, can be doubted. Bangladesh thus presents presence of sound corporate governance mechanisms
an interesting case to examine the relationship between incorporating more outsiders in the board and different
corporate governance and the extent of CSR disclosures. committees, albeit rare in the context of Bangladesh, seem
Our results indicate that in the context of Bangladesh, to alleviate some concerns regarding the influence of
although managerial ownership generally has a negative family dominance on CSR disclosures. This may have
important policy implications, as our results indicate that
1
We acknowledge that the definition of an ‘emerging economy’ is corporate governance mechanisms such as CEO chair
problematic. However, in 2005, Goldman Sachs, the global asset duality are likely to be ineffective in the context of family-
management company, classified Bangladesh as one of the ‘next 11’
firm dominated economies such as Bangladesh, if at least
emerging economies for its high potentials, along with the BRIC
countries, to be the largest economies in the twenty-first century one of these individuals is not required to be independent.
(http://www.goldmansachs.com). We also extend the CSR literature by providing empirical

123
Corporate Governance and Corporate Social Responsibility Disclosures 209

evidence of determinants of CSR disclosures in an the adoption of western-styled corporate governance

emerging economy context. models. This is consistent with Uddin and Choudhury
The rest of the paper is structured as follows. The next (2008) who mention that the traditional nature of the
section elaborates the institutional context and existing Bangladeshi society, characterised by family dominance
CSR practices in Bangladesh. ‘‘Theoretical Framework’’ and informal control mechanisms, may not be suitable for
elaborates the legitimacy theory based justifications for rational corporate governance models. This is consistent
corporate governance and CSR. This is followed by a with Chen and Nowland (2010), who find the corporate
section which reviews related literature and develops governance practices followed by family-owned enter-
hypotheses. Subsequent sections then discuss the research prises in Asia to be ‘well below the optimal levels’ (p. 4).
design and empirical results. The final section concludes As is the case in many other developing countries, a key
the paper. strategy for achieving faster economic development in
Bangladesh is one of rapid industrialisation. The industrial
sector now makes a significant contribution to the economy
Institutional Background and CSR Practices of Bangladesh.2 With that objective in mind, a private
in Bangladesh sector-led industrial development policy is being aggres-
sively pursued with the aim of attracting as much foreign
Like many other developing countries [for example, Jac- investment as possible. While this strategy clearly makes
kling and Johl (2009) report that 60 % of the top compa- some economic sense, it has at the same time created many
nies in neighbouring are run by families; similar family significant adverse social, ethical and environmental
dominance is reported other developing economies such as effects. This in turn has led to increasing demands for
Turkey (Ararat and Ugur 2003), South Korea (Joh 2003), enhanced accountability and transparency in business
Taiwan (Yeh et al. 2001), Thailand (Wiwattanakantang practices (Belal and Owen 2007).
2002)], most companies in Bangladesh are either family- The Companies Act of Bangladesh (GoB 1994) does not
owned or controlled by substantial shareholders (corporate mention a formal corporate governance structure. Also,
group or government). Farooque et al. (2007) report that, Bangladesh is perhaps one of the few countries in the world
on average, the top five stockholders hold more than 50 % without an ‘official’ code of corporate governance,
of a firm’s outstanding stocks. The paper states that man- although the Securities and Exchange Commission of
agements in many companies are effectively just exten- Bangladesh (SEC) issued a brief corporate governance
sions of the dominant owners—they are closely held small- order only applicable for the publicly listed firms in
and medium-sized firms where corporate boards are owner Bangladesh (SEC 2006). Therefore, a vast majority of the
driven. Consequently, most of the companies have execu- Bangladeshi companies do not have any mandatory or ‘best
tive directors, CEO and chairman from the controlling practice’ guidance as far as corporate governance is con-
family. A survey conducted by Sobhan and Werner (2003) cerned. Also, the adoption of SEC (2006) is not mandatory;
found that an overwhelming majority (73 %) of the boards rather, it is applicable on a ‘comply or explain’ basis.3 The
of non-bank listed companies were heavily dominated by SEC order is in line with the western-styled shareholder
sponsor shareholders. This is consistent with other studies model of corporate governance, and contains provisions
such as Reaz and Arun (2006) and Uddin and Choudhury such as a single-tiered board, presence of at least 10 %
(2008) that report similar family dominance in the board of independent members, separation of CEO and the chair-
directors. Imam and Malik (2007) analyse the ownership man, presence of an audit committee, etc. Very recently,
patterns of 219 companies from 12 different industries the SEC (2012) has invited comments on proposals for
listed on the Dhaka Stock Exchange, the premium stock reforming the SEC (2006) order. Major Proposals include
exchange in the country. It is reported that, on average, increasing the number of independent directors in the
32.33 % of the shares are held by the top three share- board, specifying qualifications for independent directors,
holders, the results being even higher for real estate, fuel and enhancing the role of the audit committee.
and power, engineering, textile and pharmaceutical sectors.
Uddin and Choudhury (2008) report that unlike developed 2
According to the Bangladesh Bureau of Statistics the industrial
economies, the influence of institutional investors is almost sector contributed around 18 % of gross domestic product (GDP) in
absent in Bangladesh as such investors mostly operate as 2009.
3
secondary market traders. Siddiqui (2010) identifies insti- This mechanism provides both flexibility in the application of the
tutional weaknesses, such as highly concentrated owner- ‘Corporate Governance Notification’ and a means by which compli-
ance to be assessed. Any non-compliance or non-application of the
ship structure, lack of shareholder activism, presence of a
relevant rule can still be said to be consistent with the spirit of the
weak capital market, absence of second-order institutions notification. Non-compliances/non-applications is to be monitored by
and poor legal structure as potential impediments towards shareholders.

123
210 A. Khan et al.

Consistent with the findings from studies based in the fear of bad publicity as the main reasons for such reluc-
context of emerging economies [for example, Lodhia tance. Belal and Roberts (2010) expressed concerns that the
(2003) in Fiji, Kuasirikun (2005) in Thailand], previous motivation and practice for CSR in Bangladesh stems from
studies investigating CSR disclosure in Bangladesh have international pressure, and the tendency to adopt stricter
found such disclosure levels to be significantly low (for CSR regulations may lead to corruption or other unin-
example, Belal 2000) and of rather descriptive nature, tended consequences, given the social and political envi-
mostly reporting positive news (Imam 2000). Belal (2001) ronment prevailing in Bangladesh.
reported that a significant portion of the CSR-related dis- The Bangladesh Companies Act (GoB 1994) does not
closure involved information regarding employee-related require mandatory disclosure of CSR activities for public
information. The paper also questioned the credibility of limited companies. However, in 2008, the government
such information, as the disclosures were mostly descrip- issued a statutory regulatory order (SRO) that allowed
tive in nature. Azim et al. (2009), in a recent study of CSR companies to claim 10 % tax rebate on the actual amount
disclosures by listed public companies in Bangladesh in spent on CSR activities (GoB 2008). The SRO identified
2007, revealed that only around 16 % companies made specific economic, environmental and social development
such voluntary disclosures. Consistent with Imam (2000) activities that would qualify for such exemptions. Recently,
and Belal (2001), the paper also reported that the disclo- the GoB (2008) was replaced by a new SRO issue by the
sures were mostly descriptive in nature, and no attempts for Bangladesh government (GoB 2011). The new order set a
independent verification were made. The study also maximum threshold of Tk 80 million or 20 % of total
reported that the highest level of CSR disclosures prevailed income of the companies for CSR-related activities that
in the banking sector. qualified for the 10 % tax rebate.
Another stream of studies attempted to identify the
perceptions and motivations for CSR disclosure in Ban-
gladesh. Belal and Owen (2007) conducted an interview- Theoretical Framework
based study to capture the views of corporate managers
regarding the current state and future prospects of CSR A number of previous studies (for example, Mukherjee-
reporting in Bangladesh. Interviews with 21 managers Reed 2002; Reed 2002; Siddiqui 2010) have suggested that
working in public and private sector entities and multi- adoption of western-styled models in emerging economies
national companies operating in Bangladesh revealed the were promoted by attempts by governments and policy
desire to satisfy key stakeholder groups to be the principal makers to gain legitimacy with external stakeholders such
motivation for CSR reporting in Bangladesh. Managers as international aid agencies and foreign governments. The
working both in private and public entities identified gov- legitimacy theory is also frequently used in the CSR lit-
ernment as a major stakeholder as it had the power to erature to explain the motivations for CSR disclosures. The
regulate the companies. Instructions from parent compa- theory is based on the notion of a ‘social contract’, which
nies and concerns raised by buyer groups were also limits the activities of an organisation within the bound-
recognised as significant sources of pressure, especially for aries set by the society (Gray et al. 1996). In essence, the
multinational companies and export-oriented industries. organisation will gain support from the stakeholders and
Other stakeholders mentioned by the respondents included continue in existence in so far as its activities give benefits,
media and influential lobby groups, and stakeholder groups or at least are not harmful to society. According to this
such as the community, environment and wider society theory, organisations continually seek to ensure that they
were either ignored or virtually unheard of. The role of are perceived as operating within the bounds and norms of
‘powerful’ stakeholder groups was also mentioned by their respective societies, that is, they attempt to ensure that
Islam and Deegan (2008) as the principal driving force for their activities are perceived by outside parties as being
CSR disclosures in Bangladesh. This is consistent with ‘legitimate’. Perrow (1970) defines legitimacy as a gener-
findings in other developing countries [for example, Rah- alised perception or assumption that the actions of an entity
aman et al. (2004) identify constant pressure from World are desirable, proper or appropriate within some socially
Bank as a major influence for environmental reporting in constructed system of norms, value, beliefs and definitions.
Ghana]. Although firms have discretion to operate within institu-
In a recent paper, Belal and Cooper (2011) reported that tional constraints, failure to conform to critical, institu-
Bangladeshi companies largely stayed away from more tionalised norms of acceptability can threaten the firm’s
compelling CSR activities such as child labour, equal legitimacy and ultimately its survival (DiMaggio and
opportunities and poverty alleviation. Interviews with Powell 1983; Oliver 1991; Scott 1987). An organisation
senior corporate managers identified absence of legal therefore, through its top management, seeks congruency
requirements, lack of awareness, shortage of resources and between organisational actions and the values of its general

123
Corporate Governance and Corporate Social Responsibility Disclosures 211

and relevant publics or its stakeholders (Dowling and activities. In other words, managers of closely held com-
Pfeffer 1975; Lindblom 1994). Sethi (1979) argues that if panies may not invest heavily in socially responsible
an actual or potential disparity exists between organisa- activities because the costs of investing in these activities
tional and social values, then organisational legitimacy will may far outweigh its potential benefits. Hence less amount
be jeopardised giving rise to a legitimacy gap. A widening of CSR information can be expected in closely held or
gap will cause an organisation to lose its legitimacy. Under owner-managed companies. The findings of limited prior
such circumstance an organisation can adopt a number of evidence also document a negative relationship between
public disclosure strategies for its survival (Lindblom managerial ownership and the extent of CSR disclosures
1994; Dowling and Pfeffer 1975). (Oh et al. 2011; Ghazali 2007). We therefore, propose the
In social and environmental accounting literature, many following hypothesis:
researchers concur that CSR disclosures can be employed
H1 Ceteris paribus, there is a negative association
by an organisation to mitigate legitimacy threat and reduce
between managerial ownership and the level of CSR
the legitimacy gap (see for example, Chen et al. 2008;
disclosures.
Deegan et al. 2000, 2002). Legitimacy theory therefore
implies that it is the top management of an organisation On the other hand, a number of recent studies (for
which is responsible to recognise legitimacy gap and carry example, Belal and Owen 2007; Islam and Deegan 2008)
out necessary social practices and disclose that accordingly have identified important stakeholders, such as pressures
to stakeholders to ensure accountability. Thus corporate from international buyers, as a critical factor for making
governance, in particular the internal governance structure CSR disclosures. This means that despite the presence of
(such as ownership and board composition) is likely to play high managerial ownership, managers in export-oriented
a vital role in reducing legitimacy gap through extended industries may have sufficient incentives to provide more
CSR disclosures. CSR disclosures in order to allay any potential concerns of
their foreign buyers. To test this claim, we propose the
following sub-hypothesis in alternative form:
Literature Review and Hypotheses Development
H1a Ceteris paribus, there is a negative association
between managerial ownership and the level of CSR dis-
Managerial Ownership
closures in export-oriented industries.
The effect of managerial ownership on voluntary disclo-
sures has been of interest to the accounting researchers for Public Ownership
a long time. Largely, prior literature finds managerial
ownership to be negatively related to levels of voluntary Prior studies also suggest that ownership dispersion across
disclosure (for example, Eng and Mak 2003; Chau and many investors contributes to increased pressure for vol-
Gray 2010). As mentioned before, owner-managed com- untary disclosures (Chau and Gray 2002; Cullen and
panies are very common in Bangladesh, and in most of the Christopher 2002; Ullmann 1985). The large number of
cases the board of directors comprise primarily of family stakeholders in a diffused company means that the benefits
members (Farooque et al. 2007). Such concentrated man- of disclosures are likely to outweigh the associated costs
agerial ownership enables managers to dominate the for the publicly owned firms. When a company is publicly
company and decide upon the strategies and policies about held the issue of public accountability may become very
organisational social behaviour. The dominance of family important as well. Publicly owned firms are therefore
members in company management leads to the develop- expected to have more pressures to disclose additional
ment of a tendency for important decisions to be first made information due to visibility and accountability issues
in family meetings, and then regularised in formal board resulting from large number of stakeholders. This may
meetings, making such meetings largely symbolic (Ahmed necessitate additional involvement in social or community
and Siddiqui 2011). For this type of companies, public activities and hence disclosure of these activities. Thus, it
accountability may be less of an issue because outsiders’ may be expected that public ownership concentration is
interests may be relatively small. From the agency theory positively associated with the extent of social activities.
point of view, this is referred to as the ‘type II’ agency However, a number of prior studies have reported (for
problem [see Villalonga and Amit (2006) and Kuo and example, Siddiqui 2010; Uddin and Choudhury 2008) that
Hung (2012) for a review of agency problems in family shareholders in Bangladeshi companies are largely inac-
firms]. Additionally, because the level of public interest in tive. Sobhan and Werner (2003) mentioned that very few
closely held companies can be expected to be relatively people attending the annual general meetings actually
low, this type of companies may be less active in social understood the financial statements being presented, and

123
212 A. Khan et al.

the main incentive for attendance was ‘the meal served in protected (Petra 2005). A number of studies (for example,
an attractive hotel’ (Sobhan and Werner 2003, p. 15). Harjoto and Jo 2011) report CSR disclosures to be signif-
Therefore, it could be argued that wider public ownership icantly correlated with board independence, measured in
in the context of Bangladesh may not result in greater CSR terms of the percentage of independent directors in the
disclosures. Therefore: board. Consistent with this, it can, therefore, be argued that
the presence of independent directors in the board will
H2 Ceteris paribus, there is a positive association
enhance CSR disclosures.
between public ownership and the level of CSR
In the context of Bangladesh, however, the term ‘inde-
disclosures.
pendent directors’ may have an entirely different meaning.
Consistent with most western-styled corporate governance
Foreign Ownership
guidelines, the current SEC order (SEC 2006) requires at
least 10 % of the members of the board of directors to be
The demands for disclosures are generally higher when
independent.5,6 However, Sobhan and Werner (2003) point
foreigners, due to the separation between management and
out that a director who fits into the definition of being
owners geographically, hold a high proportion of shares
‘independent’ in Bangladesh is often a former bureaucrat,
(Schipper 1981; Bradbury 1991). Additionally, foreign
appointed with the purpose of obtaining licenses or ‘as a
investors are likely to have different values and knowledge
payback for previous favours’. The paper goes on to make
because of their foreign market exposure. Thus, a company
the following observation:
with foreign ownership is expected to disclose more
information including social and environmental informa- Very few independent directors are appointed for
tion to help them in decision making. Haniffa and Cooke their expertise and the priority in appointing directors
(2005) find a positive significant relationship between is usually their personal connections to company
foreign ownership and CSR disclosures in Malaysia indi- management or having connections that can be used
cating that Malaysian companies use CSR disclosure as a for the company in the future. When boards need an
proactive legitimating strategy to obtain continued inflows independent opinion they rely on employing outside
of capital and to please ethical investors. It is, therefore consultants or advisors. Therefore, in the context of
possible that this group of investors can influence corporate Bangladesh, independent directors do not serve as an
disclosure practices including CSR disclosures of listed advocate for minority shareholders or as a source of
companies in Bangladesh. However, in Bangladesh, new and different ideas. (Sobhan and Werner 2003,
although foreign ownership is becoming increasingly p. 35)
common because of the growth in multinational ventures,
This is consistent with Uddin and Choudhury (2008), who
the percentage of shares held by foreign investors are still
find that in most Bangladeshi companies, independent
very limited.4 Therefore, it is also possible that foreign
directors were appointed for ‘name only’, and personal
investors, due to the limited nature of their scale of
connections, rather than skill and expertise, were the major
investments in Bangladesh, may not be able to influence
criteria for such selection. A recent study by the World
CSR disclosure practices. To test this, we therefore, pro-
Bank (2009) also identified the need for greater board
pose the following hypothesis:
independence and professionalism in the public limited
H3 Ceteris paribus, there is a positive association companies in Bangladesh. Under such circumstances, the
between foreign ownership and the level of CSR influence of independent directors in the board is doubtful.
disclosures. To test whether board independence has an influence on
CSR disclosure, we develop the following hypothesis:
Board Independence

The presence of independent directors in the board is

considered to be a major corporate governance mechanism. 5
SEC (2006) defines independent director as ‘who either does not
It is generally believed that independent outside directors
hold any share in the company or holds less than 1 % shares of the
will strengthen the board by monitoring the activities of the total paid-up shares of the company, who is not connected with the
management, and ensure that interests of the investors are company’s sponsors or directors or shareholder who holds 1 % or
more shares of the total paid-up shares of the company on the basis of
4
Uddin and Choudhury (2008) report that in 2007, only four of the family relationship. His/her family members also should not hold
top 20 ‘A’ category companies listed in the Dhaka Stock Exchange, above mentioned shares in the company’.
6
the country’s premium stock exchange, had significant foreign The recent proposals require at least one-third members of the
shareholdings, ranging from 11 % (two companies) to 34 % (one board of directors of public limited companies to be independent
company). (SEC 2012).

123
Corporate Governance and Corporate Social Responsibility Disclosures 213

H4 Ceteris paribus, there is a positive association Audit Committees

between proportion of independent directors and the level
of CSR disclosures. The corporate governance effects of audit committees have
been well documented (for example, Turley and Zaman
Role Duality 2004, 2007). Audit committees comment on and approve
choices of accounting policies, and are therefore, expected
The combination of CEO and chairman positions results in to influence a company’s approach towards financial
leadership and governance issues. Li et al. (2008) argue reporting and disclosure. Pomeroy and Thornton (2008)
that separation of the roles of chairman and CEO may conduct a meta-analysis of audit committee’s effects on
enhance monitoring quality in critical decisions about financial reporting quality. The study reports a positive
stakeholder responsiveness. Haniffa and Cooke (2005) relationship between audit committee existence and
offer two views in this aspect. The first view supports the financial reporting quality in emerging economies [for
separation of the two roles to provide checks and balances example, Bradbury et al. (2006), in Singapore and
for the performance of management, while the second view Malaysia; Rahman and Ali (2006) in Malaysia].
argues that the separation is not crucial since many com- In the context of Bangladesh, SEC (2006) requires all
panies are well run even with the roles combined and have listed companies to have audit committees comprising of at
a strong and capable board for monitoring. Nevertheless, least three members of the board of which at least one must
companies with the CEO duality offer greater power to a be an independent director [SEC (2012) proposes at least
person, which may enable him to make decisions that, do two members to be independent directors]. The order also
not take into account of greater interests of stakeholders. requires the chair of the audit committee to have a ‘pro-
This may result in negligence of additional involvement in fessional qualification or knowledge, understanding and
social or community activities and hence disclosure of experience in accounting and finance’ (SEC 2006, p. 4).
these activities. Although the influence of audit committees on financial
In Bangladesh, the SEC guidelines (2006) require the reporting quality has not been investigated, Ahmed and
positions of the chairman of the board and the CEO to be Siddiqui (2011), in a recent study report that corporate
filled by different individuals. However, unlike some cor- culture created due to family dominance tends to under-
porate governance codes adopted in other countries [for mine the effects of the audit committee. Interview evidence
example, the combined code in the UK (FRC 2011)], the seems to suggest that there is a corporate culture to
chair of the board is not required to meet the independence undermine the role of the audit committee within the
criteria. Given the overwhelming presence of family organisation. The study reports the opinions of one member
dominance in the Bangladeshi corporate sector, it is rather of the board of directors of a commercial bank, who also
unsurprising that such positions are very often filled by two holds majority of the shares:
members of the same family. Sobhan and Werner (2003)
The audit committee is like an ornament for my
report that an overwhelming majority (73 %) of the non-
bank…I do not think they have any role in the
bank listed companies interviewed in the survey, the board
functioning of the bank, nor they have anything to do
is heavily dominated by sponsor shareholders who gener-
with the auditors. They are there simply because it is
ally belong to a single family, and ‘the father as the
a regulatory requirement…I have heard that in many
Chairman and the son as the managing director (CEO) is
companies, audit committee members are actually
the norm’ (Sobhan and Werner 2003, p. 34). This is con-
wives/family members of the directors who do not
sistent with Uddin and Choudhury (2008), who report with
know much about the business. (Ahmed and Siddiqui
the exception of multinational companies, most of the lis-
2011, p. 22)
ted companies in Bangladesh are dominated by family
members, and head of the family becomes the chairman The study also reports that family connections tend to
and other family members occupy important posts such as override skill and competence as selection criterion for
the CEO or the managing director. Given this context, it members of the audit committee. Hence, in the context of
would be interesting whether the provision for a separation Bangladesh, audit committees may not have a significant
of CEO and chair would have an effect on CSR disclosures. influence on the corporate disclosure practices. Therefore
To test this, we propose the following hypothesis: we propose the following hypothesis:
H5 Ceteris paribus, there is a negative association H6 Ceteris paribus, there is a positive association
between CEO/chair role duality and the level of CSR between presence of audit committees and the level of CSR
disclosures. disclosures.

123
214 A. Khan et al.

Research Design Table 1 Sample description

Panel A: Sample size
Sample
Number of firms 135
The sample selection procedure is reported in Table 1. The Less
sample consists of all 135 manufacturing companies listed Companies without necessary information 19
with Dhaka Stock Exchange (DSE) in Bangladesh from Total 116
2005 to 2009.7 We exclude 19 companies due to missing or Panel B: Industry-wise distribution
incomplete information. The final sample comprises the
Industry sector No. of firms
remaining companies (116) with a total of 580 firm-years
observations. The sample consists of various sectors such Cement 7
as: cement (7), ceramics (4), engineering (19), food (21), Ceramics 4
jute (3), paper and printing (2), miscellaneous (11), phar- Engineering 19
maceuticals (21), tannery (5), paper and printing (2) and Food 21
textile (23).The data for our analysis comes from multiple Jute 3
sources. We collect the financial and ownership data from Paper & Printing 2
the annual reports of the sample companies listed on the Miscellaneous 11
Dhaka stock exchange. Social responsibility information Pharmaceuticals 21
was hand-collected from the CSR disclosures, corporate Tannery 5
governance disclosures, directors’ report, Chairman’s Textile 23
statement, and notes to the financial statement contained in Total 116
annual reports.

Model Specification firm’s inception; LEV, ratio of book value of total debt and
total assets; ROA ratio of earnings before interest and taxes
We use regression analysis to test the relationship between and total assets.
the corporate governance variables and the CSR disclosure. The corporate governance variables are managerial
The assumptions underlying the regression model were ownership (MOWN), public ownership (PUB), foreign
tested for multicollinearity based on the correlation matrix ownership (FOROWN), proportion of independent direc-
as well as the variance inflation factor (VIF).8 The tors on board (BIND), CEO duality (CEODU) and audit
regression equation is as follows: committee (AUDCOM). We also include control variables
CSRDI ¼a þ b1 MOWN þ b2 PUB þ b3 FOROWN that have been found in prior research to be related to
disclosure. The control variables included are firm size
þ b4 BIND þ b5 CEODU þ b6 AUDCOM
(FSIZE), firm age (FAGE), leverage (LEV) and return on
þ b7 FSIZE þ b8 FAGE þ b9 LEV assets (ROA).
þ b10 ROA þ b11 INDUSTRY DUMMIES MOWN is the proportion of ordinary shares held by
þ b12 YEAR DUMMIES þ e directors. When managerial ownership is higher, directors
are likely to be less concerned about public accountability,
where CSRDI, corporate social responsibility disclosure resulting in lower CSR disclosures (Ghazali 2007). PUB is
score/index; MOWN, percentage of shares owned by the the proportion of share own by the public. Higher level of
directors; PUB, percentage of shares owned by the public; public ownership makes the companies to be more
FOROWN, percentage of shares owned by the foreign accountable and there are pressures to disclose more
investors; BIND, proportionate indirect directors on the information on CSR (Ullmann 1985). FOROWN is the
board; CEODU, dummy variable equals 1 if same person proportion of foreign shareholders to total shareholders.
holds the positions of CEO and chairman in a firm; Due to geographical separation between management and
AUDCOM, dummy variable equals 1 if there is an audit owners, foreign investors may demand higher disclosure on
committee in a firm; FISZE, natural logarithm of total CSR (Bradbury 1991). BIND is the proportion of inde-
assets; FAGE, natural log of the number of year since the pendent directors on board. Independent directors who are
7
less aligned to management may be more inclined to
None of these companies are listed on any international stock
encourage companies to engage in CSR disclosure (Chen
exchange.
8 and Jaggi 2000). CEODU refers to the same individual
None of the variables have a VIF value in excess of 10 (Neter et al.
1983) which suggest that multicollinearity is not a problem in serving as both CEO and chairman of the board. CEO
interpreting the regression results. duality is more likely to be associated with lower levels of

123
Corporate Governance and Corporate Social Responsibility Disclosures 215

CSR disclosure since this may provide greater degree of 1992). Accordingly, the CSR disclosure index is derived by
CEO discretion and enable him less accountable for the computing the ratio of actual scores awarded to the maxi-
greater interest of stakeholders (Haniffa and Cooke 2002; mum score attainable (20) by that company (Ghazali 2007).
Gul and Leung 2004). The existence of audit committee The index is measured for each company as the ratio of the
(AUDCOM) is expected to improve financial reporting score obtained to the maximum possible score relevant for
quality including greater level of CSR disclosures. that company.10
Larger firms are expected to disclose more information Consistent with prior disclosure index studies (Botosan
(Haniffa and Cooke 2005). Larger firms receive higher 1997; Gul and Leung 2004), we use the Cronbach’s coef-
attention from the various groups in society and therefore ficient alpha (Cronbach 1951) to assess the internal con-
would be under greater pressure to disclose their social sistency of our disclosure index. Internal consistency refers
activities to legitimise their businesses. Older firms provide to the degree to which the items in a test measure the same
more social responsibility disclosures (Roberts 1992). A construct. Botosan (1997) and Gul and Leung (2004) uses
more matured firm is concerned about its reputation and the coefficient alpha as a reliability statistics useful to
hence disclose more social responsibility information. assess the degree to which correlation among the infor-
Purushothaman et al. (2000) predict a negative relationship mation categories of the disclosure index is attenuated due
between LEV and CSR disclosures in that companies with to random error. The coefficient alpha for the five infor-
high leverage may have closer relationships with their mation categories in our disclosure index is 0.702. This
creditors and use other means to disclose social responsi- statistics provides a good support that the set of items in the
bility information. Profitable companies disclose more disclosure scoring index capture the same underlying
corporate social and environmental disclosures (Haniffa construct.11
and Cooke 2005). Profitability allows management the
freedom and flexibility to undertake and reveal more
extensive social responsibility activities to general share- Results
holders. Profitable companies demonstrate their contribu-
tion to society’s well being and legitimise their existence Table 2 provides the descriptive statistics for the variables
through disclosing social information. We also use year used in the study. The average disclosure score is 0.223
dummies and industry dummies for different sectors.9 (median = 0.20). The average managerial ownership
(MOWN) is 27.40 %. The average level of public owner-
Dependent Variable—Corporate Social Responsibility ship (PUB) is 33.00 %. The average board independence
Disclosure Index (CSRDI) (BIND) of our sample is 7.10 and 24.70 % of the CEOs in
our sample firms are also the chairman of the board
The CSR disclosure index (CSRDI) represents the depen- (CEODU).
dent variable in this study. To assess the extent of CSR Table 3 presents the correlation matrix among variables.
disclosure in annual reports, a checklist containing 20 items Corporate social responsibility disclosure (CSRDI) score is
was constructed (see Appendix). We follow previous negatively correlated with managerial ownership (MOWN)
studies to construct this checklist. In particular we follow (q = -0.330). However, corporate social responsibility
Haniffa and Cooke (2002, 2005) and Ghazali (2007) and disclosure (CSRDI) score is positively correlated with
develop a modified checklist including the items relevant to foreign ownership (FOROWN) (q = 0.462) and board
Bangladeshi companies. A dichotomous procedure is independence (BIND) (q = 0.269). CEO duality is positive
applied whereby a company is awarded 1 if an item but insignificantly correlated with CSRDI. The correlation
included in the checklist is disclosed and 0 if it is not between public ownership (PUB) and CSRD is also posi-
disclosed. We do not penalise a firm for non-disclosure if tive (q = 0.081). CSRDI is also correlated with the control
the item is not relevant to the firm. Such a judgement can variables such as firm size (FSIZE) (q = 0.558), firm age
be made after reading the entire annual report (Cooke (FAGE) (q = 0.231), leverage (LEV) (q = -0.192) and
return on assets (ROA) (q = 0.371).
9
There are a number of tests available to evaluate the specification of Table 4 reports the mean values of the explanatory
our model (see Greene 2003, pp. 283–333). Accordingly, we perform
variables under analysis across the CSR disclosure scores
two tests to evaluate the adequacy of our model specification. Our
fixed effect model will outperform the simple pooled model if the null
hypothesis of homogeneity of individual effects, which can be tested 10
with an F test, is rejected. Our fixed effect model can also be We thank an anonymous reviewer for suggesting to test the
compared with random effect using Hausman’s specification test to internal validity of our disclosure index.
11
determine whether random effects are orthogonal to the regressors. Botosan (1997) obtains a coefficient alpha computed on standard-
Based on Hausman test Chi-square statistic the fixed effect model was ised data of 0.64. Gul and Leung (2004) computes a coefficient alpha
found to be superior to the random effect model at 0.01 levels. of 0.51.

123
216 A. Khan et al.

1.000
FOROWN percentage of shares owned by the foreign investors, CSRDI corporate social responsibility disclosure score/index, MOWN percentage of shares owned by the directors, PUB
percentage of shares owned by the public, CEODU dummy variable equals 1 if same person holds the positions of CEO and chairman in a firm and otherwise 0, BIND proportionate indirect
directors on the board, AUDCOM dummy variable equals 1 if there is an audit committee and otherwise 0, LEV ratio of book value of total debt and total assets, FAGE natural log of the number
ROA
Table 2 Descriptive statistics of dependent and independent
variables
Variables Mean Median Std. Dev.

0.158***
FOROWN 0.067 0.000 0.188

FSIZE

1.000
CSRDI 0.223 0.200 0.173
MOWN 0.274 0.302 0.181
PUB 0.330 0.315 0.177

1.000
-0.054
0.044
FAGE
CEODU 0.247 0.000 0.432
BIND 0.071 0.000 0.084
AUDCOM 0.579 1.000 0.494
LEV 0.776 0.626 0.807

0.299***
-0.209***
-0.401***
FAGE 23.659 24.000 10.709

1.000
LEV
FSIZE 8.700 8.705 0.661

of year since the firm’s inception, FISZE natural logarithm of total assets, ROA ratio of earnings before interest and taxes and total assets
ROA 0.075 0.071 0.095
CSRDI corporate social responsibility disclosure score/index, MOWN

-0.143***

0.239***
0.228***
AUDCOM
percentage of shares owned by the directors, PUB percentage of

1.000

-0.003
shares owned by the public, FOROWN percentage of shares owned by
the foreign investors, CEODU dummy variable equals 1 if same
person holds the positions of CEO and chairman in a firm, BIND
proportionate indirect directors on the board, AUDCOM dummy
variable equals 1 if there is an audit committee and otherwise 0, LEV

0.674***
-0.125***

0.130***
0.187***
ratio of book value of total debt and total assets, FAGE natural log of

1.000

0.028
the number of year since the firm’s inception, FISZE natural loga-
BIND
rithm of total assets, ROA ratio of earnings before interest and taxes
and total assets

-0.153****
-0.136***
for both firms with a score higher than the median and
CEODU

1.000

-0.001
-0.054
-0.032
0.029
those with a score lower than the median. To test the sta-
tistical significance of the mean differences in the
explanatory variables between both groups of firms, we
perform a t test. It can be observed that firms with a CSR
0.178***

-0.112***

-0.124***
-0.097**

-0.091**
disclosure score higher than the median have higher for-
1.000

-0.068
-0.021

eign ownership (FOROWN), public ownership (PUB) and

PUB

*, **, ***Statistically significant at less than 0.10, 0.05 and 0.01 level
CEO duality (CEODU) and lower managerial ownership
(MOWN) as compared to those firms with a CSR score
lower than the median. Although firms disclosing more on
0.134***
-0.150***
-0.167***

-0.164***
-0.373***
-0.089**

CSR activities have higher board independence (BIND),

MOWN

1.000
-0.067

-0.024

this difference is not statistically different, at a 5 % level,

between both groups of firms. Our analysis also shows that
several control variables differ significantly between both
groups of firms such as age (FAGE), leverage (LEV) and
-0.330***

0.269***
0.325***
-0.192***
0.231***
0.558***
0.371***
0.081*

profitability (ROA).
1.000

0.003
CSRDI

Table 5 reports the results of regressing the explanatory

variables on the CSR disclosure score. In model 1 we
examine the impact of managerial ownership on CSR dis-
0.462***
-0.359***
-0.278***

0.263***
0.167***

0.123***
0.328***
0.295***
Table 3 Correlation matrix
FOROWN

closures. We find a negative significant coefficient (b =

-0.107**
-0.074*
1.000

-0.114, p \ 0.01) of managerial ownership (MOWN) var-

iable. It implies that higher managerial ownership results in
lower extent of CSR disclosure thus supporting H1. Our
results also suggest that public interest as well as account-
AUDCOM
FOROWN
Variables

ability could be less of an issue in owner-managed Ban-

CEODU
MOWN
CSRDI

FSIZE
FAGE
BIND

gladeshi companies. Owner managers may not be interested

ROA
LEV
PUB

to invest heavily in CSR activities since costs associated with

123
Corporate Governance and Corporate Social Responsibility Disclosures 217

Table 4 Differences in the value of the explanatory variables Belal and Owen (2007) also identify pressures from
between firms with higher and lower CSRDI international buyers in the garment industry in Bangladesh
Variables CSRDI [ Median CSRDI \ Median p value as an ‘extremely potent factor’ influencing CSR disclosure
practices (Belal and Owen 2007, p. 485).
FOROWN 0.10 0.02 0.000***
To test the effect of managerial ownership at the pres-
MOWN 0.21 0.28 0.003*** ence of international expectations to be socially and envi-
PUB 0.33 0.23 0.000*** ronmentally responsive, we create an interaction between
CEODU 0.28 0.21 0.040** managerial ownership and textile industry variables
BIND 0.08 0.06 0.059* (EXPORT). We find a positive significant coefficient of the
AUDCOM 0.67 0.42 0.029*** interaction (b = 0.247, p \ 0.01) variable (MOWN*EX-
LEV 0.63 0.94 0.000*** PORT) indicating a moderating effect of export-oriented
FAGE 24.6 22.57 0.027** industries on the negative relationship between managerial
FSIZE 8.99 8.37 0.272 ownership and CSR disclosures. Thus our H1a is rejected.
ROA 0.10 0.04 0.026** Our results imply that in spite of managerial ownership
CSRDI corporate social responsibility disclosure score/index, MOWN concentration management of export-oriented industries in
percentage of shares owned by the directors, PUB percentage of Bangladesh report more CSR disclosures because of pres-
shares owned by the public, FOROWN percentage of shares owned by sure from international buyers. This is consistent with and
the foreign investors, BIND proportionate indirect directors on the
provides further empirical support to previous studies such
board, CEODU dummy variable equals 1 if same person holds the
positions of CEO and chairman in a firm, FISZE natural logarithm of as Belal and Owen (2007) and Islam and Deegan (2008),
total assets, FAGE natural log of the number of year since the firm’s who identify pressures exerted by powerful stakeholder
inception, LEV ratio of book value of total debt and total assets, ROA groups as a principal driver of CSR reporting in
ratio of earnings before interest and taxes and total assets
Bangladesh.
*, **, *** = statistically significant at less than 0.10, 0.05 and 0.01
In the next model (model 3) we examine the impact of
level
public ownership on CSR disclosures. We document a
positive significant coefficient (b = 0.027, p \ 0.05) of
these activities may exceed the benefits. Thus, managers are
public ownership (PUB) variable. It suggests that higher
relatively less concerned about social and environmental
percentage of public ownership results in higher level of
activities thereby reporting lower extent of CSR disclosures.
CSR disclosures. This also supports H2. Our results also
This is consistent with a number of prior studies (for exam-
indicate that when a company is publicly held the issue of
ple, Ho and Wong 2001; Chau and Gray 2010) that find
public accountability may become very important. These
managerial ownership to be negatively related to levels of
companies are expected to have more pressures to get
voluntary disclosure.
involve in social or community activities. Therefore, pub-
In model 2 we explore the impact of managerial own-
licly owned companies tend to get more involved in social
ership on the extent of CSR disclosures in export-oriented
activities to ensure organisational legitimacy and disclose
industries. Bangladesh is currently the second largest
more of these activities.
exporters of textile products in the world. The textile
In model 4 we test the relationship between foreign
industry is by far the most import industry in Bangladesh as
ownership and the extent of CSR disclosures. We find a
it generates more than 80 % of the export earnings of the
positive significant coefficient (b = 0.250, p \ 0.01) of
country. However, the industry and its large foreign buyers
FOROWN (foreign ownership) which implies that higher
(such as Wal Mart, etc.) sometimes attract criticisms from
percentage of foreign ownership results in higher extent of
the world press due to poor working conditions and levels
CSR disclosures, thus supporting H3. This implies that
of wages offered to the workers. Islam and Deegan (2008)
foreign investors are likely to have different values and
report that multinational buyers of the textile industry now
knowledge related to contextual issues and are able
expect the manufacturers in Bangladesh to attend to vari-
increase strategic decisions in regards to public and social
ous social and environmental issues, and failure to meet
activities and their reporting. This is consistent with the
such expectations may lead to loss of supply contracts.
findings of Haniffa and Cooke (2005) who suggest that
Although, like most other industries in Bangladesh, the
companies with high foreign ownership report more CSR
textile sector is also characterised by high levels of man-
disclosures as a proactive legitimacy strategy to satisfy
agerial ownership and family dominance,12 pressures from
ethical foreign investors so that they get more foreign
international buyers may mitigate the influence of family
capital.
ownership on CSR disclosure practices for this industry.
In model 5 we examine the relationship between board
12
Imam and Malik (2007) report that more than 37 % of the shares in independence and the level of CSR disclosures. We find a
the textile industry in Bangladesh are held by top three shareholders. positive significant coefficient (b = 0.372, p \ 0.01) of

123
 218

Table 5 Multiple regression results using CSRDI as the dependent variable

123
Model 1 (H1) Model 2 (H1a) Model 3(H2) Model 4 (H3) Model 5 (H4) Model 6 (H5) Model 7 (H6) Model 8

Coefficient Prob. Coefficient Prob. Coefficient Prob. Coefficient Prob. Coefficient Prob. Coefficient Prob. Coefficient Prob. Coefficient Prob.

Constant -0.924 0.000*** -0.738 0.000*** -1.073 0.000*** -0.891 0.000*** -1.066 0.000*** -1.091 0.000*** -0.949 0.000*** -0.787 0.000***
MOWN -0.114 0.001*** -0.063 0.029**
MOWN*EXPORT 0.247 0.008***
PUB 0.027 0.032** 0.072 0.027**
FOROWN 0.250 0.000*** 0.207 0.000***
BIND 0.372 0.000*** 0.141 0.053*
CEODU 0.014 0.296 0.031 0.112
AUDCOM 0.052 0.000*** 0.027 0.019**
LEV -0.014 0.079* -0.014 0.073* -0.035 0.000*** -0.030 0.000*** -0.030 0.000*** -0.035 0.000*** -0.008 0.295 -0.007 0.363
FAGE 0.003 0.000*** 0.003 0.000*** 0.004 0.000*** 0.004 0.000*** 0.004 0.000*** 0.005 0.000*** 0.004 0.000*** 0.003 0.000***
ROA 0.471 0.000*** 0.394 0.000*** -0.004 0.616 -0.008 0.283 -0.007 0.319 -0.003 0.656 0.394 0.000*** 0.285 0.000***
FSIZE 0.123 0.000*** 0.106 0.000*** 0.141 0.000*** 0.119 0.000*** 0.136 0.000*** 0.141 0.000*** 0.118 0.000*** 0.097 0.000***
CEMCER 0.031 0.292 0.023 0.423 0.045 0.129 0.032 0.259 0.017 0.657 0.044 0.135 0.038 0.201 0.027 0.349
ENG -0.039 0.162 -0.041 0.213 -0.031 0.194 -0.009 0.659 -0.024 0.376 -0.033 0.163 -0.028 0.221 -0.013 0.572
FOOD -0.045 0.139 -0.047 0.162 -0.042 0.213 -0.034 0.132 -0.029 0.205 -0.043 0.175 -0.034 0.137 -0.038 0.189
EXPORT 0.073 0.002*** 0.114 0.004*** 0.074 0.002*** 0.087 0.002*** 0.092 0.001*** 0.074 0.002*** 0.072 0.002*** 0.092 0.000***
PROCESS -0.021 0.659 -0.014 0.767 -0.052 0.259 -0.021 0.569 -0.023 0.059* -0.057 0.212 -0.044 0.337 -0.027 0.541
OTHER -0.047 0.776 -0.045 0.692 -0.049 0.064* -0.042 0.132 -0.026 0.345 -0.053 0.176 -0.047 0.601 -0.037 0.156
Y1 -0.027 0.221 -0.029 0.193 -0.231 0.167 -0.031 0.169 0.012 0.617 -0.003 0.149 0.017 0.403 0.002 0.937
Y2 -0.005 0.731 -0.007 0.642 -0.007 0.699 -0.009 0.534 0.021 0.209 -0.008 0.186 0.021 0.244 0.012 0.477
Y3 0.005 0.776 0.003 0.873 0.005 0.755 -0.005 0.927 0.017 0.305 0.003 0.547 0.019 0.263 0.013 0.387
Y4 0.013 0.426 0.011 0.481 0.011 0.497 -0.009 0.567 0.015 0.335 0.009 0.846 0.015 0.344 0.015 0.320
Y5 -0.018 0.482 -0.009 0.581 -0.007 0.556 -0.011 0.526 -0.008 0.599 -0.009 0.577 -0.016 0.349 -0.017 0.272
Adjusted R2 0.446 0.481 0.383 0.447 0.413 0.389 0.499 0.562
F stat 94.630 32.721 72.460 94.130 82.320 72.730 34.848 33.273

CSRDI corporate social responsibility disclosure score/index, MOWN percentage of shares owned by the directors, PUB percentage of shares owned by the public, FOROWN percentage of shares owned by the foreign investors, BIND
proportionate indirect directors on the board, CEODU dummy variable equals 1 if same person holds the positions of CEO and chairman in a firm, AUDCOM dummy variable equals 1 if there is an audit committee and otherwise 0,
FISZE natural logarithm of total assets, FAGE natural log of the number of year since the firm’s inception, LEV ratio of book value of total debt and total assets, ROA ratio of earnings before interest and taxes and total assets, CEMCER
dummy variable equals 1 if the firm belong to ceramic or cement industry and otherwise 0, ENG dummy variable equals 1 if the firm belong to engineering industry and otherwise 0, FOOD dummy variable equals 1 if the firm belong to
food industry and otherwise 0, EXPORT dummy variable equals 1 if the firm belongs to textile or pharmaceutical industry and otherwise 0, PROCESS dummy variable equals 1 if the firm belongs to jute, paper, printing and tannery and
otherwise 0, OTHER dummy variable equals 1 if the firm belong to other industries and otherwise 0, Y1 Year dummy variable equals 1 if the firm-year observation is from 2005 and otherwise 0, Y2 Year dummy variable equals 1 if the
firm-year observation is from 2006 and otherwise 0, Y3 Year dummy variable equals 1 if the firm-year observation is from 2007 and otherwise 0, Y4 Year dummy variable equals 1 if the firm-year observation is from 2008 and
otherwise 0, Y5 Year dummy variable equals 1 if the firm-year observation is from 2005 and otherwise 0
*, **, *** = statistically significant at less than 0.10, 0.05 and 0.01 level
A. Khan et al.
Corporate Governance and Corporate Social Responsibility Disclosures 219

board independence (BIND) variable. This is consistent (excluding family directors’ ownership) are significant and
with prior findings (for example, Petra 2005; Jo and negatively related to CSR disclosures. Our results in
Harjoto 2011). Our results thus imply that the greater the regards to family ownership imply that family owners,
board independence, it is more likely that companies will who play a more dominant role in regards to corporate
emphasise on societal interests and organisational legiti- social strategies than other investors, are less concerned
macy (Haniffa and Cooke 2005) and disclose more CSR about public accountability and organisational legitimacy.
activities, supporting H4. Our results also support the Therefore, companies report less when there is high family
notion that independent directors can put pressure on ownership. The results remain unchanged in respect of
companies to engage in CSR to ensure congruence between other variables. Second, an OLS regression test was con-
organisational actions and societal values or organisational ducted by using the natural logarithm value of the CSR
legitimacy. The results seem to imply that despite the disclosure scores as the dependent variable. We rerun all
common use of personal and family connections as the the models (1–6) and document that our results do not
criteria for selecting independent directors, the presence of differ qualitatively from those contained in Table 5. Third,
larger number of independent directors in the board helps an OLS regression test was also conducted by dropping all
diminish family influence on CSR disclosures. control variables from the model. Our results are consistent
We test the relationship between CEO duality and the with the findings reported in Table 5. Fourth, we replace
extent of CSR disclosures in model 6. We document a foreign ownership by foreign director dummy variable.
positive but insignificant coefficient (b = 0.014, p [ 0.10) Foreign director dummy variable is a dummy variable if
of CEO duality (CEODU) variable. In other words it there is any foreign director on the board. Thereafter, we
implies that CEO duality does not influence CSR disclo- rerun our model. We document a positive significant
sures for our sample companies. Thus it does not support coefficient of the dummy variable. Once again it implies
H5. The finding seems to suggest that the custom of that because of their international exposure and knowledge
selecting the CEO and chair from the same family has foreign directors are more committed to protect the interest
turned the corporate governance mechanism of CEO/chair of the society and hence ensures more reporting of CSR
duality into a mere ritual. disclosures. Finally, we partition our sample into two dif-
In model 7 we investigate the impact of existence of ferent sub-samples based on time periods—from 2005 to
audit committee on CSR reporting. We document a posi- 2006 and from 2007 to 2009 and replicated the original
tive significant coefficient (b = 0.052, p [ 0.01) of audit analysis. The purpose of partitioning the sample is to test
committee (AUDCOM) variable indicating that presence any impact of the ‘corporate governance notification 2006’
of an audit committee increases the extent of CSR disclo- that took place during our study period. The results that we
sures. Thus, our H6 is supported which indicate that exis- document for the sub-sample periods are qualitatively
tence of an audit committee can ensure objectivity of similar to the results in respect of the whole sample. Since
financial reports through reporting a greater extent of CSR the time period of our study could be influenced by
disclosures. increasing interest about CSR matters in global economy
We regress CSR disclosure on all corporate governance we attempt to test the presence of such increasing trends in
variables in model 8 to test the impact of all the hypoth- our analysis. We run our model separately for each year
esised variables in one model. Our results with respect to and use a Chow test to evaluate the shifts of independent
the coefficients of hypothesised variables are consistent variables over time. Cross-period Chow tests of the sig-
with main findings reported in models 1–7. In regards to nificance of all the explanatory variables suggest no sig-
control variables, our overall findings suggest that larger nificant shift of coefficients over time.13
firm size (FSIZE), older firms (LAGE) and better perfor-
mance (ROA) are significantly related to greater extent of
CSR disclosures. However, we find a negative significant Conclusions
impact of leverage on the level of CSR disclosures. The
results of our analysis with respect to the control variables The objective of this paper was to investigate the influence
are consistent with the previous studies (Roberts 1992; of corporate governance mechanisms on CSR disclosures
Haniffa and Cooke 2005; Ghazali 2007). in an Asian emerging economy, Bangladesh. The cultural
A series of tests were conducted to test the model’s diversity and political and legal structures in many devel-
robustness. First, in model 6, we replace managerial oping countries (particularly, in the South-East Asian
ownership (MOWN) with percentage of ownership by region) have significantly influenced the corporate gover-
family directors (FOWN) and board ownership (excluding nance practices in those countries. Consequently, most of
family directors’ ownership). In the unreported results we
13
find that family (FOWN) and board ownership (BOWN) We thank an anonymous reviewer for suggesting Chow test.

123
220 A. Khan et al.

these countries have corporate governance systems disclosures are used by managers as a strategic tool to
embedded on close, usually family relationships (Clarke attain legitimacy. We document that public ownership and
2007). Such family ownership and control has been foreign ownership (including presence of foreign nationals
enhanced through pyramidal structure and cross holdings in the board) have positive impacts on the extent of CSR
(Claessens et al. 2000; Claessens and Fan 2002). Like disclosures. This means that despite lack of shareholder
many other countries family ownership is very common in activism well dispersed firms in Bangladesh still provide
Bangladesh and the Bangladeshi controlling families hold significantly more CSR disclosures. The positive effect of
their shares independently in a particular company or foreign ownership and presence of foreign nationals in the
group of companies. This ownership structure is, however, board on levels of CSR disclosures reinforce our findings
by no means similar to the pyramidal structure found in that managers in public limited companies strive to attain
Western Europe and some other South-East Asian coun- legitimacy by making higher amount of CSR disclosures.
tries (Farooque et al. 2007). We find corporate governance mechanisms such as
Like some other developing economies (for example, board independence, and presence of an audit committee to
India, Turkey, etc.), family firms are the most dominant have significant positive influence on the levels of CSR
form of business enterprises in Bangladesh. The strong disclosures. However, we do not find any significant
family presence in the board of directors has led to the association between CEO/chairman role duality and levels
emergence of a culture where the values of corporate of CSR disclosures. It may be noted that in the context of
governance mechanisms are not always properly appreci- Bangladesh, CEO/chair role duality may not mean much as
ated by the management. Prior research [for example, in most cases, these two roles tend to be occupied by
Mukherjee-Reed (2002) in India; Uddin and Choudhury individuals from the same family. It appears that despite
(2008) in Bangladesh; Chen and Nowland (2010) in dif- the traditional settings, corporate governance mechanisms
ferent Asian countries] has generally questioned the involving presence of outsiders have significant impact on
potency of corporate governance mechanisms at the pres- the extent of disclosures made by Bangladeshi companies,
ence of strong family control. In the case of Bangladesh, possibly due to the legitimisation effects of such mecha-
measures such as separation of chairman and CEO are nisms. This is consistent with a number of prior studies
likely to be affected by the fact that both these individuals (such as Chau and Gray 2010; Filatotchev et al. 2005) that
are generally picked from the same family, and the inde- find the presence of rational corporate governance mech-
pendence and competence of the board of directors and the anisms (such as board independence and independent
audit committee are likely to be hampered by the tendency chair) to have some mitigating effect on the influence of
to select independent members on the basis of personal family ownership on voluntary disclosures. Perhaps, this
connections rather than skill and competence. Prior studies suggests that corporate governance models require some
on CSR disclosures in Bangladesh suggest that pressures further revisions requiring the chair of the board to be
from powerful stakeholders, rather than efficiency incen- independent, or not allowing the chair and the CEO from
tives, are the drivers for such disclosures. Under such the same family. The findings may have significant policy
environmental settings, the influence of corporate gover- implications in the current context of Bangladesh, as the
nance mechanisms on CSR disclosures is likely to be dif- regulators are attempting to carry out further reforms in the
ferent from those in developed economy settings. corporate governance arena.
We document that managerial ownership is negatively An alternative explanation could be that the presence of
related to the extent of CSR disclosures. This implies that ethical management in some organisations influences its
high ownership concentration by the managers influence CSR disclosure practices. Prior studies (such as Fukukawa
companies to get less involved in social activities because et al. 2007; Haniffa and Hudaib 2007) suggest a positive
of their dominance than other investors thereby reporting relationship between the ethical identity of a company and
less on CSR disclosures. However, we find that despite its corporate disclosures. In the context of Bangladesh, Belal
high level of managerial ownership, sample companies in and Roberts (2010) report that some managers and owners of
export-oriented industries in Bangladesh make significantly some companies are more committed to social and envi-
more CSR disclosures. This provides further empirical ronmental performance, and consequently, encourage more
support to prior interview-based findings by Belal and CSR disclosures. It could be argued that an ethical man-
Owen (2007) and Islam and Deegan (2008) that the most agement would promote corporate governance mechanisms
potent factor for CSR disclosures in export-oriented such as greater board independence and audit committee and
industries in Bangladesh is the pressure exerted by at the same time, be more socially responsible.
important stakeholder groups. This also extends the work The overall findings of our study provide empirical
of Roberts (1992) and Dentchev (2004) by providing evi- evidence which suggests that corporate governance attri-
dence that in the context of emerging economies, CSR butes, albeit perceived to be less effective, are important

123
Corporate Governance and Corporate Social Responsibility Disclosures 221

determinants of extent of CSR disclosures in a developing Acknowledgments The helpful comments of two anonymous
country like Bangladesh. Thus corporate governance, in reviewers and section editor Professor Thomas Clarke are gratefully
acknowledged.
particular the internal governance structure, is likely to
play a vital role to reduce legitimacy gap through envi-
ronmental and social disclosures. Our study contributes to
Appendix
the literature by extending the findings of previous research
which mainly focus on extent, content and motivational
factors of CSR disclosures. Empirically, we provide evi-
dence of managerial motivations for CSR disclosures in CSR disclosure items
emerging economies. The findings of our study suggest that
I Community involvement
different types of owners may have divergent and even
1 Charitable donations and subscriptions
competing views on CSR practices. For example, mana-
2 Sponsorships and advertising
gerial owners have a negative perspective toward CSR
3 Community program (Health and Education)
whereas public and foreign owners have positive perspec-
II Environmental
tives. Such competing preferences may result in an ineffi-
cient CSR practices. Therefore, managers need to develop 1 Environmental policies
a sophisticated strategic decision making process to deal III Employee information
with competing preferences with respect to CSR practices. 1 Number of Employees/Human resource
Our findings can also help the regulators and policy makers 2 Employees Relations
to adopt an appropriate balance of legislation, regulatory 3 Employee Welfare
reform and their enforcement to make improvements in the 4 Employee education
corporate governance practices. Therefore, it should be of 5 Employee training and development
interest to regulators and policy makers in countries whose 6 Employee profit sharing
corporate ownership and regulatory structures are similar. 7 Managerial remuneration
While our results are probably dependent on Bangladesh’s 8 Worker’s occupational health and safety
institutional environment, learning the extent to which the 9 Child labour and related actions
results do generalise will help us better understand how IV Product and service information
institutional features matter for corporate governance and 1 Types of products disclosed
the extent of CSR disclosure. Thus, further studies in dif- 2 Product development and Research
ferent jurisdictions on the issues we raise in this study are 3 Product quality and safety
warranted. 4 Discussion of marketing network
The results of our study are subject to several limita- 5 Focus on customer service and satisfaction
tions. Our study focuses on only disclosures in corporate 6 Customer Award/Rating Received
annual reports although it is known that management may V Value added information
use other mass communication mechanisms. Therefore, 1 Value added statement
future research may consider disclosures in other media
such as newspapers, the internet, etc. Additionally,
involvement in socially responsible activities may not
necessarily translate into disclosure of those activities. The
References
CSR disclosures index developed in this study may not
have been fully or properly captured the CSR practices. Ahmed, S. & Siddiqui, J. (2011). Audit committee interactions with
Hence it should not be concluded that companies which did external auditors: Evidence from an emerging economy, Work-
not disclose CSR information were not engaged in any ing paper, University of Manchester, United Kingdom.
Ararat, M., & Ugur, M. (2003). Corporate governance in Turkey: An
social activities. The relationship between ethics, corporate
overview and some policy recommendations. Corporate Gover-
governance, and CSR disclosure also needs to be explored. nance, 3(1), 18–35.
Finally, this study adopts the perspective of legitimacy Azim, M. I., Ahmed, A., & Shahidul, M. (2009). Corporate social
theory, against the body of literature on corporate gover- reporting practice: Evidence from listed companies in Bangla-
desh. Journal of Asia-Pacific Business, 10(2), 130–145.
nance and disclosure practices that prefers agency theory.
Belal, A. R. (2000). Environmental reporting in developing countries:
Further research may combine these two theories to Empirical evidence from Bangladesh. Eco-Management and
develop a more comprehensive explanation about corpo- Auditing, 7(3), 114–121.
rate governance attributes affecting the level of CSR Belal, A. R. (2001). a study of corporate social disclosures in
Bangladesh. Managerial Auditing Journal, 16(5), 274–289.
disclosures.

123
222 A. Khan et al.

Belal, A. R., & Cooper, S. (2011). Absence of corporate social DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited:
reporting in Bangladesh: A research note. Critical Perspectives Institutional isomorphism and collective rationality in organiza-
on Accounting, 22(7), 654–667. tional fields. American Sociological Review, 48(2), 147–160.
Belal, A. R., & Owen, D. L. (2007). The view of corporate managers Dowling, J., & Pfeffer, J. (1975). Organisational legitimacy: Social
on the current state of, and future prospects for, social reporting values and organisational behaviour. Pacific Sociological
in Bangladesh. Accounting, Auditing and Accountability Jour- Review, 18(1), 122–136.
nal, 20(3), 472–494. Eng, L. L., & Mak, Y. T. (2003). Corporate governance and voluntary
Belal, A., & Roberts, R. (2010). Stakeholders’ perceptions of disclosure. Journal of Accounting and Public Policy, 22(4),
corporate social reporting in Bangladesh. Journal of Business 325–345.
Ethics, 97(2), 311–324. Farooque, O. A., Zijl, T. V., Dunstan, K., & Karim, A. K. M. W.
Beltratti, A. (2005). The complementarity between corporate gover- (2007). Corporate governance in Bangladesh: Link between
nance and corporate social responsibility. Geneva Papers on ownership concentration and financial performance. Corporate
Risk & Insurance, 30, 373–386. Governance: An International Review, 15(6), 1453–1468.
Biggart, N. W. (1991). Explaining Asian economic organization: Filatotchev, I., Lien, Y., & Piesse, J. (2005). Corporate governance
Toward a Weberian institutional perspective. Theory and and performance in publicly controlled firms: Evidence from
Society, 20(2), 199–232. Taiwan. Asia Pacific Journal of Management, 22(3), 257–283.
Botosan, C. A. (1997). Disclosure level and the cost of equity capital. FRC. (2011). The combined code. UK: Financial Reporting Council.
The Accounting Review, 72(3), 323–350. Fukukawa, K., Balmer, J. M. T., & Gray, E. R. (2007). Mapping the
Bradbury, M. E. (1991). Characteristics of firms and voluntary interim interface between corporate identity, ethics and corporate social
earnings disclosure: New Zealand evidence. Pacific Accounting responsibility. Journal of Business Ethics, 76(1), 1–5.
Review, 3, 37–62. Ghazali, N. A. M. (2007). Ownership structure and corporate social
Bradbury, M., Mark, Y. T., & Tan, S. M. (2006). Board character- responsibility disclosure: Some Malaysian evidence. Corporate
istics, audit committee characteristics and abnormal accruals. Governance, 7(3), 251–266.
Pacific Accounting Review, 18(2), 47–68. Gibbins, M., Richardson, A., & Waterhouse, J. (1990). The manage-
Chau, G., & Gray, S. J. (2002). Ownership structure and corporate ment of corporate financial disclosures: Opportunism, ritualism,
voluntary disclosure in Hong Kong and Singapore. The Inter- politics and processes. Journal of Accounting Research, 28(1),
national Journal of Accounting, 37(2), 247–265. 121–143.
Chau, G., & Gray, S. J. (2010). Family ownership, board indepen- GOB. (1994). Companies Act, 1994. Ministry of Commerce,
dence and voluntary disclosure: Evidence from Hong Kong. Government of Bangladesh.
Journal of International Accounting, Auditing and Taxation, GOB. (2008). Tax rebate on corporate social responsibility expendi-
19(2), 93–109. tures. SRO 270-Law/2009. National Board of Revenue, Gov-
Chen, C. J. P., & Jaggi, B. (2000). Association between independent ernment of Bangladesh.
non-executive directors, family control and financial disclosures GOB. (2011). Tax rebate on corporate social responsibility expendi-
in Hong Kong. Journal of Accounting and Public Policy, 19(4/ tures. SRO 229-law/Income tax/2011 replacing SRO 270-Law/
5), 285–310. 2009. National Board of Revenue, Government of Bangladesh.
Chen, E., & Nowland, J. (2010). Optimal board monitoring in family- Gray, R., Owen, D., & Adams, C. (1996). Accounting and account-
owned companies: Evidence from Asia. Corporate Governance: ability: Social and environmental accounting in a changing
An International Review, 18(1), 3–17. world. Hemel Hempstead: Prentice-Hall.
Chen, J. C., Patten, D. M., & Roberts, R. W. (2008). Corporate Greene, W. (2003). Econometric analysis. New York: Prentice Hall.
charitable contributions: A corporate social performance or Gul, F. A., & Leung, S. (2004). Board leadership, outside directors’
legitimacy strategy? Journal of Business Ethics, 82(1), 131–144. expertise and voluntary corporate disclosure. Journal of
Claessens, S., Djankov, S., & Lang, L. H. (2000). The separation of Accounting and Public Policy, 23(5), 351–379.
ownership and control in East Asian corporations. Journal of Hamilton, G. G., & Biggart, N. M. (1988). Market, culture, and
Financial Economics, 58, 81–112. authority: A comparative analysis of management and organiza-
Claessens, S., & Fan, J. P. (2002). Corporate governance in Asia: A tion in the Far East. American Journal of Sociology, 94, S52–S94.
survey. International Review of Finance, 3(2), 71–103. Haniffa, R. M., & Cooke, T. E. (2002). Culture, corporate governance
Clarke, T. (2007). International Corporate Governance: A Compar- and disclosure in Malaysian corporations. Abacus, 38(3),
ative Approach. London: Routledge. 317–349.
Cooke, T. E. (1992). The impact of size, stock market listing and Haniffa, R. M., & Cooke, T. E. (2005). The impact of culture and
industry type on disclosure in the annual reports of Japanese governance on corporate social reporting. Journal of Accounting
listed corporations. Accounting and Business Research, 22(8/7), and Public Policy, 24(5), 391–430.
229–237. Haniffa, R., & Hudaib, M. (2007). Exploring the ethical identity of
Cronbach, L. J. (1951). Coefficient alpha and the internal structure of Islamic banks via communication in annual reports. Journal of
tests. Psychometrika, 16(3), 297–334. Business Ethics, 76(1), 97–116.
Cullen, L., & Christopher, T. (2002). Governance disclosures and firm Harjoto, M. A., & Jo, H. (2011). Corporate governance and CSR
characteristics of listed Australian mining companies. Interna- nexus. Journal of Business Ethics, 100(1), 45–67.
tional Journal of Business Studies, 10(1), 37–58. Ho, S., & Wong, K. S. (2001). A study of the relationship between
Deegan, C., Rankin, M., & Tobin, J. (2002). An examination of the corporate governance structures and the extent of voluntary
corporate social and environmental disclosures BHP from disclosure. Journal of International Accounting, Auditing and
1983–1997: A test of legitimacy theory. Accounting, Auditing Taxation, 10(2), 139–156.
& Accountability Journal, 15(3), 312–343. Imam, S. (2000). Corporate social performance reporting in Bangla-
Deegan, C., Rankin, M., & Voght, P. (2000). Firms disclosure desh. Managerial Auditing Journal, 15(3), 133–141.
reactions to major social incidents: Australian evidence. Imam, M. O., & Malik, M. (2007). Firm performance and corporate
Accounting Forum, 24(1), 101–130. governance through ownership structure: Evidence from Ban-
Dentchev, N. A. (2004). Corporate social performance as a business gladesh stock market. International Review of Business Research
strategy. Journal of Business Ethics, 55(4), 397–412. Papers, 3(4), 88–110.

123
Corporate Governance and Corporate Social Responsibility Disclosures 223

Islam, M. A., & Deegan, C. (2008). Motivations for an organization legitimacy crisis? Critical Perspectives on Accounting, 15,
within a developing country to report social responsibility 35–56.
information: Evidence from Bangladesh. Accounting, Auditing & Reaz, M., & Arun, T. (2006). Corporate governance in developing
Accountability Journal, 21(6), 850–874. economics: Perspective from the banking sector in Bangladesh.
Jackling, B., & Johl, S. (2009). Board structure and firm performance: Journal of Banking Regulation, 7(1/2), 94–105.
Evidence from India’s top companies. Corporate Governance: Reed, D. (2002). Corporate governance reforms in developing
An International Review, 17(4), 492–509. countries. Journal of Business Ethics, 37(3), 223–247.
Jo, H., & Harjoto, M. A. (2011). Corporate governance and firm Roberts, R. W. (1992). Determinants of corporate social responsibility
value: The impact of corporate social responsibility. Journal of disclosure: An application of stakeholder theory. Accounting,
Business Ethics, 103(3), 351–383. Organizations and Society, 17(6), 595–612.
Joh, S. W. (2003). Corporate governance and firm profitability: Schipper, K. (1981). Discussion of voluntary corporate disclosure:
Evidence from Korea before the economic crisis. Journal of The case of interim reporting. Journal of Accounting Research
Financial Economics, 68(2), 287–322. (Supp), 19, 85–88.
Johnshon, R. D., & Greening, D. W. (1999). The effect of corporate Scott, W. R. (1987). The adolescence of institutional theory.
governance and institutional ownership types on corporate social Administrative Science Quarterly, 32(4), 493–511.
performance. Academy of Management Journal, 42(5), 564–576. SEC: 2006 ‘Order Relating to Corporate Governance’, Securities and
Judge, W. Q., Douglas, T. J., & Kutan, A. M. (2008). Institutional Exchange Commission, Bangladesh SEC/CMRRCD/02-06.
antecedents of corporate governance legitimacy. Journal of SEC. (2012). Proposed amendment: Corporate governance rules,
Management, 34(4), 765–785. Securities and Exchange Commission of Bangladesh, No. SEC/
Kuasirikun, N. (2005). Attitudes to the development and implemen- CMRRCD/2006-158.
tation of social and environmental accounting in Thailand. Sethi, S. P. (1979). A conceptual framework for environmental
Critical Perspectives on Accounting, 16, 1035–1057. analysis of social issues and evaluation of business response
Kuo, Y., & Hung, J. (2012). Family control and investment cash-flow patterns. Academy of Management Review, 4(1), 63–74.
sensitivity: Moderating effects of excess control rights and board Siddiqui, J. (2010). Development of corporate governance regula-
independence. Corporate Governance: An International Review, tions: The case of an emerging economy. Journal of Business
20(3), 253–266. Ethics, 91(2), 253–274.
Li, J., Pike, R., & Haniffa, R. (2008). Intellectual capital disclosure Sobhan, F. & W. Werner. (2003). Diagnostic study of existing
and corporate governance structure in UK firms. Accounting and corporate governances scenario in Bangladesh. In Sobhan, F. &
Business Research, 38(2), 137–159. Werner, W. (Eds.). A comparative analysis of corporate
Lindblom, C. (1994). The implications of organizational legitimacy governance in South Asia (pp. 34–59). Working Paper. Bangla-
for corporate social performance and disclosure. Critical desh Enterprise Institute.
Perspectives on Accounting Conference, New York, NY. Turley, S., & Zaman, M. (2004). The corporate governance effects of
Lodhia, S. (2003). Accountants’ response to the environmental audit committees. Journal of Management and Governance,
agenda in developing nation: An initial and exploratory study on 8(3), 305–332.
Fiji. Critical Perspectives on Accounting, 14, 715–737. Turley, S., & Zaman, M. (2007). Audit committee effectiveness:
Mukherjee-Reed, A. M. (2002). Corporate governance reforms in Informal processes and behaviour effects. Accounting, Auditing
India. Journal of Business Ethics, 37(3), 249–268. & Accountability Journal, 20(5), 765–788.
Neter, J., Wasserman, w, & Kutner, M. H. (1983). Applied linear Uddin, S., & Choudhury, J. (2008). Rationality, traditionalism and the
regression models. Homewood, IL: Irwin. state of corporate governance mechanisms: Illustration from
Oh, W. Y., Chang, Y. K., & Martynov, A. (2011). The effect of less-developed country. Accounting, Auditing & Accountability
ownership structure on corporate social responsibility: Empirical Journal, 21(7), 1026–1051.
evidence from Korea. Journal of Business Ethics, 104(2), Ullmann, A. A. (1985). Data in search of a theory: A critical
283–297. examination of the relationships among social performance,
Oliver, C. (1991). Strategic responses to institutional processes. social disclosure, and economic performance of U.S. firms.
Academy of Management Review, 16(1), 145–179. Academy of Management Review, 10(3), 540–557.
Perrow, C. (1970). Organizational analysis: A sociological view. Villalonga, B., & Amit, R. (2006). How do family ownership, control,
Belmont, CA: Wadsworth. and management effect firm value? Journal of Financial
Petra, S. T. (2005). Do outside independent directors strengthen Economics, 80(2), 385–417.
corporate boards. Corporate Governance, 5(1), 55–64. West, A. (2006). Theorising corporate governance in South Africa.
Pomeroy, B., & Thornton, D. B. (2008). Meta-analysis and the Journal of Business Ethics, 68(4), 233–248.
accounting literature: The case of audit committee independence Wiwattanakantang, Y. (2002). The equity ownership structure of Thai
and financial reporting quality. European Accounting Review, firms. In J. P. H. Fan, M. Hanazaki, & J. Teranishi (Eds.),
17(2), 305–330. Designing financial systems in East Asia and Japan toward a
Purushothaman, M., Tower, G., Hancock, R., & Taplin, R. (2000). twenty-first century paradigm. London: Routledge.
Determinants of corporate social reporting practices of listed World Bank. (2009). Bangladesh: Corporate governance country
Singapore companies. Pacific Accounting Review, 12(2), assessment. Report on the Observance of Standards and Codes
101–133. (ROSC).
Rahman, R. A., & Ali, F. H. M. (2006). Board, audit committee, Yeh, Y. H., Lee, T. S., & Woidtke, T. (2001). Family control and
culture and earnings management: Malaysian evidence. Mana- corporate governance: Evidence from Taiwan. International
gerial Auditing Journal, 21(7), 783–804. Review of Finance, 2(1/2), 21–48.
Rahaman, A. S., Lawrence, S., & Roper, J. (2004). Social and
environmental reporting at VRA: Institutionalised legitimacy or

123