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Determinants of CSR disclosure quantity and quality: Evidence from non-financial listed firms in Saudi Arabia

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Abstract

The purpose of this study is to examine the practice of Corporate Social Responsibility (CSR) Disclosure in a Saudi Arabian context. This study has two particular objectives. First, it aims to measure the level of CSR disclosure quantity and quality. Second, it aims to investigate the determinants of CSR disclosure quantity and quality in a Saudi Arabian context. The study examined a sample from Saudi non-financial listed firms covering the period of 2013–2014. In addition, it develops CSR disclosure indices to measure the level of quantity and quality of CSR disclosure. The study found that Saudi Arabian firms provided higher levels of CSR disclosure quantity; however, the quality of the disclosure was relatively low. In addition, the study found that CSR disclosure quantity was positively associated with board size and the size of audit committee. However, it is negatively associated with percentage of governmental ownership and size of remuneration committee. In contrast, the quality of CSR disclosure was positively associated with the board size and the percentage of managerial ownership. However, the study found a negative association with the percentage of independent directors. The results suggest that Saudi Arabia provides higher levels of disclosure with a lower quality. In addition, the levels of CSR disclosure quantity and quality have different drivers.

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Notes

  1. This is the same governance code applied to companies in Saudi Arabia.

  2. Definition of each characteristics is included in Appendix B.

  3. Multicollinearity (also, multicolinearity or colinearity) exists when two or more variables are highly correlated, meaning that one can be linearly predicted from the other (Tabachnick and Fidell, 2007; Gujarati and Porter, 2009).

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    Khaleed Omair Alotaibi & Khaled Hussainey

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Appendices

Appendix A

Table A1

Table A1 CSR disclosure quantity index
Full size table

Appendix B

Table A2

Table A2 The index to measure of CSR disclosure quality index
Full size table

Relevance

Information is considered to be relevant when it has high ability of making difference in many of the decisions taken by users (. IASB, 2010, p. 17). IFRS progress that ‘Financial information is able to make a difference in decision-making’.

Faithful representation

For information to be faithfully representative, it should be complete, natural and free of material misstatement (IASB, 2010).

Understandability

The IASB (2010) define the understandability as understanding of knowledge regarding the quality of the information that enabled users to understand their meaning. IASB (2010) suggest that understandability is enhanced when information is classified, characterised and presented clearly and concisely.

Comparability

The Comparability is considered to be the quality of information that enables users to identify similarities in, and differences between, two sets of economic phenomena characteristic (IASB, 2010). In addition, it helps users to identify the key trends and analyse the performance of the company over time (ASB, 2006).

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Omair Alotaibi, K., Hussainey, K. Determinants of CSR disclosure quantity and quality: Evidence from non-financial listed firms in Saudi Arabia. Int J Discl Gov 13, 364–393 (2016). https://doi.org/10.1057/jdg.2016.2

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