Academic journal article Global Journal of Business Research

Corporate Social Responsibility Disclosure: Evidence from Libyan Managers

Academic journal article Global Journal of Business Research

Corporate Social Responsibility Disclosure: Evidence from Libyan Managers

Article excerpt

ABSTRACT

This paper explains the importance and benefits for Libyan companies of engaging in corporate social responsibility disclosure (CSRD). Libya, as a developing country, was chosen by the researchers as it has undergone many changes over a short period of time in terms of economic, environmental and social changes. Both quantitative and qualitative methods were used to collect data relating to CSRD in Libyan companies. Perceptions of financial managers interviewed as part of the study reveal that CSRD is important for company performance. The paper reveals that CSRD in the annual reports is very important in terms of attaining company objectives to: satisfy the interests of stakeholders; protect employees' interests; clarify the extent of contribution of the company in both CSR activities and CSRD; and assisting investors to make appropriate investment decisions. The perceived primary benefits of CSRD were enhanced company reputation, and increased financial performance. It also improves ability to attract foreign investors, and results in higher consumer satisfaction leading to commercial benefits. Secondary benefits include demonstration of compliance with the law and improved employee commitment.

JEL: M14, M41, L11, K21

KEYWORDS: Corporate Social Responsibility (CSR); Corporate Social Responsibility Disclosure (CSRD); Financial Performance; Corporate Reputation.

INTRODUCTION

The institutional context of the emerging economy of Libya has experienced dynamic change over the last ten years (Mateos 2005). The main influential factor that leads to and regulates the attitude and behaviour of Arab societies, including Libya, is the Islamic religion. According to Ali (1996) the Islamic religion organises the social life in family and other social organisations and maintain their endurance and influence. Changes in regulatory environment may have an impact on companies in terms of their disclosures. The level of CSR disclosure in Libya has increased since 2000 (Pratten & Mashat 2009) due to pressures from stakeholders. This has led to development of the concept of CSRD.

The development of the concept of CSRD has passed through different stages; the first stage is the period 1970-1980. Empirical studies were focussed on developing methods to measure the incidence of information disclosure by firms which was voluntary. Most frequently disclosed was information about employees and products. At that time, managers, accountants, and the majority of their observers were not interested in environmental concerns, because it was invisible. Some empirical studies were used three environmental categories out of twenty seven (Ernst and Ernst, 1978 as cited in Mathews 1997). The second stage is the period 1980-1990. Many changes have appeared due to the focus of the social and environmental accounting literature, with increasing signs of specialization since 1980. For instance, value-added statements attracted a separate group of adherents and employee reports (Burchell et al., 1985). Environmental disclosure has become of greater concern than social disclosure, as firms consider alternative means of reducing environmental damage. Legally enforceable accounting standards, Means of conceptual frameworks, and legislation are features of this period that contribute to the increase in regulation of accounting disclosures. Empirical studies in this period were more analytical and less descriptive. The final stage is the period 1991 -now. This stage has focussed on environmental issues within accounting on a broad front, including interest from managers as well as accountants. (Gray et al. 1995) argue that this stage has been characterized by the almost complete domination of environmental accounting with research on broader social reporting (including employee and ethical disclosures).

This research presents evidence from interviews with 24 financial managers and 7 information managers on the importance and the benefits of CSRD in Libya. …

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