Research On Voluntary Corporate Social Disclosures From The Perspective Of Organizational Legitimacy

Issues relating to Corporate Social Responsibility (CSR) have become thehotspot topic in both theoretical and practical scopes since1990s. Government, media,customers, general public and all other stakeholders expect businesses undertake moresocial responsibilities in the meantime that businesses fulfill their economic needs.Under this background, disclosing corporate social responsibility informationgradually became the task that businesses must not elude. Disclosure format fromsimple descriptions with scattered words among annual reports in the early times, tostand-alone corporate social reports or environmental reports prepared by more andmore businesses nowadays, which can be seen that businesses pay much moreattention on it than before. The phenomena of progressively strengthen is because ofsupervision of the governments and the regulators, or in order to satisfy some kind ofbusinesses’ own needs, or due to pressures by stakeholders like customers, media,general public and so on? The issue is still with no consistent conclusion no matter intheoretical or practical scope.The paper is based on the theory of legitimacy which is the mainstream ofcurrent voluntary corporate social responsibility information disclosures in overseasacademic research and tries to analyze the motivation of voluntary corporate socialdisclosures in substance and empirical examined the determinants of voluntarycorporate social disclosures. Psychology states that need bring motivation, motivationdetermines behavior, and behavior brings consequences. Therefore, under the basis ofanalyzing the motivation and determinants of corporate social disclosures, the papertries to examine the consequences of corporate social disclosures. In detailed saying,the paper mainly focuses on the following aspects:(1) the current status andmotivations of voluntary corporate social disclosures;(2) the determinants ofvoluntary corporate social disclosures;(3) the consequences of voluntary corporatesocial disclosures.On the basis of combing the institutional environment for corporate socialdisclosures in China in the first, the paper analyzes the motives of voluntary corporatesocial disclosure essentially in view of legitimacy theory. Followed by researchmethod of interviews and surveys, the paper explores the current status and reasons of corporate social disclosures and the source of pressures which corporate perceives,then, the paper conducts an empirical analysis according to159valid surveys. Next,the paper empirically examined the determinants of voluntary corporate socialdisclosures by using the private companies listed in Small and medium EnterpriseBoard, Shenzhen Stock Exchange as examples, followed by the empiricalexamination of social and financial effects of voluntary corporate social disclosures.In the end, the paper summaries and concludes for the overall study, and proposessuggestions for regulatory bodies and listed companies in order to perfect andimprove corporate social disclosures in China.The paper is devided into eight chapters as follows:Chapter one is introduction. This chapter introduces the research background,research meaningfulness, the definition of key concepts, research idea and methods,the framkwork and the sturcutre of the whole paper, and some innovation of the paper.Chapter two is literature review. This chapter reviewes domestic and overseasacademic researches on motivations, determinants and consequences of corporatesocial disclosures in recent years, and then, summaries the features and theshortcomings for current researches, therefore, put forward the research direction ofthe paper.Chapter three is institutional background and theoretical analysis. This chaptermainly devided into two parts: firstly, the historical evolution of corporate socialdisclsores and the peculiar institutional background of China are introduced; secondly,the oringin and the concept of legitimacy theory, the basic and extensive contents oforganizational legitimacy and the maganerial motives for corporate social disclosruresfrom the perspecticve of organizational legitimacy are discussed.Chapter four is design of positive research. This chapter is prepared forsubsequent empirical study and mainly introduces the classifications and indicatorsfor corporate social disclosrures, the measurement of corporate social disclosrures, theselection of research samples and the souces of data, the selection of variables andresearch methods.Chapter five is the analysis of motivations of corporate social disclosrures. Thischapter adopts the methods of interviews and suverys, analyzes the current situations and sources of pressures of corporate social disclosrures in China, examined whethercorporate social disclosrures can be explained by organizational legitimacy theory.Conclusions are drawn from the survey part:(1) corporate size, legislative pressuresby regulatory bodies, media pressure and pressures from non-profit organizationsincluding industrial associations are significantly correlated with corporate socialresponsibility attitude;(2) corporate size, legislative pressures by regulatory bodiesand the pressures from non-profit organizations including industrial associations aresignificantly correlated with corporate social responsibility strategy;(3) corporate sizeand public pressure are significantly correlated with general corporate socialdisclosures;(4) pressures from investors and financial institutions and public pressureare significantly correlated with the extent of corporate social disclosures thatinfluenced by external factors.Chapter six is the empirical study of determinats of voluntary corporate socialdisclosures. This chapter empirically examines the determinats of voluntary corporatesocial disclosures by using correlation method and regression method, and takes theprivate companies listed in Small and medium Enterprise Board, Shenzhen StockExchange as examples. The detail content of this chapter includes, researchassumpations, structure of models, empirical emxaminations and result analysis. Theempirical study of the determinants of voluntary corporate social disclosures showsthat the combination of Chairman and CEO, shareholder concentration and theestablishment of corporate social responsibility committee are significantly correlatedwith voluntary corporate social disclosure quantity; asset to liability ratio issignificantly correlated with corporate social disclosure quality with limitedexplanatory power to the model.Chapter seven is the effects of voluntary corporate social disclosures. Thischapter empirically examines the social and financial effects of voluntary corporatesocial disclosures by using method of correlation, regression and t-test of independentsamples, and takes the private companies listed in Small and medium EnterpriseBoard, Shenzhen Stock Exchange as examples. The empirical study of the effects ofvoluntary corporate social disclosures shows that neither disclosure quantity ordisclosure quality can bring social effect to the company; but yet, both disclosure quantity and disclosure quality have financial effects to the company in the mannerthat disclosure quality positively correlated with corporate financial performance,while disclosure quantity negatively correlated with it.Chapter eight is the conclusions and suggestions. Based on the the overallconculsions made by the paper, some suggestions are brought forward in this chapter,and followed by the limitations and further research directions of the study.Generally speaking, the study makes some innovations in the following aspectscompared to past theoretical framework and research methods in corporate socialdisclosure research field in China:(1) The paper is based on organizational legitimacytheory which is the dominant theory of corporate social disclosure research field inoverseas, and uses interviews and surveys to analyze the current situations andmotivations of corporate social disclosures in China, the theory is rarely to find indomestic academic corporate social disclosure research field and methods ofinterviews and surveys are also rarely to find in domestic research.(2) The valuationof the level of corporate social disclosure is divided into two parts—disclosurequantity and disclosure quality, since it can not bring a complete and reliableassessment of the level of corporate social disclosure by only considering disclosurequantity or disclosure quality.(3) The empirical examination of the determinants andthe effects of corporate social disclosures in the study excludes the companies whichare compulsory issue of corporate social reports required by Shenzhen StockExchange. That means, the study only focus on voluntary companies which disclosecorporate social responsibility information, since it is helpful to explore the realmotives of disclosing corporate social responsibility information by separatingcompulsory disclosing and voluntary disclosing.The limitations of the paper includes:(1) The empirical examination of thedeterminants and the effects of corporate social disclosures only selects the privatecompanies listed in Small and medium Enterprise Board, Shenzhen Stock Exchangeas examples, the research samples should be enlarged in further study; underrestrictions of acquisition of data, the study only uses one year data for empiricalexamination.(2) The suverys are oringinally developed to private listed companies,but because of the objective difficulties in collection of the surveys, the suvey targets are then broadend. If the suvery targets and the empirical study samples were thesame, the value of the conclusions would be progressively improved.(3) Althoughorganizational legitimacy theory is commonly accepted and supported by empiricalenvidence in overseas corporate social disclosure research field, due to the differenceson culture, politics and economy between China and foreign contries, it should becarefully combined with real situations in China when introduce the theory in order toimprove the robustness of conclusions.