Impact of company size and financial performance on CSR disclosure and performance: Using an enhanced GRI-based measuring tool
Accounting and Finance Association of Australia and New Zealand (AFAANZ)
School of Business and Law / Centre for Innovative Practice
Companies are expected to demonstrate corporate social responsibility (CSR) and be transparent about their business activities, especially for large companies operating in environmentally sensitive industries that tend to attract greater media exposure and are subjected to more extensive public scrutiny. This study focused on Australian resources companies that are legally obliged to include environmental disclosures in their reports. However, the lack of a prescriptive reporting framework and ambiguity on how and what CSR information to disclose have made CSR disclosures still largely voluntarily, especially in the economic and social aspects of CSR that are not mandatory. Using an enhanced GRI-based measuring tool that differentiates companies with genuine contributions towards CSR, this study examined the impact of company size and financial performance on CSR disclosure and performance. Significant positive correlations were found between CSR disclosures (economic, environmental and social) and company characteristics - size and financial performance. The results from this industry-specific study provided empirical findings that support the legitimacy theory and provided practical implications for many stakeholders including regulators, investors and shareholders.