Open AccessCorporate Governance and Corporate Social Responsibility Society Disclosure: The Application of Legitimacy Theory
Author(s) -
Joanne Shaza Janang,
Corina Joseph,
Roshima Said
Publication year - 2020
Publication title -
international journal of business and society
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.236
H-Index - 15
ISSN - 1511-6670
DOI - 10.33736/ijbs.3281.2020
Subject(s) - corporate governance , legitimacy , accounting , audit , corporate social responsibility , business , public relations , stakeholder , political science , law , finance , politics
It is important for companies to adhere to society’s values by engaging in corporate social responsibility activities to remain legitimate, which in turn, translated into disclosures in annual reports. Corporate governance mechanisms have been used as explanatory factors in determining the level of disclosures. This paper aims to determine the influence of corporate governance mechanisms on the society disclosure in Malaysian companies’ annual reports using the legitimacy theory. The level of society disclosure is examined against the Modified Society Disclosure Index (MoSDI), which was developed based on the society indicatorof Global Reporting Initiative Version 4.0, preliminary observation on the 2016 NACRA winners’ annual reports and past literature. The analysis involved 234 top Malaysian companies’ annual reports from 2014 to 2016. The results found that audit committee, independent directors, and size are significantly associated withthe level of society disclosure. By complying with good corporate governance practice, awareness can be raised and preventive measures can be taken in addressing society’s issues through proper society disclosure.The legitimacy gap can be reduced via the society disclosure.