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Abstract

This study uses stakeholder theory to explore how corporate governance [CG] characteristics influence corporate social responsibility disclosure [CSRD] in the context of a global financial crisis [GFC]. Empirical data are drawn from Portugal, a country strongly affected by the GFC. Portuguese companies are characterized by high ownership concentration. The largest shareholder is often the CEO and Board Chair (a phenomenon known as CEO duality). We analyse the association between CSRD (measured by a 40-item disclosure index) and CG variables (board size, CEO duality, board independence, ownership concentration and presence of an audit committee or CSR committee) for 48 of the 51 listed companies in Portugal. The control variables are company size and industry type.

We find that CSRD is affected positively by board size, CEO duality, company size and industry type. This accords with suggestions implicit in stakeholder theory that a larger board will represent a broader diversity of stakeholders and will promote better monitoring, more assertive stakeholder management, greater transparency, and increased levels of CSRD. Larger companies and companies close-to-consumers are associated with high levels of CSRD, ostensibly because they are more visible and subject to greater societal monitoring during a period of financial crisis. We reveal that in a country characterized by high ownership concentration, CEO duality has a positive effect on CSRD.

JEL Classification: M14

Keywords: Corporate social responsibility disclosure, corporate governance, ownership concentration, stakeholder theory, Portugal.

(ProQuest: ... denotes formulae omitted.)

1.Introduction

The overriding objective of business activity has evolved from a classical, largely unfettered quest for profit maximizing, to one of seeking profit in a socially responsible way. In a period of ongoing global financial crisis (GFC) in some European countries (such as Portugal, Greece and Spain, where the effects were pronounced and are on-going), this evolution has directed keen attention to the efficacy of Corporate Governance (CG) mechanisms and the extent and quality of Corporate Social Responsibility Disclosure (CSRD) practices.

A company board of directors is responsible for instituting appropriate mechanisms to monitor and control company activity. The board is responsible also for a company's accountability and transparency through information disclosure. Boards have collective obligations to a wide range of stakeholders. However, there has "been little research linking corporate disclosure to governance structures" (Akhtaruddin et al., 2009, p.1)....

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