Corporate Social Responsibility (CSR) Disclosures in Group Affiliated Firms and Politically Connected Family Firms: Empirical Evidence From a Traditional Society

Abstract

This paper explores whether the political connections in group-affiliated firms and family firms have any impact on the corporate social responsibility disclosure (CSRD) practices in a traditional society. Using a total sample of 792 company year observations from the Dhaka Stock Exchange (DSE) from 2010-2018, this paper documents that the firms, which are group affiliated and which are family controlled, are positively significant to CSRD, indicating more disclosure of CSR information. However, when the family firms are politically connected, the CSRD is negatively significant. Without denying the benefits of alternative theoretical lenses adopted in disclosure studies, this paper tries to identify whether elements of “traditionalism” such as display of loyalty to master, domination and control, as characterized by (Weber, 1978), can be used to explain the determinants of social and environmental disclosure in developing/ traditional economy. This paper contributes to the CSR literature by providing an alternative theoretical perspective for traditionalist societies and connecting political affiliation and ties of family firms and group affiliated firms with CSR disclosure. It provides a deeper insight into the dynamics and interplay between group affiliated firms and family controlled firms, its ownership structures and governance mechanism with the disclosure practices in a traditional setting.