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Corporate social reporting in Thailand


The news is all good and increasing Sunee Ratanajongkol

67

Care of Department of Accounting, University of Waikato, Hamilton, New Zealand, and

Howard Davey and Mary Low Department of Accounting, University of Waikato, Hamilton, New Zealand Abstract Purpose – The purpose of this paper is to examine the extent and nature of the corporate social reporting (CSR) practices of the 40 largest Thai companies over the years 1997, 1999 and 2001. Design/methodology/approach – The extent and nature of CSR in annual reports was measured according to the number of words disclosed and trends were analyzed over this five-year period. CSR disclosure was classified according to five key themes, the nature of the evidence, and the type of news disclosed. Findings – The research showed, in aggregate, a trend of increasing amounts of corporate social disclosure, although the five-year trends varied within different industries. CSR among Thai companies was found to be primarily focused on human resources, providing “declarative” good news disclosures. Legitimacy theory, political economy theory and economic conditions were used to present explanations for the trends. The study concluded that while no single perspective can explain the disclosure of CSR, the empirical findings demonstrate that the key areas of company social exposure are reflected by CSR. Originality/value – This paper makes an important contribution to the knowledge of CSR in Asia and demonstrates similar issues in CSR reporting to those found in other countries. Keywords Corporate social responsibility, External auditing, Thailand Paper type Research paper

Introduction Corporate social reporting (CSR) originated from a growing public awareness of the role of the corporate in society. It has been argued that in the mid-1970s there was a change in corporate external reporting from a largely profit oriented perspective to a broader view encompassing a CSR perspective (Ramanathan, 1976). International concern for CSR is becoming more evident, for example, in triple bottom line reporting and the global reporting initiative (Hall, 2002; Nash and Awty, 2001; O’Dwyer, 2001; McGrath, 2003). Despite the increasing attention given to the problems of using profit as a measure of corporate performance with little regard to externalities (Gray et al., 1987), along with the heightened expectations of stakeholders regarding business growth and social responsibility, the development of CSR has been somewhat slow, piecemeal, reflective of a number of disparate positions, as well as lacking a clear theoretical framework:

Qualitative Research in Accounting & Management Vol. 3 No. 1, 2006 pp. 67-83 q Emerald Group Publishing Limited 1176-6093 DOI 10.1108/11766090610659751

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Accounting researchers have also begun to articulate different theoretical perspectives in support of corporate social accounting . . . but to date, there exists no universally accepted theoretical framework of corporate social accounting (Hackston and Milne, 1996, p. 2)

Yet in spite of this somewhat patchy approach there is clearly an increase in CSR (Hackston and Milne, 1996). This paper examines the literature on CSR and extends this by undertaking an empirical investigation into the corporate social disclosure of Thai companies between 1997 and 2001. The research uses longitudinal content analysis to show trends as well as absolute CSR levels of Thai companies. The annual reports from the Thailand top 40 companies listed on the stock exchange at 31 December 1997, 1999 and 2001 were selected. The alternate years were selected to give greater time coverage for the analysis, it was considered better to undertake detailed analysis of more companies in each period than a lesser number of companies over the full five-year period. The researchers suggest that changes from one year to another are likely to be slight, but that changes over a five-year period are more likely to reveal interesting insights. Content analysis was used to measure CSR in terms of the number of words disclosed. The themes were: environment, energy, product/consumer, community, employees and general; evidence was: monetary, non-monetary and declarative; and news was: good, bad, and neutral. This study expands the pool of knowledge about the CSR of companies in Asian countries as previous studies on CSR have generally concentrated on companies in the European Union, USA, UK and Australia (Purushothaman et al., 2000). The study may assist regulators and investors by identifying the categories of information that are voluntarily disclosed and the characteristics of the companies that disclose such information on a voluntary basis. Theoretical perspectives on CSR and the responsibilities of business Although CSR has been the subject of much writing and research primarily in the academic accounting literature Ullmann (1985) argues that an overall coherence is not demonstrated and that the absence of systematic theorizing of CRS is one of the principal reasons for the lack of substantive, systematic conclusions about CSR. Mathews (1987), a widely published author in the area, has attempted to place empirical investigation of CSR in some sort of theoretical context as have Hopper and Powell (1985). Gray et al. (1995a) have used a three-tier taxonomy to classify corporate social disclosure research, these being: decision-usefulness studies, economic theory studies, and social and political theory studies. However, the empirical results of ranking studies as well as on share price behavior tend to be inconsistent and inconclusive. One of the earlier problems of CSR research has been the founding premise of the “economic agency theory” and “positive accounting theory” paradigms and the belief that all individual action can be explained in terms of the personal pursuit of financial wealth (Deegan and Gordon, 1996). Gray et al. (1995a, p. 4), however, assert that “While the accounting community has benefited from the methodological pluralism of recent decades, ‘economic theory’ has little or nothing to offer as a basis for the development of CSR”. Social and political theory has been suggested as offering a way forward and may be divided into three sub-groups: legitimacy theory, stakeholder theory, and political economy theory. The brief details of these three approaches are provided as follows:

(1) Within legitimacy theory, the organization is seen as part of a broader social construct whose expectations it must meet if it is to have ongoing operations without excessive societal sanctions being imposed. The assumption of legitimacy theory stems from the notion that organizations do not have an inherent right to exist but only do so with the sanction of society. If an organization perceives that its legitimacy is under threat it can adopt numerous strategies. Lindblom (in Gray et al., 1996) identifies four courses of action an organization can take to obtain or maintain legitimacy – (in brief) educate and inform, change perceptions, manipulate perception, and change external expectations. A number of papers (Hogner, 1982; Deegan and Rankin, 1996; Brown and Deegan, 1999; Savage et al., 2000; Wilmhurst and Frost, 2000; Deegan, 2002; O’Donovan, 2002) have identified specific types of social responsibility disclosures that have appeared within annual reports and which have been explained by the respective researchers as being part of the portfolio of strategies undertaken by accountants and managers to bring legitimacy to, or maintain the legitimacy of, their respective organizations. (2) As with legitimacy theory, stakeholder theory sees the organization as part of the wider social system but this approach focuses on the various stakeholder groups within society. Deegan et al. (2000) divide stakeholder theory into two branches; the positive/managerial branch and the ethical/normative branch. The positive branch posits that organizations will respond to stakeholders on an asymmetric basis favoring the powerful or those who can have significant impact upon the organization (O’Dwyer, 2003). The ethical branch argues that “all stakeholders have the right to be treated fairly by an organization, and that issues of stakeholder power are not directly relevant” (Deegan et al., 2000). In particular Gray et al. (1996) support this view and argue for disclosure of environmental information to all stakeholder groups. (3) Political economy has a very long historical tradition and again has multiple twists to its meaning. The essence is that economics, politics and society are intertwined and indivisible and as such form the basis of research in the area. The tenets of political economy have changed from the classical perspective that was somewhat Marxian and concerned with struggle, conflict, and inequality to a more managerial perspective concerned with a pluralistic world in which interactions and relationships exist. The investigation of Thai CSR adopts an accountability framework, in line with Gray et al. (1996), based on the premise that it is the moral responsibility of companies to make corporate social disclosures beyond the minimum that are legally mandated to all its stakeholders. Other empirical CSR research Although there has been a substantial amount of research in the area (see Mathews, 1993 or Gray et al., 1996 for a detailed summary) much of the work has focused on the USA, UK, and Australia (Hackston and Milne, 1996). A smaller body of literature exists around such other countries as Canada, Germany, Japan, New Zealand, Malaysia and Singapore. Ernst and Ernst (1979) undertook a detailed content analysis approach of the USA. This was followed by Guthrie and Parker (1990). Gray et al. (1987, 1995a)

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provide detailed findings from the UK. Surveys of Australia include Trotman (1979) and Guthrie (1983). Davey (1982), Ng (1985), Hackston and Milne (1996) and Kirk (2000) have provided a history of social reporting in New Zealand. While little CSR evidence has been seen from Asia, Singapore has been examined (Purushothaman et al., 2000). The major longitudinal studies have been carried out by Gray et al. (1995a) who, in a 13-year period in the UK, documented a general increase (with some fluctuations) in CSR. Trotman (1979) looked at Australian companies and showed an increasing level of reporting, as did Deegan and Gordon (1996) who looked at the period 1980-1991. O’Dwyer (2001) examined reporting in Ireland in 1999/2000 and compared it to the 1991-1995 findings, with only a small difference being evidenced. In New Zealand Ng (1985) found little change over a three-year period (Table I). A number of conclusions may be made from the research. The incidence of CSR appears to be increasing. There are clearly issues with sampling as most studies use selection based on “top 20” companies or similar rather than random selections. The literature shows a reasonably consistent use of ranking of by theme, the normal being human resources, environment, community, energy and product. The level of CSR does not vary greatly between companies whether they be in the USA, UK, or Australia. Disclosures are typically of a positive nature with very little bad news being reported. To this end Australian findings indicate that CSR is often a response to an event or incident rather than a reflection of the company’s underlying responsibility to stakeholders (Deegan et al., 2000). The literature evidences a variety of methods of content analysis such that comparability is compromised. To reduce this problem and to provide internal comparability, this study uses a longitudinal approach. Research methodology in Thai CSR disclosure study The largest 40 companies listed on the Stock Exchange of Thailand at 31 December 1997, 1999, and 2001 were selected based on a size ranking of market capitalization. These companies comprised 65.25, 73.90 and 62.43 percent of the total market capitalization, respectively. For the purposes of analysis, the top 40 Thai companies were classified into the four broad headings, namely, manufacturing, services, finance and properties. To determine if the volume of CSR in Thailand is related to the size of company, the Spearman rank correlation coefficient was used. Company size was measured Themes

Table I. Cross cultural comparison, modified from Hackston and Milne (1996)

Environment Energy Products Community Human resources Others Total Number of companies making CSR Average words disclosed

1997 (n ¼ 14) (9)

(91)

Notes: Figures in parentheses are percentages

83 0 0 0 792 0 875 10 88

1999 (n ¼ 13)

(, 5) (39) (50) (10)

0 0 15 539 706 140 1,400 7 200

2001 (n ¼ 12) (, 5) (, 5) (47) (45) (, 5)

32 0 268 2,668 2,558 101 5,627 9 625

according to total capitalization figures. In previous studies, company size has been measured by number of employees, total asset value, sales volume, market capitalization, or an index rank (Hackston and Milne, 1996). As there are no persuasive theoretical reasons for a particular measure of size the total capitalization figures were used in this study.


Method of content analysis Each company’s annual report for 1997, 1999 and 2001 was fully analyzed and CSR classified on an individual recording sheet. A list of operational definitions was used for each of the themes (see below for themes) and a set of decision rules were applied. A pilot sample of reports was jointly analyzed by the writers as well as a third party using the decision rules; where either the rules were unclear or there were obvious discrepancies in the scoring, the rules were tightened, this is in line with recent significant content approach works (Hooks et al., 2002). Amount of disclosure. The number of words was used to measure the level of CSR for several reasons. Measuring the number of words is more detailed than measuring “part-page” disclosure (Deegan and Gordon, 1996); words lend themselves to more exclusive analysis (Gray et al., 1995b); “part-page” disclosure does not consider different print and page sizes (Hackston and Milne, 1996); and measurement according to number of sentences ignores differences in typeface size and does not account for different grammar conveying the same message (Milne and Adler, 1999). Themes. Themes were categorised according to: environment, energy, consumer, community, employees and general. Quality dimensions. Guthrie and Mathews (1985) suggest that quality of the evidence can be assessed by, first, the type of statements made (quantitative, financial or other numeric, or declarative) and, second, the type of news conveyed by the statements (whether the events reflect well, badly or neutrally on the reporting entity). Gilkison and KPMG (1999) also distinguished evidence between monetary, non-monetary and declarative disclosure. Guthrie (1982), Gray et al. (1995b) and Hackston and Milne (1996) replicated previous studies by distinguishing evidence between monetary, non-monetary and declarative disclosures. By using this nomenclature the Thai results can be compared and contrasted with various countries surveyed. This latter measure of evidence and a news dimension added qualitative measures of the CSR of Thai companies. The news dimension used three categories: good, bad and neutral after Hackston and Milne’s (1996) instrument.

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Empirical results Incidence of CSR disclosure Between 1997 and 2001 the percentage of the top 40 Thai companies making CSR disclosure increased from 72.50 percent (29 companies in 1997) to 75 percent (30 companies in 2001). Total corporate social disclosure increased from 17,477 words in 1997, to 18,547 words in 1999 and 25,263 words in 2001 (Table II). The finance and manufacturing sectors contribute significantly to this trend. The finance sector reported between 9,089 and 10,332 words in CSR, whereas, the manufacturing sector disclosed CSR words between 5,044 and 8,272.

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Table II. Incidence of CSR disclosure

Manufacturing companies (n) Number of companies disclosing CSR Total words disclosed Average disclosure per manufacturing company Service companies (n) Number of companies disclosing CSR Total words disclosed Average disclosure per service company Finance companies (n) Number of companies disclosing CSR Total words disclosed Average disclosure per finance company Properties companies (n) Number of companies disclosing CSR Total words disclosed Average disclosure per property company Total words of CSR Total companies disclosing CSR (n ¼ 40) Average disclosure per company (number of words)

1997

1999

2001

11 8 5,398 675

9 8 5,044 631

9 8 8,272 1,034

14 13 12 10 7 9 878 1,400 5,627 88 200 625 12 14 13 9 10 10 10,332 10,260 9,089 1,148 1,026 909 3 4 6 2 3 3 872 1,843 2,275 436 614 758 17,477 18,547 25,263 29 28 30 72.5 percent 70 percent 75 percent 602.66

662.4

Percentage of change 1997-2001

þ53

þ541

212

þ161 þ45

842.1

CSR disclosure themes “Human resources” disclosure dominates, accounting for between 37 and 42 percent of total corporate social disclosure over the five years (refer Table III). “Community” disclosure is the second most disclosed theme increasing from 30 percent in 1997 to 36 percent in 1999, and then decreasing to 32 percent in 2001. Disclosure on “environment” and “products” themes decreased over the period as a proportion of total CSR disclosure, although the actual amount of disclosure in both categories increased. “Energy” was the least disclosed theme among the top 40 Thai companies. Evidence “Declarative” disclosures increased in absolute amount of words disclosed over the period and remained the dominant type of evidence reported. The amount of

1997

Table III. Number of words disclosed according to theme

Theme Environment Energy Products Community Human resources Others Total

2,823 0 2,437 5,225 6,555 437 17,477

Percentage of total disclosure 16.2 0.0 13.9 29.9 37.5 2.5

1999 2,760 67 811 6,722 7,794 393 18,547


2001 3,712 134 1,953 8,067 9,954 1,443 25,263


“non-monetary quantitative” disclosures increased, yet “monetary quantitative” disclosures decreased from 1999 to 2001 in absolute terms and as a percentage of total corporate social disclosure (Table IV). News. “Good” news disclosures dominate, ranging from 78 to 83 percent of total CSR disclosure. “Bad” news remains very low, and “neutral” news shows a slight increase in 1999 and 2001 (Table V).


Disclosure according to industry type Owing to the small number of companies in each industry type, results are indicative only. There was no marked difference across industry type in the proportion of companies in each sector disclosing CSR information (Table II). Nevertheless, the average number of words disclosed per company was highest in the finance sector, although there was decreasing disclosure in this industry sector over the five-year period. In 2001, manufacturing companies, on average, disclosed the greatest amount of CSR (Figure 1).

1997 Evidence Monetary Non-monetary Declarative Total

243 2,563 14,671 17,477

1997 News Good Bad Neutral Total

Percentage of total disclosure

14,531 140 2,806 17,477

1.4 14.7 83.9

Percentage of total disclosure 83.1 0.8 16.1

1999 750 3,665 14,132 18,547

1999 15,220 90 3,237 18,547



2001 377 4,133 20,753 25,263

2001 19,613 130 5,520 25,263


Table IV. Nature of the evidence in CSR disclosures


Table V. Type of news in CSR disclosures

Figure 1. Average words of CSR for each industry

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Table VI. Number of words of CSR for manufacturing companies over the period

Table VII. Number of words of CSR for finance companies over the period

Table VIII. Number of words of CSR for property companies over the period

Themes of disclosure over the period by industry type Tables I, VI-VIII show that, except for manufacturing and to a lesser extent property, environmental disclosure is relatively low. This might be expected given the industry types, and might be explained by the need of property developers to report on the key element of their business, the environmental impacts of the properties that they build, and manufacturers to disclose environmental effects as it is likely to be an area of obvious impact of the manufacturing processes. Apart from these, community and

Themes

1997 (n ¼ 11)


(35) (9) (16) (32) (8)

1,888 0 482 848 1,743 437 5,398 8 675

1999 (n ¼ 9) (42) (,5) (7) (11) (39)

2,127 67 369 535 1,946 0 5,044 8 631

2001 (n ¼ 9) (38) (, 5) (8) (20) (24) (8)

3,180 134 680 1,661 1,974 643 8,272 8 1,034


Themes

1997 (n ¼ 12)


(7) (14) (42) (37)

702 0 1,498 4,350 3,782 0 10,332 9 1,148

1999 (n ¼ 14) (,5) (,5) (53) (43) (,5)

122 0 324 5,397 4,377 40 10,260 10 1,026

2001 (n ¼ 13) (, 5) (5) (35) (49) (7)

321 0 493 3,223 4,452 600 9,089 10 309


Themes

1997 (n ¼ 3)


(17) (52) (, 5) (27)


150 0 457 27 238 0 872 2 436

1999 (n ¼ 4)

2001 (n ¼ 6)

(28)

511

(8)

(5) (14) (42) (11)

103 251 765 213 1,843 3 614

(23) (23) (43) (, 5)

179 0 512 515 970 99 2,275 3 758

human resources are the dominant areas of reporting, with only property companies scoring higher than 10 percent on another category, that being product. It is interesting to note the change in the service companies from reporting 90 percent of their CSR in human resource in 1997 to a balance of human resource and community in 2001. Human resource and community reporting supports stakeholder and legitimacy theory, where one might expect a focusing of reporting on the key-effected groups. In 2001 (Table IX) the most frequent themes disclosed by manufacturing companies were “environment” related (38 percent of all words disclosed by manufacturing companies) and both “human resources” and “community” related themes accounted for 44 percent of disclosure by manufacturing companies. The “energy” theme is rarely disclosed by manufacturing companies. For the services sector, extensive disclosure is provided on “human resources” and “community” themes, which together account for 92 percent of disclosure by services companies. By contrast with the manufacturing sector, the services sector reports very little on “environment” themes. The finance sector emphasised “human resources” and “community” disclosure in 2001. Companies in the services, finance and property sectors disclosed no information in relation to the “energy” theme in 2001. The properties sector devotes the highest percentage of their CSR to “human resources”. “Community” and “products” themes were disclosed in equal proportion. In summary, Thai companies in different industries place emphasis on different themes in CSR disclosures. Particularly, the manufacturing sector places most emphasis on “environment”, whereas the service sector concentrates mostly on “human resources” themes. The finance and properties sectors also emphasized human resources. The “energy” theme seems to be ignored in CSR disclosures. No meaningful association (0.31 in 1997, 0.23 in 1999, and 0.23 in 2001) was found in this study between company size and amount of CSR disclosure. Implications of results Trends intotal corporate social reporting There is a trend of increasing corporate social disclosure among the top 40 Thai companies shown by the 45 percent increase intotal words of corporate social disclosure from 1997 to 2001. This trend may be in response to the promotion of corporate governance practices in Thai companies since Thailand confronted the economic crisis of 1997. As no data were collected prior to 1997 this is, however, hard to verify. During this economic crisis, public oversight and pressure became more common for Thai companies. The press was asking tough and sophisticated questions of business leaders in areas beyond financial reporting. Human rights, human dignity, social responsibility and equitable treatment within stakeholder groups were the issues raised by activists, reporters, analysts and the public at large. As a result of this, all listed companies were asked by the Stock Exchange of Thailand to appoint an audit committee before the end of 1999. This effort was aimed at building awareness of, and promoting implementation of, corporate governance practices in Thailand. In line with this move to promote good corporate governance, the Institute of Internal Auditors of Thailand (IIAT) (an affiliate of the IIAUSA) has also embarked on a program to create awareness and promote full understanding, as well as good


Table IX. CSR theme disclosure by industry sector, 2001

Environment Energy Products Community Human resources Others Total Number of companies disclosing CSR Average words disclosed

38 ,5 8 20 24 85

1,034

3,180 134 680 1,661 1,974 643 8,272 8

,1 0 ,5 47 45 ,5

2001 (n ¼ 12) Service Percentage of total sector disclosure

625

32 0 268 2,668 2,558 101 5,627 9

,5 0 5 35 49 7

2001 (n ¼ 13) Finance Percentage of total sector disclosure

909

321 0 493 3,223 4,452 600 9,089 10

8 0 23 23 43 ,5

2001 (n ¼ 6) Properties Percentage of total sector disclosure

76

Theme

2001 (n ¼ 9) Manufacturing Percentage of total sector disclosure

758

179 0 512 515 970 99 2,275 3

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practices in corporate governance in Thailand through contributing regular newspaper articles, organizing its own live TV talk show, an annual conference and a Best Practices Contest on good Corporate Governance (Ridder, 2002). Preferred governance and non-financial disclosure topics advocated by IIAT include corporate governance framework and practices, business ethics, employee reporting, environmental reporting and value reporting. The data trend may also be explained using legitimacy theory. The call for better corporate governance may be interpreted by corporates as society saying that companies are not meeting society’s expectations. One way of demonstrating good citizenship could be greater disclosure of social impacts and generally greater disclosure across a range of areas, thus demonstrating higher levels of “accountability” and good governance. This is consistent with one strategy an organization can use to legitimate its activities: “the organization can adapt its output, goals and methods of operation to conform to prevailing definitions of legitimacy” (Dowling and Pfeffer, 1975, p. 127, cited in Deegan, 2000). This conclusion is further supported by the results showing “human resources” and “community” disclosures increasing from 1997 to 2001. The trend in CSR disclosures by industry type According to Cooke (1989), the disclosure of information may not be identical throughout all sectors of the economy. Deegan and Gordon (1996) also recommend that an industry whose activities modify or affect the environment might disclose more detailed social responsibility information than the companies in other industries. Deegan and Gordon’s finding is reinforced by a study conducted by Ness and Mizra (1991) which found companies in the oil industry were disclosing more environment-related information than companies in other industries. The main trend in the data is the dramatic increase in the average number of words of corporate social disclosure by companies in the service and properties sectors, that is, in both total amount of disclosure as well as in average amount of disclosure by company. In contrast, the finance sector shows a decreasing trend from 1997 to 2001. The service sector showed a clear increasing trend from 1997 to 2001. In 1997, the average number of words was 88 words; the number increased to 200 words in 1999 and dramatically increased to 625 in 2001, an increase of 541percent. The properties sector also has a clear trend with 436 words in 1997, 614 words in 1997 and 758 words in 2001. This trend can be explained using legitimacy theory, as mentioned earlier, which asserts that organizations continually seek to ensure that they operate within the bounds and norms of their respective societies, that is, they attempt to ensure that their activities are perceived by outside parties as being legitimate (Deegan, 2000). The finance sector showed a decreasing trend from 1997 to 2001: 1,148 words in 1997, 1,026 words to 1999, and 909 in 2001. In 1996, the Thai economy began to slow down, a clear signal coming from the export sector which, after several years of growth averaging more than 20 percent, actually shrank a little for the first time. This trend continued into the first half of 1997. Meanwhile, various businesses failed to meet their foreign debt obligations. This prompted foreign investors to begin to lose confidence, affecting a massive outflow of funds from the second quarter. Furthermore, 58 finance companies were ordered to temporarily suspend their operation in the middle of the year without clear corrective measures


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(Anonymous, 1988). This finally resulted in the permanent closure of 56 finance companies at the beginning of December 1997. The financial system thus has undergone a severe liquidity crunch since 1997. In times of duress it is quite possible to argue that non-essential reporting (nor other activities of a non essential) will be curtailed, this is supported by Mathews (1995) who argued that the volume of corporate social disclosure varies with economic conditions; and that survival may be place ahead of “social reporting” in periods of economic stress. The manufacturing sector showed a fluctuating corporate social disclosure, with an overall increase in 2001 (1,034 words). This trend is difficult to explain. One explanation for the lack of a clear trend is based on a political economy framework. Some earlier studies (Ng, 1985; Guthrie and Parker, 1989; Campbell, 2000) have demonstrated fluctuating disclosure levels over time that are difficult to explain through issues of corporate legitimacy. Political economy and management self-interest (Guthrie and Parker, 1989); could provide an explanation for this disclosure variability. It may be that the varying levels of disclosure are the result of management furthering their own interests by maintaining the current social, economic and political structures. Cross cultural comparison of CSR disclosures The Thai empirical research focused on a longitudinal analysis, rather than comparisons with other research, due to measurement method variability. However, some patterns emerge from the Thai data (Table X). First, the incidence of CSR (percentage of total sample of companies that made at least one CSR) in Thailand appears much lower than in the USA, the UK and New Zealand but higher than in Australia. However, it is probable that sampling technique and sample size influence incidence rates (Hackston and Milne, 1996). Second, the pattern of ranking of CSR by theme has some consistency across all countries, with human resources, the environment, and the community receiving most attention. However, similar to the USA, the products theme receives much more attention in Thailand than in other countries surveyed. Third, the amount of CSR disclosure by Thai companies is higher than by New Zealand companies. However, it is important to emphasize that the surveys were conducted in different time periods and involve different sample sizes, different methods and different researchers. As such, the data are not strictly comparable. Finally, the trends of Thai CSR follow the documented trends of a general increase (with some fluctuations) over time in the level of corporate social disclosures in the UK (Gray et al., 1995a) and Australia (Trotman, 1979; Deegan and Gordon, 1996). Some limitations Although trends in Thai corporate social disclosure have been highlighted, one limitation is the short time period considered. The research could be extended by conducting the longitudinal analysis over a longer time period, allowing more in-depth examination of trends. The study used content analysis to measure CSR. This is justified in order to classify and analyze the diverse aspects of CSR, but could be considered a limitation. Future research may look at approaches capable of classifying alternative disclosure media to annual reports and to pursue the motivation behind CSR disclosure.

57 47 33 59 33 24

500 90 N/A

USA

53 75 35 43 63 0

50 85 1.26

(2)

14 98 10 2 96 0

50 98b 0.89

(3)

7 65 4 1 10 5

100 72 0.5

UK (4)

75 100 10 15 62 15

100 100 2

(5)

21 93 0 4 29 18

50 56 0.7 17 34 4 7 11 6

50 56 0.68

Australia (6) (7)

6 66 3 0 16 13

32 84 270d

(8)

13 88 28 3 19 3

32 100 300d 23 79 40 6 30 19

50 83 0.75

New Zealand (9) (10)

28 70 33 5 48 23

40 75 842d

Thailand Current study 2001

Notes: aPercentage of total sample of companies that made at least one social disclosure; bGuthrie and Parker’s 98 percent incidence rate includes both mandatory and voluntary disclosures. When voluntary disclosures only are considered, the UK incidence rate is 56 percent; caverage amount of disclosure to the nearest 100th of annual report page for those companies making at least one social disclosure; daverage number of words; epercentage of the total sample of companies making at least one disclosure in that theme. (1) ¼ Ernst and Ernst (1976); (2) ¼ Guthrie and Parker (1983); (3) ¼ Guthrie and Parker (1983); (4) ¼ Gray et al. (1983); (5) ¼ Gray (1991); (6) ¼ Guthrie and Parker (1983); (7) ¼ Guthrie and Parker (1990); (8) ¼ Davey (1982); (9) ¼ Ng (1985); (10) ¼ Hackstone (1992)

Sample Incidencea Amountc Theme: e Environment Human resources Products Energy Community General/other

(1)


Table X. Cross cultural comparison

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Finally, it must be recognized that all inferences drawn from the study about CSR relate to the volume of disclosures, not necessarily to the level of corporate concern or activity. This is an important distinction. A company may be concerned about social responsibility issues but may not disclose such in the annual report, for example, to preserve independence a corporate may make substantial donations to an independent trust, in this case only the donation (and maybe some small commentary) will be evidenced but if the trust’s activities were undertaken in house substantial “good deeds” would have been able to be reported. Conversely, some companies may have little time for social factors and see whatever they do through the lens of corporate image (Laufer, 2003). Conclusions The study into the extent of CSR among Thai companies and the trends in CSR over a five-year period indicated an overall trend towards increasing levels of corporate social disclosure among the top 40 Thai companies. However, the research data showed different trends in different industries. The theme of human resources dominated Thai company disclosure, comparable to earlier cross cultural research. Declarative, good news disclosures likewise predominated. The results across industry sectors showed a concurrence with the view of accountability to stakeholders since the key themes of disclosure reflected the key areas of exposure of the particular industry sectors. The manufacturing sector had the highest disclosure of the industry sectors with the dominant theme of the environment. The service sector had the lowest disclosure on the environment theme. Legitimacy theory, political economy theory and the recession of 1998 all contribute to an understanding of the factors impacting on Thai CSR. Corporate social disclosure is clearly a complex activity that cannot fully be explained by a single theoretical perspective or from a single level of resolution (Gray et al., 1995a). References Anonymous (1988), “Thai authorities shut down 56 companies”, The Banker (London), Vol. 148 No. 863, January, p. 49. Brown, N. and Deegan, C. (1999), “The public disclosure of environmental performance information: a dual test of media agenda setting theory and legitimacy theory”, Accounting & Business Research, Vol. 29 No. 1, pp. 21-41. Campbell, D.J. (2000), “Legitimacy theory or managerial reality construction? Corporate social disclosure in Marks and Spencer Plc annual corporate reports, 1969-1997”, Accounting Forum, Vol. 24 No. 1, pp. 80-100. Cooke, T.E. (1989), “Disclosure in the corporate annual reports of Swedish companies”, Accounting & Business Research, Vol. 19 No. 74, pp. 113-24. Davey, H.B. (1982), “Corporate social responsibility disclosure in New Zealand – an empirical investigation”, Occasional Paper No 52, Massey University, Palmerston North. Deegan, C. (2000), Financial Accounting Theory, McGraw-Hill, Sydney. Deegan, C. (2002), “The legitimizing effect of social and environmental disclosures: a theoretical foundation”, Accounting, Auditing & Accountability Journal, Vol. 15 No. 3, pp. 282-312.

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QRAM 3,1

Hooks, J., Coy, D. and Davey, H.B. (2002), “The information gap in annual reports”, Accounting Auditing & Accountability Journal, Vol. 15 No. 4, pp. 501-22.

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Laufer, W.S. (2003), “Social accountability and corporate greenwashing”, Journal of Business Ethics, Vol. 43 No. 3, pp. 253-79. McGrath, D. (2003), “Aspects of social accounting: bank disclosures”, Working Paper No 12/03, Faculty of Commerce, Charles Sturt University. Mathews, M.R. (1987), “The implementation of the interpretive paradigm: philosophical bases underlying social accounting”, Accounting Forum, Vol. 10 No. 3, pp. 23-37. Mathews, M.R. (1993), Socially Responsible Accounting, Chapman & Hall, London. Mathews, M.R. (1995), “Social and environmental accounting: a practical demonstration of ethical concern?”, Journal of Business Ethics, Vol. 14 No. 8, pp. 663-73. Milne, M.J. and Adler, R.W. (1999), “Exploring the reliability of social and environmental disclosures content analysis”, Accounting, Auditing & Accountability Journal, Vol. 12 No. 2, pp. 237-56. Nash, A. and Awty, A. (2001), “Just clowning around?”, Australian CPA, Vol. 71 No. 2, pp. 24-32. Ness, K.E. and Mizra, A.M. (1991), “Corporate social disclosure: a note on a test of agency theory”, British Accounting Review, Vol. 12 No. 3, pp. 211-7. Ng, L.W. (1985), “Social responsibility disclosures of selected New Zealand companies for 1981, 1982 and 1983”, Occasional Paper No 54, Massey University, Palmerston North. O’Donovan, G. (2002), “Environmental disclosures in the annual report: extending the applicability and predictive power of legitimacy theory”, Accounting, Auditing & Accountability Journal, Vol. 15 No. 3, pp. 344-72. O’Dwyer, B. (2001), “Corporate environmental reporting”, Accountancy Ireland, Vol. 33 No. 2, pp. 18-19. O’Dwyer, B. (2003), “Conceptions of corporate social responsibility: the nature of managerial capture”, Accounting, Auditing & Accountability Journal, Vol. 16 No. 4, pp. 523-56. Purushothaman, M., Tower, G., Hancock, P. and Taplin, R. (2000), “Determinants of corporate social reporting practices of listed Singapore companies”, Pacific Accounting Review, Vol. 12 No. 2, pp. 101-33. Ramanathan, K.V. (1976), “Toward a theory of corporate social performance: methods and results”, Journal of Contemporary Business, Vol. 7 No. 1, pp. 516-28. Ridder, K. (2002), “Opinion: it’s critical time for good governance among Thailand firms”, Tribune Business News, p. 1, 9 July. Savage, A., Cataldo, A.J. and Rowlands, J. (2000), “A multi-case investigation of environmental legitimation in annual reports”, Advance in Environmental Accounting and Management, Vol. 1, pp. 45-81. Trotman, K. (1979), “Social responsibility disclosures by Australian companies”, The Chartered Accountant in Australia, Vol. 49 No. 8, pp. 24-8.

Ullmann, A.E. (1985), “Data in search of a theory: a critical examination of the relationships among social performance, social disclosure and economic performance of US firms”, Academy of Management Review, Vol. 10 No. 3, pp. 540-57. Wilmhurst, T.D. and Frost, R.G. (2000), “Corporate environmental reporting a test of legitimacy theory”, Accounting, Auditing & Accountability Journal, Vol. 13 No. 1, pp. 10-25.


Further reading Mathews, M.R. (1997), “Twenty-five years of environmental accounting research: is there a silver jubilee to celebrate?”, Accounting, Auditing & Accountability Journal, Vol. 10 No. 4, pp. 481-531.

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About the authors Sunee Ratanajongkol is an ex-master’s student at the University of Waikato, currently only contactable care of Professor Davey. Howard Davey is Professor and Joint Head of the accounting department, specializes in international accounting, external reporting and accounting theory. Howard Davey is the corresponding author can be contacted at: [email protected]. Mary Low is a Lecturer who specializes in financial accounting, financial reporting and accounting education.

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