Transparency, CSR Disclosure and the Financial Performance of Firms

A Case of Pakistan Stock Exchange

Authors

  • Hina Ahmed Steuer & Wirtschafts-Akademie (SWA)GMBH, Kiel, Germany
  • Saman Hussain Govt. Degree Girls College, Karachi
  • Nida Masroor Department of Commerce, University of Karachi

DOI:

https://doi.org/10.46568/kubrj.v1i1.5

Keywords:

financial performance, financial transparency and disclosure, CSR, board autonomy, firm size

Abstract

Transparency in disclosure and audit are among the major considerations that triggers stakeholders interest in an organisation. The evaluation of firm's financial performance is a pre-requisite before investment, that is represented by its financial statements and the transparency and accuracy of these financial reporting helps in building and maintaining investors confidence on the credibility of the organization. On one end, firm's financial performance ensures the security of interest of the shareholders, creditors and other stakeholders meanwhile it also reflects industry's sustainability in a broader view. The major objective of CSR (Corporate Social Responsibility) of a firm is also to ensure the interest of all stakeholders by means of transparent reporting. This paper is an attempt to investigate the association between firm's performance and corporate governance in Pakistan in a globalised corporate scenario. The firm's performance is measured as return on equity, whereas corporate governance is addressed here based on disclosure and transparency mechanism along CSR (Corporate social responsibility). This study discusses the theoretical end empirical literature based on the association of Corporate Governance and firm's financial performance in the presence of foreign competition, along interpretations based on findings of empirical research done in this study comprises of a sample of non-financial listed firm's on KSE-30, during the period of 2013 to 2019. The sample taken here consists of 22 non-financial firms listed at Karachi stock exchange. The study finds a hybrid type of effects of attributes regarding disclosure, transparency and CSR in corporate governance on the firm performance along effects attributed by some macro-economic variables.

Author Biographies

Hina Ahmed, Steuer & Wirtschafts-Akademie (SWA)GMBH, Kiel, Germany

Research scholar,
Steuer & Wirtschafts-Akademie (SWA)GMBH, Kiel, Germany

Saman Hussain, Govt. Degree Girls College, Karachi

Lecturer,
Govt. Degree Girls College,
Karachi

Nida Masroor , Department of Commerce, University of Karachi

Research Scholar,
Department of Commerce
University of Karachi

References

Abdul-Qadir, A. B., & Kwanbo, M. L. (2012). Corporate Governance and Financial Performance of Banks in the Post-Consolidation Era in Nigeria. International Journal of Social Science and Humanity Studies, 4(2).

Ahmed, K., & Courtis, J. K. (1999). Associations between corporate characteristics and disclosure levels in annual reports: a meta-analysis. The British Accounting Review, 31(1), 35-61.

Akhtaruddin, M. (2005). Corporate mandatory disclosure practices in Bangladesh. The International Journal of Accounting, 40(4), 399-422.

Amba, S. M. (2014). Corporate governance and firms' financial performance. Journal of Academic and Business Ethics, 8, 1.

Armstrong, A., & Sweeney, M. (2002). Corporate Governance Disclosure: Demonstrating corporate social responsibility through social reporting. New Academy Review, 1(2), 33-51.

Ball, R., Robin, A., & Wu, J. S. (2003). Incentives versus standards: properties of accounting income in four East Asian countries. Journal of accounting and economics, 36(1), 235-270.

Bebchuk, L., & Cohen, A. (2002). Firms' decisions where to incorporate (No. w9107). National Bureau of Economic Research.

Chau, G. K., & Gray, S. J. (2002). Ownership structure and corporate voluntary disclosure in Hong Kong and Singapore. The International journal of accounting, 37(2), 247-265.

Clatworthy, M. A., & Jones, M. J. (2006). Differential patterns of textual characteristics and company performance in the chairman's statement. Accounting, Auditing & Accountability Journal, 19(4), 493-511.

Gompers, P. A., Ishii, J. L., & Metrick, A. (2001). Corporate governance and equity prices (No. w8449). National bureau of economic research.

Gugler, K., Mueller, D. C., & Yurtoglu, B. B. (2004). Corporate governance and globalization. Oxford review of economic policy, 20(1), 129-156.

Hussin, N., & Othman, R. (2012). Code of corporate governance and firm performance. British Journal of Economics, Finance and Management Sciences, 6(2), 1-22.

Islam, M. Z., Mohammad Nazrul Islam ACA, A. C. M. A., Bhattacharjee, S., & Islam, A. Z. (2010). Agency problem and the role of audit committee: Implications for corporate sector in Bangladesh. International journal of Economics and Finance, 2(3), 177.

Masroor N. & Hassan S. (2018), Impact of Corporate Governance Systems on Performance of Companies. Pakistan Administrative Review, 2(4), 373-382.

Peters, G. T., & Bagshaw, K. B. (2014). Corporate governance mechanisms and financial performance of listed firms in Nigeria: A Content Analysis. Global Journal of Contemporary Research in Accounting, Auditing and Business Ethics, 1(2), 103-128.

Porta, R., Lopez‐de‐Silanes, F., Shleifer, A., & Vishny, R. (2002). Investor protection and corporate valuation. The journal of finance, 57(3), 1147-1170.

Rajagopalan, N., & Zhang, Y. (2009). Recurring failures in corporate governance: A global disease?. Business Horizons, 52(6), 545-552.

Siagian, F. T., & Tresnaningsih, E. (2011). The impact of independent directors and independent audit committees on earnings quality reported by Indonesian firms. Asian review of Accounting, 19(3), 192-207.

Solomon, J. (2007). Corporate governance and accountability. John Wiley & Sons.

Wallace, R. O., & Naser, K. (1996). Firm-specific determinants of the comprehensiveness of mandatory disclosure in the corporate annual reports of firms listed on the stock exchange of Hong Kong. Journal of Accounting and Public policy, 14(4), 311-368.

Watson, A., Shrives, P., & Marston, C. (2002). Voluntary disclosure of accounting ratios in the UK. The British Accounting Review, 34(4), 289-313.

Xie, B., Davidson, W. N., & DaDalt, P. J. (2003). Earnings management and corporate governance: the role of the board and the audit committee. Journal of corporate finance, 9(3), 295-316.

Yaseer, Q. F., Entebang, H., & Mansor, S. A. (2011). Corporate governance and firm performance in Pakistan: The case of Karachi stock exchange (KSE)-30. Journal of economics and international finance, 3(8), 482-491.

Published

2020-06-30

How to Cite

Ahmed, H., Hussain, S. ., & Masroor , N. . (2020). Transparency, CSR Disclosure and the Financial Performance of Firms: A Case of Pakistan Stock Exchange. Karachi University Business Research Journal, 1(1), 01-10. https://doi.org/10.46568/kubrj.v1i1.5

Issue

Section

Articles