Do different dimensions of corporate social responsibility disclosure have different economic consequence: multi-approaches for profitability examination

Abstract

Purpose

This study examines the impact of Corporate Social Responsibility Disclosure (hereafter CSRD) on the Corporate Economic Performance (hereafter CEP) of a group of public shareholding companies in Jordan.

Design/methodology/approach

This study uses different proxies to examine the impact of CSRD on companies’ financial and economic value. The data were collected from a sample of 94 companies listed on the Amman Stock Exchange from 2010 to 2016. Based on a checklist of 41 indicators, this study employed the manual content analysis technique to collect and analyse CSRD data. A statistical analysis technique was also used to examine the hypothesized relationships between collected data on CSRD and profitability.

Findings

The findings indicate that CSRD is value-relevant. It is positively and statistically associated with firm value proxied by Tobin’s Q. In addition, it is positively and statistically associated with firm financial performance proxied by ROE and ROA.

Research limitations/implications

This study contributes to the research debate on the relationship between CSRD and CEP, particularly in developing nations. The study draws attention to the need for information on different dimensions of CSR, including human resource, environmental, product responsibility, and community participation, as disclosure on such dimensions is positively associated with profitability.

Practical implications

The findings provide important implications for Jordanian corporate managers to maintain CSRD in their best interest. With more emphasis on disclosing stand-alone CSR reports, corporate managers can present more information on different dimensions of CSR, attracting the attention of stakeholders such as investors, the government, media, and humanitarian activists and enhancing overall corporate goodwill.

Originality/value

CSRD activities reflect a positive impact on CEP. Due to the dearth of relevant research conducted in developing countries, this study provides empirical evidence on the positive relationship between CSRD and CEP in an emerging economy, with more emphasis on specific dimensions of CSR, including human resources, environmental, product responsibility, and community participation. Since multiple proxies exist to measure profitability, this study uses multi-approaches for profitability examination proxied by Tobin’s Q, ROE, and ROA. Moreover, the issue of CSR is original and interesting to be examined in the Jordanian context, where the listed firms have reported a homogeneous perception of CSR.

Citation

Alshurafat, H., Ananzeh, H., Al-Hazaima, H. and Al Shbail, M.O. (2023), "Do different dimensions of corporate social responsibility disclosure have different economic consequence: multi-approaches for profitability examination", Competitiveness Review, Vol. 33 No. 1, pp. 240-263. https://doi.org/10.1108/CR-06-2022-0082