Teerooven Soobaroyen

Corporate Governance and Performance in Socially Responsible Corporations: New Empirical Insights from a Neo‐Institutional Framework

Manuscript Type. Empirical. Research Question/Issue. This paper investigates the relationship between corporate governance (CG) and corporate social responsibility (CSR) and, consequently, examines whether CG can positively moderate the association between corporate financial performance (CFP) and CSR. Research Findings/Insights. Using a sample of large listed corporations from 2002 to 2009, we find that, on average, better‐governed corporations tend to pursue a more socially responsible agenda through increased CSR practices. We also find that a combination of CSR and CG practices has a stronger positive effect on CFP than CSR alone, implying that CG positively influences the CFP‐CSR relationship. Our results are robust to controlling for different types of endogeneities, as well as alternative CFP, CG and CSR proxies. Theoretical/Academic Implications. The paper generally contributes to the literature on CG, CSR, and CFP. Specifically, we make two main new contributions to the extant literature by drawing on new insights from an overarching neo‐institutional framework. First, we show why and how better‐governed corporations are more likely to pursue a more socially responsible agenda. Second, we provide evidence on why and how CG might strengthen the link between CFP and CSR. Practitioner/Policy Implications. Our findings have important implications for corporate regulators and policy‐makers. Since our evidence suggests that better‐governed corporations are more likely to be more socially responsible with a consequential positive effect on CFP, it provides corporate regulators, managers and policy‐makers with a new impetus to develop a more explicit agenda of jointly pursuing CG and CSR reforms, instead of merely considering CSR as a peripheral component of CG or as an independent corporate activity.

Changes in social and environmental reporting practices in an emerging economy (2004–2007): Exploring the relevance of stakeholder and legitimacy theories

Abstract We examine social and environmental reporting (SER) practices of listed companies in the island economy of Mauritius. Based on a content analysis of annual reports, quantitative and qualitative changes in SER were analyzed in light of recent developments in corporate governance and with regard to the prevailing social and political contexts of this emerging economy. We find a significant but selective increase in the volume and quality of SER over the period under review (2004–2007). We rely on Suchman’s (1995) conceptualizations of legitimacy to argue that the changes in SER are related to a need for companies to demonstrate an affiliation to pro-social objectives (moral legitimacy) and, to a lesser extent, are motivated by the need to manage specific stakeholders (pragmatic legitimacy). More specifically, the increase in ethical disclosures reflects an attempt at gaining procedural legitimacy in response to criticisms of corruption and unfair/unethical business practices. Furthermore, the increase in social disclosures can primarily be seen as a mechanism to gain consequential legitimacy in response to concerns that local companies are not sufficiently contributing to the country’s social development. We suggest that future empirical research should devote more attention to the specific characteristics of emerging economies (such as levels of corruption and unethical business practices and the level of corporate governance) and examine whether these can explain patterns of corporate SER in a given national context or on a cross-country basis.

Religious “spirit” and peoples' perceptions of accountability in Hindu and Buddhist religious organizations

Purpose - The purpose of this paper is to examine how the Buddhist and Hindu people in non-Western societies perceive rational accountability practices in religious organizations, through their respective religious “spirit” and “beliefs” and in combination with broader structural elements of the society. Design/methodology/approach - The interpretive tradition of research, i.e. ethnography based on two in-depth cases from Sri Lanka (a Buddhist temple) and Mauritius (a Hindu temple) is adopted for the data collection. The data are analysed using grounded theory methods and procedures. Findings - In non-Western Buddhist and Hindu societies where peoples lives are bound by a high religious “spirit” the accountability system in the religious organisations is largely visible as an informal and social practice rather than a stakeholder-oriented rational mechanism. It is found that the rational accountability mechanisms are “sacredised” by the Buddhist and Hindu religious “spirit” and subsequently, the accountability systems and religious activities are both influenced by the “structural elements” of trust, aspirations, patronage and loyalty relations, social status, power and rivalries. The accountability practices implemented in these organisations are perceived by the people as being no more than “ceremonial rituals” aimed at strengthening the temples righteous and prudent image to the religious society. Research limitations/implications - The paper raises the issue that accountability practices in community, grassroots-based non-profit organisations are not mere reporting of “facts” relating to economic activities and a “neutral system” giving reasons for the conduct of its leaders. Instead, they initiate new forms of accountability systems and reproduce structural conditions. Originality/value - This is one of the first field studies which examine perceptions of accountability within a Hindu and a Buddhist context, as influenced by the religious “spirit” and internal belief systems of the devotees. Previous studies have mostly focused on Judeo-Christian or Islamic denominations.

Governance structures, voluntary disclosures and public accountability: The case of UK Higher Education Institutions

Purpose - The purpose of this paper is to investigate the extent of voluntary disclosures in UK higher education institutions’ (HEIs) annual reports and examine whether internal governance structures influence disclosure in the period following major reform and funding constraints. Design/methodology/approach - The authors adopt a modified version of Coy and Dixon’s (2004) public accountability index, referred to in this paper as a public accountability and transparency index (PATI), to measure the extent of voluntary disclosures in 130 UK HEIs’ annual reports. Informed by a multi-theoretical framework drawn from public accountability, legitimacy, resource dependence and stakeholder perspectives, the authors propose that the characteristics of governing and executive structures in UK universities influence the extent of their voluntary disclosures. Findings - The authors find a large degree of variability in the level of voluntary disclosures by universities and an overall relatively low level of PATI (44 per cent), particularly with regards to the disclosure of teaching/research outcomes. The authors also find that audit committee quality, governing board diversity, governor independence and the presence of a governance committee are associated with the level of disclosure. Finally, the authors find that the interaction between executive team characteristics and governance variables enhances the level of voluntary disclosures, thereby providing support for the continued relevance of a “shared” leadership in the HEIs’ sector towards enhancing accountability and transparency in HEIs. Research limitations/implications - In spite of significant funding cuts, regulatory reforms and competitive challenges, the level of voluntary disclosure by UK HEIs remains low. Whilst the role of selected governance mechanisms and “shared leadership” in improving disclosure, is asserted, the varying level and selective basis of the disclosures across the surveyed HEIs suggest that the public accountability motive is weaker relative to the other motives underpinned by stakeholder, legitimacy and resource dependence perspectives. Originality/value - This is the first study which explores the association between HEI governance structures, managerial characteristics and the level of disclosure in UK HEIs.

Social and environmental accounting as symbolic and substantive means of legitimation: The case of HIV/AIDS reporting in South Africa

Abstract We develop an interpretive framework which combines Suchmans (1995) work on the dynamics of organisational legitimacy and Ashforth and Gibbs’ (1990) concepts of symbolic and substantive management to investigate how and why public corporations rely on symbolic and substantive social disclosures. We apply this framework to the case of the HIV/AIDS health crisis in South Africa (SA) and examine the corporate disclosure behaviour of a sample of 75 SA-listed corporations from 2003 to 2009. We use content analysis procedures to codify the disclosures and devise a disclosure index based on the Global Reporting Initiative guidelines on HIV/AIDS to assess whether corporations have adopted a substantive management strategy. Our findings suggest that public corporations use a combination of substantive and symbolic disclosures in a bid to seek specific forms of moral legitimacy (structural, procedural, and consequential) and pragmatic legitimacy (dispositional, influence, and exchange). Our analysis reveals that the mix of substantive and symbolic disclosures is altered as a result of changes in stakeholder salience, societal attitudes and the corporations current ‘state’ of legitimacy. Overall, the findings demonstrate that our analytical framework is useful in understanding how substantive and/or symbolic disclosures could be relied upon to achieve specific types of organisational legitimacy.

Community disclosures in a developing country: insights from a neo-pluralist perspective

Purpose - – The purpose of this paper is to analyse changes in community disclosures by listed companies in Mauritius. Design/methodology/approach - – The authors carried out a quantitative and qualitative assessment of annual report disclosures over the period 2004-2010. In particular, the authors consider the influence of a corporate governance code and a government intervention to first persuade and subsequently mandate corporate social responsibility investment (known as a “CSR Levy”). Findings - – From a predominantly limited and neutral form of communication, narratives of community involvement morph into assertive and rhetorical statements, emphasising commitment, permanency and an intimate connection to the community and a re-organisation of activities and priorities which seek to portray structure and order in the way companies deliver community interventions. Informed by Gray Research limitations/implications - – The authors find that community disclosures are not only legitimating mechanisms driven by international pressures but are also the result of local tensions and expectations. Originality/value - – This study provides evidence on forms of “social” – as opposed to environmental – disclosures. Furthermore, it examines a unique setting where a government enacted a legally binding regime for greater corporate social involvement.

A Longitudinal Study of the Implementation of the Corporate Governance Code in a Developing Country: The Case of Mauritius

This exploratory study investigates firms’ implementation of a new corporate governance code in Mauritius, a developing economy. The authors rely on annual report disclosures during a four-year period (2004-2007). The authors analyze the level of corporate engagement with the code’s requirements, including corporate social responsibility initiatives, relative to a 2004 (when the code was enacted) benchmark over the three subsequent years. The study contributes to the literature in two ways. First, it provides much needed evidence of longitudinal implementation within developing economies that exhibit, or have started to exhibit, a combination of ownership and control features found in more advanced economies and characterized in the literature as an “emerging governance” model. Second, the authors develop a more comprehensive assessment of implementation using a scoring system that combines trichotomous weighting of each governance component (as 1, 3, or 5) and trichotomous rating of implementation of each component (as 0, 0.5, or 1). The authors argue that this system is superior to the un-weighted, dichotomous approach typically used in the literature. The analysis of weighted assessment scores for reveals a significant implementation of the code initially after 2004; but implementation began to level off by 2007 well below maximum assignable scores. Detailed requirements regarding directors’ appraisal and training, remuneration policies and remuneration information appear to be ignored by companies through 2007. A correlation analysis of the corporate governance scores and firm-based measures (level and changes) shows that the association between these different variables fluctuates significantly over the implementation window.

Do corporate governance Codes improve board accountability? Evidence from an emerging economy

Purpose - The purpose of this study is to examine whether the expectations and requirements contained within the corporate governance code have an impact on how accountability is perceived, understood and practiced by company board members in an emerging economy (Mauritius). Design/methodology/approach - The paper relies on 24 semi-structured interviews of board members in listed and non-listed companies and also analyses the accountability implications present in the local code of corporate governance and relevant reports. The analysis is informed by the typologies of board accountability and process developed by Roberts in 2001 (socialising, individualising, sovereign and complementary) and is complemented by Pettigrew and McNultys 1995 notions of minimalist and maximalist boards. Findings - From a state which can largely be associated to the notion of sovereign governance and a minimalist board, the findings reveal a substantive change in the type of board accountability but it is one which privileges an individualising form of board interactions. A move to a more empowered “maximalist” board is also noted. Notwithstanding, the paper uncovers specific issues with the INED as an accountability mechanism in that there is much fuzziness on his/her role and motivations and whether INEDs can conceivably contribute to a socialising form of board accountability. Originality/value - The paper responds to calls for more qualitative research on how boards actually operate in emerging economies, at a time when an increasing number of countries have adopted corporate governance requirements drawn primarily from the Anglo-American model. This paper contributes to the literature by providing empirical evidence on corporate board processes and dynamics in non-Western contexts.

A case study on the influence of corporate governance beyond the boardroom: perceptions from business unit managers

Purpose – This study aims to explore the influence of corporate governance (CG) on non‐board business unit (BU) managers in relation to its perceived effects on managerial/organizational outcomes.Design/methodology/approach – Following the recent implementation of the CG code in a conglomerate, a number of BU managers were interviewed on the meaning and implications of CG at their level with a subsequent focus on two principles advocated in CG: accountability and transparency.Findings – BU managers perceived the CG adoption will have a positive impact on their performance via its effect on enhancing the credibility of the unit and the organization. Managers also developed a wider notion of accountability, akin to a ‘socializing form’ accountability, which improves the level of dialogue, trust and communication within the organization, thereby leading to better organizational outcomes. However, in view of the opaque business context prevailing in the country of study, these positive consequences are dampen...

Accounting and governance in Africa – contributions and opportunities for further research

Purpose The purpose of this paper is to review and reflect on the contributions of the Journal of Accounting in Emerging Economies’ special issue on accounting and governance in Africa. Design/methodology/approach The themes and contributions from the accepted papers are identified and discussed in relation to prior research and potential for further studies. Findings Key aspects of boards and corporate governance (CG), audit reporting and quality and government accounting practices are revealed as mechanisms which, in some cases, did have some consequences in the African context. However, in other cases, accounting or governance mechanisms appear to be at the periphery of organizational practice and exhibit little influence on decision making and accountability. Research limitations/implications Whilst this paper does not provide a systematic review of the literature in the African context, it provides relating to special issue’s contributions on CG, audit and government accounting on the continent. Originality/value This special issue extends the burgeoning scholarship in African accounting and governance and provides directions and opportunities for future research.