Editorial Notes Issues on Social and Environmental Accounting

The new millennium saw the emergenceof a new way of thinking about the functionsand duties of modern corporations.The growing international demands forcompanies to be more transparent andaccountable for their economic, socialand environmental impacts everywherethey operate. Corporate managers arepressed with more responsibility to servethe needs of society at large. Today,businesses are expected not only to increasetheir bottom line but also to operatewithin the ‘new moral marketplace’.Corporate morality is increasingly beingjudged by consumers, investors and employees.Terms that are alien to many afew years ago such as ‘green marketing’,‘environmentally friendly’, ‘gender sensitive’,‘fair trade’, ‘against animal testing’and many more become householdwords and high on consumers’ conscienceof today. Beyond that, globalissues like, the oil crisis, environmentaldegradation, human rights, labour issuesand energy issue forced the companiesto reconsider their objectives. Instead ofjust trying to maximize profit and pleasetheir shareholders, many multinationalcorporations are beginning to understandthat they now have a broad spectrum ofstakeholders. This includes investors,creditors, employee, governments,NGOs and the various communities inwhich they operate. Businesses have tosatisfy all these stakeholders’ needs, thushave an additional role and purpose.Hence, the term corporate social responsibility(CSR) was born.Whilst CSR in the seventies and eightiesare more towards meeting society’s expectations,and earn from society theinformal ‘license to operate’, disclosingsuch information falls under the task ofCorporate Public Relation Department.The information provided understandablywould be more of an image enhancerto communicate and demonstrate a company’scommitment to improve socialperformance. In today’s world the wholequestion of business and environmentalsustainability has emerged to the forefrontwith the ravages of climate changeand global warming. This increasinglycalls for companies to align their CSRstrategies to sustainability so that sustainablepractices can be further enhanced.With greater consumer sophisticationand expectation for sustainabilitydevelopment, CSR is gaining competitiveadvantage in terms of market share,attracting top talent and employee retention.Well focussed and managed CSRinitiatives should improve relationshipwith stakeholders and yield better financialresults through sustainable innovation,investment and decision making.Thus, there is the need for the accountingfraternity to step in to provide informationsuch as long-run profitability,sustainability, social and environmentalinvestment, improved performance and many more. Beyond that, the accountingprofession, academics, researches aswell as the practitioners need to play abigger role of not only providing datafor disclose but also the quality and theassurance of the data provided.Therefore, it is imperative that Issues onSocial and Environmental Accountingbe published to provide an avenue foraccounting academics, researchers aswell as practitioners to publish theirfindings and serves a platform for intellectualdiscourse. As can be seen fromthe articles published, this journal is indeedan international journal withoutdiminishing local flavour. Even thoughsome of the articles are country specific,authors from various countries like Japan,Malaysia, Indonesia and Canadadiscuss issues that are internationallyrelevant, interconnected and comprehensive.These issues such as Ethics, Environmental,Social, Disclosures, Sustainability,Performance, to name a few, allrelated to the 3 Ps’ (Profit, Planet andPeople) and the Triple Bottom Line, arescrutinised and deliberated in the articles.Through the years, CSR has evolves andcomes in variety of approaches. Nonetheless,its characteristics remain unaffected.Companies are starting to realizethat adopting socially responsible behaviourand voluntary course of action canprovide long-term interests. CSR is alsoessentially tied to the concept of sustainabledevelopment. It promotes integrationof economic, social and environmentaloutcomes in standard managementand accounting systems. ThereforeCSR should be continuously driven tohigher levels to build on existing practice,optimizing its impact and making apositive link between social responsibilitiesand best business practices. A trulyeffective CSR strategy should be alive,adaptable and embedded into the organisationand aligned to the commercialobjectives of the organisation. Thesestrategies must then be implemented andpractices, followed by reporting and disclosingthem to the various stakeholders.Copyright © www.iiste.orgÂ

The driving forces behind Malaysian corporate social reporting / Mustaffa Mohamed Zain

Corporate social disclosure has, since the early seventies, attracted the interest of various user groups. As a result, a long history of research into corporate social disclosure practice is observable in developed countries particularly the United States and Western Europe. However, very little attention has been focused on developing countries. This paper seeks to understand why corporations in Malaysia are disclosing social information in their annual report. Semi structured personal interviews were conducted on ten companies from various sectors to find out the reasons for disclosure. A group of financial analysts were also interviewed to understand the need for information by third party. The interviews revealed that most companies are disclosing social information due to top management awareness together with a desire to comply with the government's social policy and enhance corporate image. The study also highlights that while accountability seems to be the main emphasis for disclosing social information, legitimization of business cannot be ingored due to different market pressures, government policy and values from those of western countries

Assurance of CSR and Sustainability Reports: Empirical Evidence from an Emerging Economy

In tandem with the evolution of reporting, this paper highlights the extent to which the content of corporate social responsibility (CSR) and sustainability assurance reports in Malaysia addressed the key elements of the requirements of the ISAE3000 assurance standard. A content analysis of the assurance statements of eight (8) public-listed companies in Malaysia for the year 2010 revealed some areas of concern with regards to the assurance statements provided. The findings from the study revealed some variability in the assurance reports provided. However, in terms of the nature of work undertaken, the findings from the study revealed that Malaysian assurors performed well in all three validation processes; validation of data in the report, validation of data collection and in the validation of achievement targets. The findings also revealed that Malaysian assurance providers were engaging with the stakeholders during the assurance process. Keywords: Assurance, Sustainability, Corporate Social Responsibility, Standard, Malaysi

Does Good Corporate Governance Lead to Better Sustainability Reporting? An Analysis Using Structural Equation Modeling

AbstractThis paper examines the impact of good corporate governance (CG) on the sustainability disclosure of 100 public listed companies in Malaysia from the perspective of agency theory. The data was analysed using Structural Equation Modelling technique of Partial Least Squares. The findings from the study indicate that board size, professionalism and board designation had a significant impact on sustainability disclosure. However, board independence and board ownership were not significant in motivating sustainability disclosure. The findings from this study provide enhance understanding of the determinants of sustainability reporting and confirm the appropriateness of agency theory in examining studies of this nature

Does social risk management matter? influencing factors and their link to firms' financial performances / Tamoi Janggu ... [et al.]

This article deals with the growing pressures and demands for emerging risk reporting that may help interested users assess the importance of social risk management for sustainable development. The objectives of this study were to examine the influence of individual and institutional ownership and stakeholders on social risk disclosures and the joint effects on firms’ financial performances. A content analysis on the 2013 and 2014 annual reports of all plantation companies was carried out and analyzed using partial least square (SEM_PLS) software version 3.2. Based on the tests, we found significant relationships between institutional ownership and the number of stakeholders with social risk disclosures. However, there were no significant relationships between individual ownership and social risk disclosures. In addition, we found significant relationships between social risks and firms’ financial performances. These findings revealed that institutional shareholders and the number of stakeholders had a significant influence in deciding the disclosure of social risk information. Interestingly to note that social risk information was found to be statistically significant on firms’ financial performance as measured by the firms’ net profits. This paper, therefore, endorsed the growing demand to fully embed social risk management in companies’ operations by both institutional shareholders and stakeholders in general

Does social risk management matter? Influencing factors and their link to firms’ financial performances / Tamoi Janggu … [et al.]

This article deals with the growing pressures and demands for emerging risk reporting that may help interested users assess the importance of social risk management for sustainable development. The objectives of this study were to examine the influence of individual and institutional ownership and stakeholders on social risk disclosures and the joint effects on firms’ financial performances. Content analyses on the 2013 and 2014 annual reports of all plantation sector companies were carried out and analyzed using partial least square (SEM_PLS) software version 3.2. Based on the tests, we found significant relationships between institutional ownership and the number of stakeholders with social risk disclosures. However, there were no significant relationship between individual ownership and social risk disclosures. In addition, we found significant relationships between social risks and firms’ financial performances. These findings reveal that institutional shareholders and the number of stakeholders had a significant influence in deciding the disclosure of social risk information. Interestingly social risk information was found to be statistically significant on firms’ financial performance as measured by firms’ net profits. This paper, therefore, endorses the growing demand to fully embed social risk management in companies’ operations by both institutional shareholders and stakeholders in general

Environmental risk disclosure practice in Malaysia: an emphasis on the plantation industry / Haslinda Yusoff … [et al.]

This study aimed to investigate the environmental-related risk management practices via disclosures of publicly listed companies in Malaysia. A content analysis of annual and sustainability reports from 2012 to 2014 of all companies in the plantation industry was carried out. Using a disclosure rating index, the quantity and quality of the environmental-related risks disclosures was examined. The results reveal that the quantity and quality of disclosures are rather low and minimal; being in the form of short statements and a brief explanation of information. “Pollution and abatement commitment” is found to be the most disclosed category and information, followed by “environmental conservation-energy”, while, “pollution and abatement–noise outdoor” is the least disclosed one. Generally, a majority of the disclosures showed a decreasing trend. These findings indicate that typically the plantation companies in Malaysia gave minimal attention to environmental risk reporting henceforth signifying that disclosure practice is not viewed as critical to their sustainability agenda and value creation

Corporate social reporting in Malaysia : the current state of the art and future prospects

Corporate social reporting has, since the early seventies, attracted the interest of various user groups. As a result, a long history of research into corporate social disclosure practice is observable in developed countries particularly the United States and Western Europe. However, very little attention has been focused on developing countries. This research investigates the extent of corporate social disclosure in Malaysia, the type of disclosure made and the relationship between disclosure practice and company characteristics. The study also seeks to understand why corporations in Malaysia are disclosing social information. A content analysis is presented, centring on 100 1993 annual reports of major Malaysian companies, to find the extent of disclosure and personal interviews are conducted to find out the reasons for disclosure. Content analysis demonstrates that Malaysian companies are actively disclosing social information with size of company being a major determinant factor. Human resource information is the main social theme disclosed. Personal interviews reveal that most companies are disclosing social information due to top management awareness together with a desire to comply with the government's social policy and enhance corporate image. The study highlights the communication gap that exists between Providers and users of social information and the dilemma faced by companies in seeking a balance between transparency and Islamic teachings. The research provides further insights towards an understanding of the reasons for social disclosure in developing countries where the culture, values and religious beliefs are different from those of western countries

Factors affecting SMEs successful utilization of tax incentives in manufacturing sectors / Nadiah Abd Hamid, Rohaya Mohd Noor and Mustaffa Mohamed Zain.

This study aimed to determine the key factors associated with successful utilization of tax incentive and to further investigate which factors were significant via the logistic approach. Using the convenient sampling, 125 SMEs in the manufacturing sector were selected as samples. The findings showed four factors; capital investment, business strategies, government support and environment were significant in attributing to successful utilization of tax incentives. A further analysis using the logistic approach was extended to determine the underlying factors of why some SMEs were able to utilize the tax incentives, whilst others were not. The results from the logistic approach revealed that factors related to the governance of companies had significant influence on the ability of the company to effectively utilize the tax incentives. This study used both primary and secondary data and employed methods, such as, survey and real financial data analysis retrieved from companies’ financial statements