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Independent corporate social responsibility assurance: a response to soft laws, or influenced by company size and industry sector?

Barry Ackers ()
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Barry Ackers: University of South Africa (UNISA)

International Journal of Disclosure and Governance, 2017, vol. 14, issue 4, 278-298

Abstract: Abstract South African soft laws, such as the King III principles and the Johannesburg Stock Exchange (JSE) regulations, require all JSE-listed companies to provide independent corporate social responsibility (CSR) assurance on an apply or explain basis. While prior studies may have suggested that these soft laws were the primary drivers of independent CSR assurance, in reality, the majority of companies, where this was a de facto mandatory requirement, did not comply. This study explores the independent CSR assurance phenomenon to understand whether independent CSR assurance decisions were influenced by other factors such as company size and industry sector. In this way, the paper contributes to the perennial debate between voluntary governance principles and mandatory regulation and legislation. The study utilised a longitudinal study involving a content analysis of the annual and/or corporate social responsibility reports of the largest 100 JSE-listed companies over the 8-year period from 2007 to 2014 (i.e. both before and after King III) to identify companies providing independent CSR assurance. The resultant observations were subsequently analysed in terms of the size and industry sector represented. Despite ostensibly being a mandatory requirement for JSE-listed companies, and acknowledging the important role of King III, the findings suggest that King III may not be the primary driver of independent CSR assurance. Although independent CSR assurance has steadily grown, this assertion is confirmed by less than 40% of companies doing so, in spite of the King III and JSE requirements. Instead, the study found that larger companies, and particularly those operating in environmentally sensitive industries, as well as the consumer sector (both of which are concerned about their perceived legitimacy) had a greater propensity to conform. Although not a specific objective of the study, the results also offer a possible explanation for the removal of the independent CSR assurance requirement in King IV.

Keywords: Assurance; Company size; Corporate social responsibility (CSR); Industry sector; Soft laws; Environmentally and socially sensitive industries (search for similar items in EconPapers)
Date: 2017
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