CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES OF MALAYSIAN PUBLIC LISTED COMPANIES

REVIEW paper from international conference on regional networking 2008-Banda Aceh
Researcher : Baihaqi and Saiful (The University of Bengkulu)

Several theories as a foundation of this research are Masley (2000) as cited by Van Der Valde, Vermeir & Corten (2005) described that the current investment trend is the investors will take into account the social, environment, and ethical issues in investment selections process. Webley and More (2003) supported that the investors value more highly companies that are less exposed to social, environmental, and ethical risks. In Malaysia, the private sector has been pressured to accept social responsibility since 1980s. However, previous studies have found that the level of corporate social responsibility at Malaysian PLCs remain low. Chamber et al. (2002) showed that, there are fewer corporate social responsibility companies in the seven selected Asian Countries (India, South Korea, Thailand, Singapore, Malaysia, Indonesia, Philippines) as score of 41% which is under half the score for the United Kingdom (98%) and Japan Companies (96%).

Corporate social responsibility disclosures include detail of the physical environment, energy, human resources, product, and community involvement matters (Ho, 1990; Hackston & Milne, 1996). CSR can be defined as the provision of financial and non-financial information relating to an organizations interaction with its physical and social environment, as stated in corporate annual reports (Guthrie & Mathews 1985). Bhimani and Soonawalla (2005) have shown that corporate conformance and corporate performance are linked. The more the companies conform to the best practices of corporate governance; the beter will be the disclosure of their corporate responsibilities. Coffey and Wang (1998) found that the ratio of insiders to a outsiders on the board was positively related to charitable contributions and the percentage of stock owned by insiders is positively related to charitable giving. Longo et al. (2005) demonstrated that ethical motives of top management of small medium enterprises will influence corporate social responsibility disclosure. Abdul Rashid and Ibrahim (2002) found that family upbringing, traditional beliefs and custom, common practice in industry, school, and university training, conduct of superiors, religious training, and conduct of peers are important factors that drive the orientation of Malaysian executive and managers toward corporate social responsibility.

This research has several purposes that are to investigate the level of corporate social responsibility activities of the five themes, practiced by the Malaysian PLCs, the level of importance, awareness, knowledge, behavioral, and impact of the corporate social responsibility activities of the Malaysian PLCs, the groups that influences that Malaysian PLCs to participate in the corporate social responsibility activities, and the relationship among the corporate social responsibility activities.

The samples of this research are Malaysian companies that are listed on the main board of bursa Malaysia using stratified proportionate random sampling at 6 industries (construction, consumer product, industrial product, plantation, properties, trading and service). Data collection used primary data through questionnaires, were sent to 200 PLCs listed in Bursa Malaysia as at 2005. Only 9 questionnaires were received and then collect 62 more responses through follow up. The questions are adapted from Hackston and Milne (1996) and Adebayo (2000).

This research found several conclusions that the relationship among CSR activities perceived and characteristic board of directors (ethnics, qualifications, religion) influence CSR activities especially in term of community, product, and human resources. And also director’s perceived on CSR activities are influenced by intern and extern corporate as well. This research finding imply that CSR activities will increase when intern and extern corporate be able to play important role in pushing directors to well perform CSR activities.

The limitation of this research are the scope just at the year end January to December 2005 and the sample size too small because of poor interest rate from companies, thus the sample size not reflect the whole situations in Malaysian corporate scenario.