Carlos Serrano-Cinca, Beatriz Cuéllar-Fernández and Yolanda Fuertes-Callén
Many indicators attempt to measure the social performance of a company from different perspectives. Grounded in stakeholder theory, this paper aims to propose capitalising the…
Abstract
Purpose
Many indicators attempt to measure the social performance of a company from different perspectives. Grounded in stakeholder theory, this paper aims to propose capitalising the economic value distributed annually to society over a period of time, hereafter called a firm’s cumulative contribution to society (CCS). This can be done by including everything that stakeholders value; for example, payments of taxes, remuneration of employees, payments to suppliers and creditors, donations, dividends, research and development expenses and efforts to improve the environment.
Design/methodology/approach
First, this paper makes a methodological proposal about how to calculate the CCS and discusses potentials and shortcomings. Then, a set of hypotheses are formulated about the firm characteristics and country attributes that make the most positive contribution to society such as business models, financial performance, a country’s human development, income equality and the extent of its shadow economy. The authors also argue that a company that originally contributes to society will continue to do so because of the structural inertia faced by organisations. The hypotheses were validated with an empirical study conducted with a sample of 9,276 new-born European companies.
Findings
The most significant contributors to society are large, profitable companies, which are leveraged but solvent, with high asset turnover and high-profit margins and which are productive and pay high wages. Unfortunately, this win-win situation describes a small percentage of the explained variance, which can explain why social and financial performance sometimes do not go hand-in-hand. The paper identifies features of other types of companies that contribute to society, suggesting criteria for socially responsible investors. Country development favours the cumulative contribution that firms make to society.
Research limitations/implications
Most accounting systems do not collect all the information necessary to calculate a refined version of the indicator such as percentage of purchases from local suppliers, percentage of salaries for executives and disabled employees and percentage of financing from socially responsible financial entities. The authors encourage modification of the accounting systems to include those aspects.
Practical implications
This paper identifies several types of companies that contribute the most to society from a modest set of financial indicators. Socially responsible investors can estimate their contribution to society, devising new investment criteria.
Social implications
The paper identifies several types of companies that contribute the most to society from a modest set of financial indicators. Socially responsible investors can estimate their contribution to society, devising new investment criteria.
Originality/value
The paper makes two contributions, one methodological and the other empirical. By applying a financial methodology, the authors propose to capitalise the contributions of a company over a period of time. The empirical study identifies both firm and country characteristics that explain CCS.
Details
Keywords
Yolanda Fuertes-Callén, Beatriz Cuellar-Fernández and Marcela Pelayo-Velázquez
The purpose of this paper is to explore the determinants of online corporate reporting in three Latin American emerging markets, Argentina, Mexico and Chile, providing further…
Abstract
Purpose
The purpose of this paper is to explore the determinants of online corporate reporting in three Latin American emerging markets, Argentina, Mexico and Chile, providing further evidence to test the mediation role of web presence development in the relationship between these determinants and e-disclosure. Web presence development measures the firm's efforts to archive web visibility, web usability and convenience.
Design/methodology/approach
Based on a content analysis of corporate web sites, the extent of the information is measured by three internet disclosure indexes. Four constructs which are considered key drivers of a firm's disclosure strategy are identified. Structural equation modelling (SEM) was used to assess the research model. The sample contains publicly available data on listed companies’ web sites.
Findings
The results reveal that the development of a firm's presence on the internet is as important as its characteristics in determining corporate transparency and in mediating the relationship between firm size and cross-listing and e-disclosure.
Practical implications
Companies should be aware that investors are attaching increasing importance to corporate transparency. Consequently, managers should put more effort into improving web sites, which would increase corporate visibility and open up a direct communication channel with their stakeholders. They should also take advantage of web sites to provide information, above and beyond that required by local law. Not only do current and potential investors find this useful, it also increases their confidence in the company.
Originality/value
This paper proposes an integrative model of the determinants of the level of online corporate reporting using constructs that reflect their multidimensional nature. A non-financial latent variable for web presence on the internet is proposed as a mediator in the relationship between e-disclosure and traditional determinants. The SEM approach simultaneously examines the direct and indirect relationships between the proposed latent variables and how these relationships influence the level of e-disclosure.
Details
Keywords
Md Imran Hossain, Adamu Jibir, Md Aslam Mia, Musa Abdu and Swati Chauhan
Islamic banking and microfinance institutions (MFIs) share the core objective of serving the underprivileged. This study aims to investigate whether Islamic banking development…
Abstract
Purpose
Islamic banking and microfinance institutions (MFIs) share the core objective of serving the underprivileged. This study aims to investigate whether Islamic banking development facilitates (greases) or hinders (sands) the social mission of MFIs.
Design/methodology/approach
Data for 19 countries covering the period 2010–2018 were collected from the World Bank, Bank Focus and International Monetary Funds and analyzed using conventional econometric methods. Endogeneity-corrected techniques and alternative proxies were employed to ensure robust results.
Findings
The study revealed that Islamic banking development (proxied by the size of the Islamic banking assets) weakens the depth of outreach of MFIs (measured by average loan size). In countries with growing Islamic banking, MFIs appear to shift their focus toward wealthier clients, potentially due to market saturation among the poor. This is evidenced by MFIs offering larger loans, suggesting a mission drift toward profit maximization. Therefore, it can be inferred that competition from Islamic banks, to some extent, erodes the social mission of MFIs.
Originality/value
This study is among the few to examine the recent and comprehensive relationship between Islamic banking development and the social mission of MFIs.