CHAPTER 6 PERCEPTIONS OF INVESTORS AND STOCK BROKERS...

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CHAPTER 6

PERCEPTIONS OF INVESTORS AND STOCK BROKERS WITH REGARD TO CSRD- AN

ANALYTICAL STUDY

Investors, being the internal users of information need social responsibility information for the purpose of

their investment decisions (Chander, 1994). The opinions and perceptions of investors must carry

supreme importance in designing and implementing CSR as a strategic decision by the companies. Given

this context and owing to the dearth of studies in India on corporate social responsibility based on surveys

of different stakeholders, the main objectives of this chapter have been set to investigate attitudes and

opinions of the investors and brokers with regard to current CSRD, motives behind CSR and CSR

disclosures, and to determine the type of information that they believe should be included in

environmental and social reports and to figure out companies which basically need to pursue and report

CSR. As there are not any mandatory requirements put forward by legislation of India (for details see

regulatory framework in chapter 1), investors and brokers have been asked their opinions on type of CSD

information that is voluntarily provided by Indian companies. Additionally, opinions relating to the

relevance, sufficiency or otherwise of current CSD, and suggestions for additional disclosure

requirements as well as attitudes towards varying impact of various CSR activities have been sought from

the participants. It is important to know the perceptions of investors regarding the information disclosed

in annual reports, as information disclosed affects their decisions.

6.1 QUESTIONNAIRE DESIGNING - RELIABILITY AND VALIDITY ISSUES

To design the questionnaire first of all a pilot study of the brokers and investors was conducted. A

theoretical lens has been used to provide the options to various inquiries put forward to shareholders and

brokers. A few options have been either added or altered in different questions on the basis of pilot study.

A few changes like investment range of brokers have been amended. The questionnaire has been tested

for language validity, content validity. Questionnaire reliability test in form of ‘alternate form’ has been

conducted. In addition, the split half method of correlation has been conducted and found to be

satisfactory. To check the reliability of the questionnaire, alternate questions were asked with minor

variations in the language and the correlation of the responses to these pairs of questions has been

calculated. The value of r is more than 0.65 in all the alternate form of questions. So, the questionnaire is

considered to be a reliable instrument to measure the perception of investors and brokers with regard to

corporate social responsibility and its disclosures. The results of these tests are presented below:

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6.2 RESULT OF ALTERNATE FORM RELIABILITY TEST

Question N R

4a and 8b Interest of employees ranking and maximum impact 20 0.66

4c and 8f Interest of shareholders and investors and impact. 20 0.67

4d and 8a Interest of Community at large and impact of community welfare efforts.

20 0.78

6a and 16a Performance of CSR by loss making companies. 20 0.65

13 and 15 Satisfaction level of investors and brokers with CSRD 20 0.73

6.3 ORGANISATION OF QUESTIONNAIRE

The simple structured questionnaire has been divided into three parts:-

Part I: To check the awareness level and importance of CSR as perceived by investors and brokers.

Part II: To examine the perceptions of investors and brokers with regard to relationship between CSR and

financial performance.

Part III: To examine the perceptions of with regard to disclosure of CSR activities.

Before finalizing the questionnaire, the expert opinion from some of the persons in academia (School of

Management Studies, Punjabi University Patiala, Business Management Department, Punjab Agricultural

University, Ludhiana, Delhi University, New Delhi) and from eminent personalities in Stock Exchanges

(Executive Director, Ludhiana Stock Exchange, Ludhiana, Executive Director, Delhi Stock Exchange,

New Delhi, Chairman, Citizen Awareness Group) and finally some brokers associated with stock

exchanges were taken to further improve the questionnaire. The changes suggested by them have been

given due weight-age in the final draft of both questionnaires of Investors and Brokers (some meaningful

suggestions some experts have been attached in the Appendix 8).

6.4 COLLECTION OF QUESTIONNAIRES AND THE RESPONSE RATE

Through the use of a simple structured questionnaire, the data has been from key respondents including

investors and brokers. Following is the response rate on the questionnaires.

Chandigarh Delhi Ludhiana Delhi Ludhiana

Investors response Brokers response

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Sample Size 100 100 100 50 50

Usable Questionnaires 95 91 90 46 44

Response rate 95% 91% 90% 92% 88%

The response rate in Chandigarh is 95%, 91% in Delhi and 90% in Ludhiana region in case of investors.

The response rate for brokers is 92% in Delhi and 88% in Ludhiana. For getting the questionnaires filled

from investors, two strategies were followed. Firstly, investors awareness workshops being organised by

Citizen Awareness Group (in collaboration with SEBI) in Ludhiana, Chandigarh, Jalandhar were attended

(copy of invitation card attached- Appendix 9) and questionnaires were got filled by personal interview

method. In addition, the Delhi Stock Exchange and Ludhiana Stock Exchange have been visited

personally time to time to get the questionnaires filled up from investors. For brokers, the questionnaires

were mailed to Assistant Manager in Delhi Stock Exchange in addition to personal interview method. To

cover a wide range of brokers, some broking houses like Master Trust, India Bulls, Sunglow Capital, J.M.

Securities, Master Capital Services, IDFC, Quest Securities, B.L.K. Financial and many more were

visited and questionnaires were got filled from them. A list of brokers was got extracted from “Silvi

Software” and questionnaires were collected by taking appointment, using snowball sampling technique

and then visiting them.

6.5 ANALYSIS OF QUESTIONNAIRES:

In analyzing the data, both descriptive and analytical approach using testing of hypotheses have been

adopted. The following techniques have been used for analysis of questionnaires-

(i) Descriptive Statistics- Percentages, Mean, frequency distribution, Standard Deviation, Coeff. of

variation, Skewness, Kurtosis, Ranking, five point Likert scale for quantitative measurement of

satisfaction responses for analytic purposes.

(ii) Analytical Statistics- ANOVA test, Kruskal Wallis test and Mood’s test have been conducted to

find out whether average response in one category differs from other categories, multiple range

tests comprising Fisher's least significant difference, chi-squared test for medians. (For details of

these tests, kindly refer to chapter 3- Research Methodology).

6.6 INVESTOR’S PERCEPTIONS REGARDING CORPORATE SOCIAL

RESPONSIBILITY (CSR) AND ITS DISCLOSURE

6.6.1 Factors Influencing Investment Decision: The first question intended to gauss the investment

making behavioural pattern of investors and to understand the importance attached to CSR activities,

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among the other factors influencing decision making investments. The respondents were asked to give

ranking, 1 for most important, 2 for next important and so on, 5 for least important.

Table 6.1

Overall Ranking across Respondents– Factors Influencing Investment Decision

CRITERIA DELHI LDH CHD Total RANK

Past Financial Performance of the Company

153 141 153 447 1

CSR activities of the Company 317 346 348 1011 4

Advice of friends 376 383 346 1105 5

Advice of brokers/ consultants 300 297 330 927 3

Future Prospects of the Company 283 181 188 652 2

(Source: Author’s computations)

It has been found that investor’s decisions are influenced maximum by the past financial performance of

the company followed by future prospects of the companies. This reveals the importance the investors

attach to the financial/economic performance. Then, the investors give least preference to the informal

advices given by the friends and relatives, as it has been given lowest rank (5) by the investors. This

explains the importance of the imparting education of the investors. Broadly, CSR activities were given

3rd, 4th and 5th priority in importance while making the decision regarding the investment decisions. Very

few investors gave 1st and 2nd order importance to CSR activities of the companies. One very interesting

revelation is that ranks are consistent across the different sets of the samples.

To analyse the investors’ perception greater detail, the analysis of ranks given to various options by

different set of sample investors have been taken. The table gives the analysis of ranks given by

Chandigarh investors.

Table 6.2

Descriptive Statistics: Chandigarh Investors – Factors Influencing Investment Decision

Past

Performance CSR Friends Advice Broker/Consultant Future Prospects

N 95 95 95 95 95

Mean 1.6105 3.3368 3.9579 3.1579 2.9789

Median 1.0000 3.0000 4.0000 3.0000 3.0000

Std. Deviation 1.08466 1.10714 1.28755 1.19677 1.32872

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Skewness 2.008 -0.177 -1.020 0.031 0.206

S.E. Skewness 0.247 0.247 0.247 0.247 0.247

Kurtosis 3.338 -0.803 -0.125 -1.076 -0.736

Sum 153.00 317.00 376.00 300.00 283.00


Table 6.3

Chandigarh Investor’s Response Distribution Summary

Score Past performance CSR Friends advice Future prospects Brokers/ Consultants

f % F % f % f % F %

1 63 66.3 4 4.2 7 7.4 15 15.8 6 6.3

2 19 20.0 20 21.1 8 8.4 20 21.1 28 29.5

3 5 5.3 26 27.4 14 14.7 29 30.5 21 22.1

4 3 3.2 30 31.6 19 20.0 16 16.8 25 26.3

5 5 5.3 15 15.8 47 49.5 15 15.8 15 15.8

Total 95 100 95 100 95 100 95 100 95 100


The above table shows that in Chandigarh investors have assigned 1st and 2nd rank to past performance

and future prospects of company with 66.3 % and 15.8 % respectively showing high influence of past and

future performance upon investment decision of investor. On the contrary, CSR has been given first

preference by only 4 investors (i.e. the minimum number of investors), followed by 30 investor (31.6% of

the sample) giving 4 rank to CSR activities. This confirms the lesser importance of CSR activities in the

minds of investors. Brokers and consultants advice also does not have much influence as just 6 investors

(6.3% of the sample) have shown first preference to it. The status of friend’s advice is also almost the

same with 7 investors giving 1st preference to it while investing. This can be concluded that the investors

in Chandigarh consider more the fundamentals of the company rather than CSR, advice of friends and

advice of brokers /consultants.

Table 6.4

Descriptive Statistics for Delhi Investors – Factors Influencing Investment Decision

Past performance CSR Friend advice

Broker consultant Future prospects

N 91 91 91 91 91

Mean 1.5714 3.8352 4.2637 3.3077 2.0000

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Median 1.0000 3.0000 4.0000 4.0000 3.0000

Std. Deviation 1.07459 1.12564 1.25785 1.69149 1.25361

S.E. Skewness .253 .253 .253 .253 .253

Skewness 1.832 -.405 -1.830 -.211 1.200

Kurtosis 4.875 -.752 3.904 .112 1.245

S.E. Kurtosis .500 .500 .500 .500 .500

Sum 143.00 349.00 388.00 301.00 182.00


Table 6.5

Delhi Investor’s Response Distribution Summary

Score Past performance CSR Friends advice Future prospects Brokers advice

F % F % F % F % F %

1 49 53.8 2 2.2 3 3.3 3 3.3 33 36.3

2 36 39.6 6 6.6 3 3.3 11 12.1 37 40.7

3 3 3.3 32 35.2 3 3.3 40 44.0 13 14.3

4 2 2.2 16 17.6 40 44.0 29 31.9 4 4.4

5 1 1.1 35 38.5 42 46.2 8 8.8 4 4.4

Total 91 100 91 100 91 100 91 100 91 100


The tables 6.4 and 6.5 show the descriptive statistics and response distribution of Delhi investors. The

mean preference given to the past performance is 1.57, followed by future prospects with mean 2

indicating that the investors consider the past and future performance of the company while making the

investment decisions. The broker’s advice has got the third priority with mean 3.31 followed by CSR

information at the fourth place. Least priority is shown towards friend’s advice with mean 4.26. Now, this

shows that CSR information does not have very influential role in investment decisions. Just two

investors (2.2% of the sample) have given first priority to CSR performance of the companies. Six

investors (6.6% of the sample) have given second preference whereas 35.2%, 17.6%, 38.5% of the

investors have preferred to assign third, fourth and fifth rank to CSR information in making investment

decisions. Delhi investors have also shown past performance as most influential factor followed by

advice of brokers and consultants.

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Table 6.6

Descriptive Statistics for Ludhiana Investors – Factors Influencing Investment Decision

Past

performance CSR Friends Advice

Broker Consultant Future Prospects

N 90 90 90 90 90

Mean 1.5667 3.8444 4.2556 3.3000 2.0111

Median 2.0000 4.0000 4.0000 4.0000 2.0000

Std. Deviation 1.0184 1.2315 1.2763 1.2675 1.2782

Skewness 1.9536 -0.365 -1.155 0.255 0.266

S.E. of Skewness 0.322 0.322 0.322 0.322 0.322

Kurtosis 2.458 -0.8130 -0.525 -1.236 -0.376

Std. Error of Kurtosis 0.385 0.385 0.385 0.385 0.385

Sum 141 346 383 297 181


Table 6.7

Ludhiana Investor’s Response Distribution Summary

Score Past performance CSR Friends advice Future prospects Brokers/ Consultants

F % F % F % F % F %

1 44 48.9 3 3.3 6 6.7 5 5.6 32 35.6

2 36 40.0 9 10.0 3 3.3 11 12.2 31 34.4

3 6 6.7 23 25.6 29 32.2 14 15.6 18 20.0

4 3 3.3 20 22.2 19 21.1 41 45.6 7 7.8

5 1 1.1 35 38.9 33 36.7 19 21.1 2 2.2

Total 90 100 90 100 90 100 90 100 90 100


The tables 6.6 and 6.7 show the response distribution and descriptive statistics of Ludhiana investors. The

mean preference given to the past performance is 1.57, followed by future prospects with mean 2.01,

indicating that investors consider the past and future performance of the company while making the

investment decisions. The broker’s advice has got the third priority with mean 3.30 followed by CSR with

mean 3.84. Least priority is shown towards friend’s advice at the fifth place. Now, this shows that CSR

information does not have very influential role in investment decisions. Just three investors (3.3% of the

sample) have given first priority to CSR performance of the companies. Nine investors (10% of the

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sample) have given second preference whereas 25.6%, 22.2%, 38.9% of the investors have preferred to

assign third, fourth and fifth rank to CSR information in making investment decisions. Ludhiana investors

have also shown most influential factor as past performance followed by advice of brokers and

consultants. This seems to present a different view point from an earlier study conducted by Chander

(1994) shows that the investors do need social responsibility index for the purpose of their investment

decisions. Teoh and Shiu (1990) in his study addressed the questions of perceived importance of social

responsibility information characteristics in a decision context, as well as the attitudes of institutional

investors toward social responsibility involvement. The authors had reported that SRI presently disclosed

in company annual reports did not have any significant impact on institutional investors' decisions. So,

one can infer that the CSR information does not impact the investment decision of the investors in a

significant manner. Milne and Chan (1999) reported the usefulness of typical social disclosures from

corporate annual reports for investment decision-making and authors indicated that from a sample of

sophisticated users (accountants and investment analysts) social disclosures from annual reports do not

elicit any more than a 15% switch in investment funds. Furthermore, the switch in funds is not always in

favour of the company providing the information. So, overall moderate attitudes to the decision

usefulness of narrative SRI for investment decision making can be inferred.

6.6.2 Awareness of CSR activities: Responses to Question no. 2 have been analysed to find out which

CSR activities of the companies get noticed. The respondents were asked to name two major CSR

(Corporate Social Responsibility) activities undertaken by Indian companies. This section of study shall

help the companies to identify and focus more on those activities that get noticed more by different

stakeholders.

Table 6.8

Awareness of CSR activities- Chandigarh Investor’s Response Distribution Summary

Response Education Healthcare Environment EHS

Rural Development Any other

F % F % F % F % F % F %

Yes 44 46.3 32 33.7 38 40.0 40 42.1 33 34.7 44 46.3

No 51 53.7 63 66.3 57 60.0 55 57.9 62 65.3 51 53.7

Total 95 100 95 100 95 100 95 100 95 100 95 100


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Initiatives taken by the companies in education have received maximum attention from the investors as

46.3% of the respondents in Chandigarh region are found to be aware of these efforts. This was followed

by employee’s health and safety with 42.1% of the investors saying affirmatively that they are aware of

the efforts done in this direction. The environment efforts were noticed with the third ranking. Rural

development and health care have been noticed by almost same percentages i.e. 34.7 and 33.7

respectively.

Table 6.9

Awareness of CSR activities- Delhi Investor’s Response Distribution Summary

Response Education Healthcare Environment EHS

Rural Development Any other

F % F % F % F % F % F %

Yes 61 67.0 23 25.3 31 34.1 28 30.8 32 35.2 34 37.4

No 30 33.0 68 74.7 60 65.9 63 69.2 59 64.8 57 62.6

Total 91 100 91 100 91 100 91 100 91 100 91 100


In Delhi region, again education received maximum attention from the shareholders. 67% of the

respondents answered in affirmative with regard to education. Here, second rank and third rank was

attained by Rural Development and Environment with 35.2 and 34.1 percent of the investors showing

awareness for these initiatives. The items which get least noticed by the investors are: Healthcare (25.3%)

and Employee Health and Safety (30.8%). Thirty seven percentages of the investors mentioned some

other initiatives taken by companies in CSR.

Table 6.10

Awareness of CSR activities- Ludhiana Investor’s Response Distribution Summary

Education Healthcare Environment EHS Rural Development Any other Response

F % F % F % F % F % F %

Yes 58 64.4 27 30 51 56.7 31 34.4 22 24.4 25 27.8

No 32 35.6 63 70 39 43.3 59 65.6 68 75.6 65 72.2

Total 90 100 90 100 90 100 90 100 90 100 90 100


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The investors in Ludhiana as well have shown the maximum awareness with regard to education

initiatives taken by the companies. But unlike investors in other regions, second preference was given to

environment with 56.7% of the investors showing awareness for it. The activity least noticed are Rural

Development (24.4%) and Health Care (30%). The other initiatives were noticed by just 27.8% of the

investors.

6.6.3 Source of CSR information: The investors in all the geographic areas selected in the sample were

asked to mention their source of CSR information. Four options had been provided to them to select from.

The responses that have been received are as under:

Table 6.11

Source of Information on CSR - Chandigarh Investor’s Response Distribution

Response Annual Reports Company Website Standalone Reports Media

F % F % F % F %

Yes 44 46.3 30 31.6 13 13.7 37 38.9

No 51 53.7 65 68.4 82 86.3 58 61.1

Total 95 100 95 100 95 100 95 100


Table 6.12

Source of Information on CSR - Delhi Investor’s Response Distribution


F % F % F % F %

Yes 34 37.4 36 39.6 18 19.8 38 41.8

No 57 62.6 55 60.4 73 80.2 53 58.2

Total 91 100 91 100 91 100 91 100


Table 6.13

Source of Information on CSR - Ludhiana Investor’s Response Distribution


F % F % F % F %

Yes 39 43.3 32 35.6 21 23.3 32 35.6

No 51 56.7 58 64.4 69 76.7 58 64.4

Total 90 100 90 100 90 100 90 100


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With regard to actual source of information dissemination of CSR information, the respondents used

annual reports (46.3%) for Chandigarh region, (37.4%) for Delhi region and (43.3%) for Ludhiana region

as a source of information. The Media as a source of information has been used by 38.9% of the investors

in Chandigarh region, 41.8% in Delhi region and 35.6% in Ludhiana region. The company’s websites

have been used as a source of information dissemination by maximum 39.6% of investors in Delhi region

followed by 35.6% in Ludhiana and then followed by 31.6% in Chandigarh. The standalone reports are

clearly least used by investors in all regions (13.7% in Chandigarh, 19.8% in Delhi and 23.3% in

Ludhiana). So overall, it can be concluded that the annual reports are preferred as the main source of

information with regard to CSR activities. This may be due to fact that annuals reports are perceived to be

reliable and most accessible source of corporate information. These days the impact of media is also

increasing. That explains the increasing trend towards the companies going for massive media advertising

of their CSR activities. Investors do not bother to read standalone reports on CSR. This has the

implication that instead of separate reports, CSRD should be made in the annual report itself. Online

reports may find an only a limited usage as these can be used only by the stakeholders having internet

access and a threshold of internet expertise. Rowbottom and Lymer (2010) explored users of narrative

reporting information contained within online corporate annual reports and assess the relative use of

different types of narrative information. The most frequent users of the online annual report were found to

be private individuals, those registered under internet service providers, employees and professional

investors/creditors respectively. The widespread availability and accessibility of online annual report

allows narratives to provide a source of general company information for employees and a wider

stakeholder audience.

6.6.4 Who is the most important stakeholder: Next question posed to investors was to rank different

parties (stakeholders) whose interest should be given preference. A extensive literature that exist on

stakeholder theory given by Freeman, (1984) posit the view that firms can no longer be seen purely as

private institutions but as social institutions instead (Frederick et al., 1992; Freeman, 1984). The benefits

which emerge from firms need to be shared collectively. So, firm is accountable not only to its

shareholders (owners) but to all stakeholders (consumers, employees, and creditors) who contribute to

firm’s success.

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Table 6.14

Priority of Different Stakeholders – Chandigarh Investors Response distribution

Score

Employees/Workers

Shareholders/

Investor Customers Community at

large

F % F % F % F %

1 22 23.2 31 32.6 21 22.1 21 22.1

2 28 29.5 25 26.3 27 28.4 15 15.8

3 23 24.2 25 26.3 32 33.7 14 14.7

4 22 23.2 14 14.7 15 15.8 45 47.4

Total 95 100 95 100 95 100 95 100


Table 6.15

Priority of Different Stakeholders Interests – Delhi Investors Response distribution

Score Employees/Workers Shareholders/ Investor Customers Community at large

F % F % F % F %

1 17 18.7 26 28.6 17 18.7 34 37.4

2 29 31.9 16 17.6 33 36.3 12 13.2

3 36 39.6 24 26.4 26 28.6 4 4.4

4 9 9.9 25 27.5 15 16.5 41 45.1

Total 91 100 91 100 91 100 91 100


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Table 6.16

Priority of Different Stakeholders Interests – Ludhiana Investors Response distribution


F % F % F % F %

1 11 12.2 22 24.4 17 18.9 40 44.4

2 33 36.7 20 22.2 28 31.1 9 10.0

3 28 31.1 29 32.2 20 22.2 13 14.4

4 18 20.0 19 21.1 25 27.8 28 31.1

Total 90 100 90 100 90 100 90 100


Table 6.17

Region wise distribution of Ranking of Priority of Different stakeholders Interest

Chandigarh Delhi Ludhiana Stakeholder Group

Sum Mean Rank Sum Mean Rank Sum Mean Rank

Employees/ Workers 235 2.47 3 219 2.4066 1 233 2.59 3.5

Shareholders 212 2.23 1 230 2.5275 3 225 2.50 2

Customers 231 2.43 2 221 2.4286 2 233 2.59 3.5

Company at large 273 2.87 4 234 2.5714 4 209 2.32 1


Investors in Chandigarh region have shown clear preference for normative priority to be given to

“Investors” while a company plans its CSR activities. 32.6 % of the investors in Chandigarh have given

first rank to the consideration of shareholders/investors interests. Whereas first priority being given to

employees, customers and community at large is almost the same. The Chandigarh investors have shown

overall first preference for investors/shareholders interests with total score being 212 followed by

customers with 231 score and then by employees and workers with 235 and last by community at large

with score of 273. This approach seems to show the investors in a bit practical/materialistic approach.

Thirty seven percent of investors in Delhi region have shown their preference for ‘Community at Large’

to be given priority in CSR planning by the corporate. After Community at Large, 28.6% of investors

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have given first priority to ‘Shareholders’ jointly followed by ‘Employees’ and ‘Customers’ i.e. 18.7%.

Overall, the investors in Delhi region have given preference to Employees/Worker’s interest with sum of

ranks equal to 219 marginally followed by Customers with Sum 221. The shareholders and community at

large have been given least ranking of 230 and 234 respectively.

In Ludhiana region, a clear cut first priority is suggested to be given to interest of community at large, as

44.4% of investors give it the first rank. So overall, investors in Ludhiana have opined that ‘Community

at Large’ should be given the benefits of CSR activities of the companies with mean rank of 2.32

followed by interest of the shareholders with mean rank of 2.50 followed by mean rank of 2.59 in respect

of customers and employees.

6.6.5 Impact of various themes of CSR – Chandigarh Investors Response distribution: Next, the

investors have been provided with options so as to rank various initiatives of CSR with respect to their

impact. The maximum impact was required to be assigned Rank 1, 2 for next lesser impact and so on, and

rank 6 indicated minimum impact. The response distribution and the descriptive statistics are as under:

Table 6.18

Impact of various themes of CSR – Chandigarh Investors Response distribution

Rank Community

Development

Labour/ Employees

welfare Environment

Energy conservation

Emissions PSI etc.

F % F % F % F % F % F %

1 46 48.4 11 11.6 15 15.8 5 5.3 11 11.6 8 8.4

2 15 15.8 19 20.0 29 30.5 16 16.8 8 8.4 9 9.5

3 7 7.4 31 32.6 19 20.0 21 22.1 9 9.5 8 8.4

4 6 6.3 14 14.7 18 18.9 25 26.3 19 20 13 13.7

5 12 12.6 10 10.5 11 11.6 18 18.9 27 28.4 16 16.8

6 9 9.5 10 10.5 3 3.2 10 10.5 21 22.1 41 43.2

Total 95 100 95 100 95 100 95 100 95 100 95 100

(Source: Author’s computations) Maximum impact ranked as 1 and so on, 6 for minimum impact

Community development has been presumed to have maximum impact as first preference by 48.4%,

second priority to labour welfare by 15.8%, third to environment by 7.4% of the participants. 6.3%,

12.6%, 9.5% of the participants have given fourth, fifth and sixth preference to community development.

After Community Development, no other CSR theme is perceived to be as importance as Community

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Development because Labour welfare, Environment, energy conservation, Carbon and other harmful

gases emissions and PSI have been perceived to have maximum impact by only 11.6%, 15.8%, 5.3%,

11.6% and finally 8.4% respectively. These figures are quite low as compared to Community

development. These figures indicate that the respondents in Chandigarh feel that community

development theme has maximum influence in comparison to other themes.

Table 6.19

Impact of various CSR themes- Chandigarh Investors Response distribution

Statistics CD HR Environment Energy Emissions PSI

Mean 2.4737 3.2421 2.8947 3.6842 4.1158 4.5053

Std. Deviation 1.80921 1.46386 1.37201 1.37812 1.62993 1.70027

Skewness 0.847 0.379 0.395 -0.058 -0.657 -0.832

S. E. skewness 0.247 0.247 0.247 0.247 0.247 0.247

Kurtosis -0.842 -0.624 -0.750 -0.788 -0.701 -0.643

S. E. Kurtosis 0.490 0.490 0.490 0.490 0.490 0.490

Sum 235 308 275 350 391 428


Considering all the ranks/scores given to all the themes, the mean has been calculated. The community

development has the mean 2.47, succeeded by environment with mean 2.89 then by labour and employee

welfare, carbon emissions, PSI with means 3.24, 3.68, 4.12 and finally 4.51 consecutively. This is

because of noticeable increased number of respondents are having the feeling that Community

development initiatives shall be providing maximum benefits and have maximum effect. Skewness and

kurtosis are well within the limits of +2 to -2. The standard deviation is maximum in community

development at 1.81 and lowest in environment at 1.37.

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Table 6.20

Impact of various themes of CSR – Delhi Investors Response distribution

Score CD HR Environment Energy Emissions PSI

F % F % F % F % F % F %

1 38 41.8 23 25.3 12 13.2 2 2.2 8 8.8 6 6.6

2 19 20.9 12 13.2 20 22.0 19 20.9 7 7.7 12 13.2

3 5 5.5 20 22.0 20 22.0 26 28.6 12 13.2 7 7.7

4 5 5.5 14 15.4 25 27.5 17 18.7 14 15.4 14 15.4

5 10 11.0 13 14.3 7 7.7 16 17.6 24 26.4 19 20.9

6 14 15.4 9 9.9 7 7.7 11 12.1 26 28.6 33 36.3

Total 91 100 91 100 91 100 91 100 91 100 91 100


Community development has been given the first preference by 41.8%, second priority by 20.9% of the

participants, third by 5.5% of the participants. 5.5%, 11.0 %, 15.4% of the participants have given 4th,

fifth and sixth preference to community development. After community development, no other CSR

theme is perceived to be as importance as Community Development because Labour welfare,

Environment, Energy conservation, Carbon and other harmful gases emissions and PSI have been

perceived to have maximum impact by only 25.3%, 13.2%, 2.02%, 8.8 % and finally 6.6% respectively.

These figures are quite low as compared to Community development. So, respondents in Delhi feel that

community development theme has maximum influence in comparison to other themes.

Table 6.21

Impact of various themes of CSR – Ludhiana Investors Response distribution


F % F % F % F % F % F %

1 41 45.6 14 15.6 20 22.2 8 8.9 2 2.2 5 5.6

2 26 28.9 22 24.4 21 23.3 7 7.8 10 11.1 4 4.4

3 6 6.7 28 31.1 16 17.8 21 23.3 9 10.0 10 11.1

4 5 5.6 17 18.9 23 25.6 22 24.4 20 22.2 2 2.2

5 7 7.8 6 6.7 4 4.4 22 24.4 36 40.0 16 17.8

6 5 5.6 3 3.3 6 6.7 10 11.1 13 14.4 53 58.9

Total 90 100 90 100 90 100 90 100 90 100 90 100


232

Community development has been given the first preference by 45.6%, second priority by 28.9% , third

preference by 6.7% of the participants. 5.6%, 7.8 %, 5.6% of the participants have given fourth, fifth and

sixth preference to community development. After community development, no other CSR theme is

perceived to be as importance as Community Development because HR, Environment, Energy

conservation, Carbon and other harmful gases emissions and PSI have been perceived to have maximum

impact by only 15.6%, 22.2%, 8.9%, 2.2 % and finally 5.6% of the respondents respectively. These

figures are quite low as compared to Community development. From this it can be inferred that

respondents in Ludhiana also feel that community development theme has maximum influence relative to

other themes.

6.6.6 Who should perform CSR and how: To understand the investor perceptions with regard to

objectives of pursuing socially responsible activities, the investors were asked why companies conduct

social responsibility to these days. The respondents have been to choose among the following alternatives

given to them: Strongly Agree (4), Agree (3), Disagree (2), and Strongly Disagree (1). The summarized

responses to statements are presented below. The table 6.22 offers these responses in all the three

geographical samples i.e. Chandigarh, Delhi and then Ludhiana in succession.

Table 6.22

Companies Not Earning Profits and CSR

Chandigarh

Mean Response 3.2947 1- Strongly Disagree 2 2.10%

Median response 3 2- Disagree 11 11.57%

Standard Deviation 0.75616 3- Agree 39 41.05%

Sum 313 4- Strongly Agree 43 45.26%

Valid Responses 95

Delhi





Valid Responses 91

Ludhiana



233



Valid Responses 90 90 100%


Balabanis, G., & Phillips, H. C. (1998) hypothesized that CSR is the fulfilment of a firm’s “internal and

external self-actualisation needs” which are located on the top of their organisational needs pyramid.

Firms adopt CSR after they have satisfied three earlier layers of needs i.e. “physiological” or survival

through corporate profits; “safety needs” such as dividend policy, conglomeration and competitive

position; and ‘affiliative needs’ such as participation in trade association, lobby groups, etc. but the

investors have perceived that even if the firms are not making profits, they should perform CSR activities.

The investors in Chandigarh region have stated that a company should perform CSR activities even if it is

not profitable with mean score of 3.29 and standard deviation 0.76. The median response equal to 3

indicates that investors in Chandigarh agree that every company should perform CSR irrespective of its

profitability. Just 2 investors (2.10% of the sample) strongly disagree, 39 investors (41.05% of the

sample) agree, 43 investors i.e. 45.26% of the sample have shown their strong agreement with the

statement that CSR is every company’s responsibility-making profit or not making any profit.

The investors in Delhi region also preferred that a company should perform CSR activities even if it is not

profitable with mean score of 2.96 and standard deviation 0.98. The median response equal to 3 indicates

that investors in Delhi agree that every company should perform CSR irrespective of its profitability. Just

9 investors (9.9% of the sample) strongly disagree, 18 investors (19.8% of the sample) agree, 32 investors

i.e. 35.2% of the sample have shown their strong agreement with the statement that CSR is every

company’s responsibility-making profit or not making any profit.

The investors in Ludhiana region have expressed their opinion that a company should perform CSR

activities even if it is not profitable with mean score of 3 and standard deviation 0.7. The median response

equal to 3 indicates that investors in Ludhiana agree that every company should perform CSR irrespective

of its profitability. In Ludhiana, highest level of agreement can be seen with the statement that

performing CSR activities is necessary for all companies. Banerjee H (2005) strongly argued that return

expected from a company should not be in the shape of bottom line performances only, but something

more than that. The shareholders are an inseparable part of society. Return to the shareholder should also

ensure a sense of peace, prosperity and security of the society of which he is a shareholder in true sense.

234

The summarized responses to statement “large companies should invest more in CSR activities than small

companies” are presented below in table 6.23. The table offers these responses in all the three

geographical samples i.e. Chandigarh, Delhi and then Ludhiana.

Table 6.23

Large companies and CSR

Chandigarh

Mean Response 2.8211 1- Strongly Disagree 19 20%





Delhi

Mean Response 3.4945 1- Strongly Disagree





Ludhiana







As large companies have larger resources available with them and also the impact of their activities on

‘community at large’, society, environment and natural resources is also large in comparison to small

companies, it was expected that large companies should invest more in CSR activities than smaller

companies. This view has been explicitly agreed by the respondents except in Chandigarh, where the

mean response is 2.82. The mean response in Delhi and Ludhiana is higher at 3.49 and 3.14 respectively.

The median response in case of Chandigarh and Ludhiana is 3 showing agreement with the statement

whereas the median response in Delhi is 4 showing overall strong agreement with the view. 33.68% of the

investors in Chandigarh and 57.1% in Delhi and 44.4% in Ludhiana strongly agree with the view

presented, whereas, 34.74% of respondents in Chandigarh, 35.2% in Delhi and 27.8% in Ludhiana have

235

expressed their agreement with this statement. Moreover, a large body of respondents i.e. 57.1% in Delhi,

44.4% in Ludhiana has strongly agreed that larger companies should bear more burden of social

responsibility than the smaller companies. Goltagunta, (2008) stated in their study that Tata group,

Reliance, Ranbaxy and Infosys, followed by Maruti Udyog, ICICI, ST Microelectronics, ITC, Phillips,

Escorts, HCL, and Hero group are top most companies in social responsibility. It shows that CSR has

been adopted by giant firms only. Previous research (Cowen et al, 1987; Patten, 1991; Roberts, 1992;

Hackston and Milne 1996; Adam et al., 1998) has also found that large and high profile industry

companies disclose significantly more social and environmental information than low profile industry

companies. The relationship between industry and corporate social disclosure may occur due to

consumer perceptions, government pressure (Cowen et al., 1987) or the industries' environmental or

social impact (Pang, 1982; Cowen et al., 1987).

“Multinational corporations should perform more corporate social responsibility activities than domestic

companies.” The summarized responses to statement are presented below. The table offers these

responses in all the three geographical samples i.e. Chandigarh, Delhi and then Ludhiana in succession.

Table 6.24

Multinational Companies and CSR

Chandigarh





Valid Responses 95 Total 95 100%

Delhi





Valid Responses 91 91 100 %

Ludhiana






236


Multinational companies are expected to make more CSR activities than domestic companies, this view

point has been agreed by Chandigarh, Delhi, Ludhiana investors with a mean response of 3.20, 3.01 and

3.14 respectively. The median response for all sets of sample is 3 indicating agreement with the said

statement. 43.16% investors in Chandigarh, 35.2% in Delhi and 44.4% investors in Ludhiana strongly

agreed with the statement. 3.16% of the respondents in Chandigarh, 3.3% in Delhi and just 2.2% in

Ludhiana have strongly disagreed with the statement. This agreement has been shown by 16.84%

respondents in Chandigarh, 27.5% in Delhi and 25.6% in Ludhiana. The level of agreement/strong

agreement is much higher with 80% of respondents in Chandigarh 69.3% in Delhi and 72.2% of

respondents in Ludhiana showing agreement/strong agreement with the statement. Chapple and Moon

(2005) in their study of seven Asian countries including India, expressed their opinion that MNCs are

likely to adopt CSR more than domestic companies and their CSR tends to reflect the profile of countries

of operation rather than country of origin.

Table 6.25

Collaboration with NGO

Chandigarh






Delhi




Sum 267 4- Strongly Agree 32 35.2


Ludhiana




237




“For CSR, companies must collaborate with NGO's.” The summarized responses to statement are

presented below. The table offers these responses in all the three geographical samples i.e. Chandigarh,

Delhi and then Ludhiana in succession.

A large body of existing literary work has considered social and environmental NGOs as stakeholders

(Gray et al. 1996; Elkington 1997; Greenwood 2001). This group of stakeholders can influence

corporations to increase CSRD as a response to stakeholder group needs (Deegan 2000; Delfgaauw 2000;

Hooghiemstra 2000; Gelb and Strawser 2001). In this context it is relevant to understand what do the

investors believe with regard to companies collaborating with NGO’s for performing their CSR activities

and this shall have automatic implications for the disclosure of CSR as well. In India, the role of NGO’s

in helping the companies in CSR by collaborating with them has been little more than agreed by the

investors. The mean response to need for collaboration has been found at 3.03, 2.93 and 3.16 by investors

in Chandigarh, Delhi and Ludhiana. Median response is 3 in all the regions suggesting agreement with the

view presented. 61.05% investors in Chandigarh, 34.1% in Delhi and 46.7% in Ludhiana agree with the

view. This may also help in reducing cynicism pertaining to CSR reporting in eyes of NGO. Many pieces

of existing research work (Hackston and Milne 1996; O'Dwyer et al. 2004; Tilt 2004) suggest that social

and environmental NGOs are sceptical of CSD content.

“For CSR, companies should collaborate with government.” The summarized responses to statement are


Delhi and then Ludhiana in sequence.

Table 6.26

Collaboration with Government

Chandigarh



Standard Deviation 0.85355 3- Agree 38 40%



Delhi


238



Sum 268 4- Strongly Agree 23 25.3%%


Ludhiana

Mean Response 3.04 1-Strongly Disagree 4 4.4%






In addition to NGO’s, the opinion was sought with regard to role of government in promoting CSR

activities. The mean response received is 2.93 in Chandigarh, 2.94 in Delhi and 3.04 in Ludhiana region.

So overall, little less than agreement can be interpreted. 40% of investors in Chandigarh, 47.3% in Delhi

and 57.8% in Ludhiana region have shown agreement whereas 28.42%, 25.3% and 25.6% investors have

shown strong agreement towards need for collaboration by the organizations with government for

performing their CSR activities. 31.5%, 27.5%, 16.6% of the investors in Chandigarh, Delhi and

Ludhiana respectively have expressed their disagreement/strong disagreement with the need for

collaboration with the government. The median response is 3 in all the cases which suggest that overall

the investors have chosen that the government has to play a role for the implementation of CSR and may

be to facilitate such initiatives as well.

“Business is for earning profits not for charity/CSR.” The summarized responses to statement are



Table 6.27

Business and Charity

Chandigarh




239



Delhi






Ludhiana


Median response 2.00 2- Disagree 25 27.8%





The primary motive of any business organization is its survival and growth for which earning profit is

foremost necessity. Every business should focus on earning profits and charity/CSR fall beyond the ambit

of business organization. This view has been disagreed by all sets of respondents. The mean response to

this statement is 2.28 in Chandigarh, 2.57 in Delhi and 2.32 in Ludhiana. Even the mean response is 2 in

case of Chandigarh and Ludhiana (3 in case of Delhi) indicating disagreement with the outlook. 63.15%

of the respondents in Chandigarh, 48.4% in Delhi and 53.4% in Ludhiana have either strong disagreement

or disagreement with the opinion. Nijhof and Jeurissen (2010) aimed to offer a clarification that CSR has

come a long way by the prevailing business case approach, but increasingly hit a glass ceiling. The glass

ceiling metaphor refers to the inherent limitations created by a business case approach towards CSR. It

has evolved into a marketable asset of companies, in which profit-oriented managers and entrepreneurs

are willing to invest.

6.6.7 Motives behind CSR: “A socially responsible Company enjoys better profits in the short run

through increased confidence of customers.” The table offers these responses in all the three geographical

samples i.e. Chandigarh, Delhi and then Ludhiana in progression.

240

Table 6.28

CSR and Better Profits in Short Profits

Chandigarh






Delhi

Mean Response 3 1- Strongly Disagree 4 4.4%





Ludhiana

Mean Response 3.01 1- Strongly Disagree 0 0 %






The motives for CSR activities which could come out to be higher profitability in short term, higher stock

price, enhanced level of profits in long run, competence to bear hard times and enhanced goodwill and

reputation have been presented to the stakeholders i.e. investors. The respondents have expressed their

opinion that a socially responsible company enjoys better profitability through higher level of confidence

of customers in such companies. The mean response is 3.06 in Chandigarh, 3 in Delhi and 3.01 in

Ludhiana. The median response is 3 in all the cases expressing agreement with statement. A little strong

disagreement with 4.21% of respondents in Chandigarh, 4.4% in Delhi and zero percent in Ludhiana can

be seen. 47.36% of the respondents in Chandigarh, 50.5% in Delhi and 43.3% in Ludhiana have agreed

and 31.57% of respondents in Chandigarh, 27.5% in Delhi and 28.9% of respondents in Ludhiana have

strongly agreed with the statement.

241

“A CSR company enjoys higher level of confidence of investors in form of higher stock prices.” The

summarized responses to statement are presented below. The table offers these responses in all the three

geographical samples i.e. Chandigarh, Delhi and then Ludhiana.

Table 6.29

CSR and Higher Stock Prices

Chandigarh



Standard Deviation 0.85145 3- Agree 38 40%

Sum 276 4- Strongly Agree 26 27.36%%

Delhi





Ludhiana







Earlier research work on whether the CSR disclosures impact market prices positively or negatively, has

been inconclusive as Chugh (1978), Trotman and Bradley (1981), Mahapatra (1984) concluded that CSR

activities may lead to increased systematic risk showing cost associated with CSR disclosures. On the

other hand, the more recent research exertion by Hussainey and Salama (2010) explored how corporate

environmental reputation (CER) affects the association between current annual stock returns and current

and future annual earnings found that firms with higher levels of CER scores exhibit higher levels of

share price anticipation of earnings than firms with lower levels of CER scores. More specifically, the

researchers examined the potential usefulness of CER to investors in predicting future earnings. CER

contains value-relevant information. Such information is potentially useful to investors in anticipating

future earnings. In the present study, the investors have exhibited that a CSR company enjoys higher level

of confidence of investors in form of higher stock in form of higher stock with mean rank of 2.91 in

242

Chandigarh, 2.96 in Delhi and 2.93 in Ludhiana. Just 4.21% of the investors in Chandigarh strongly

disagreed with the view. No respondent in Delhi and Ludhiana preferred strong disagreement with the

statement. 40%, 52.7% and 53.3% of the respondents in Chandigarh, Delhi and Ludhiana agreed and

27.36%, 22% and 20% have strongly agreed with the statement. In European countries some research

asserted that CSR initiatives have positive impact upon the market prices. Gallego-Álvarez, Isabel et al

(2010) analysed whether CSR practices performed by European companies (both those CSR practices

related to marketing-based strategies and those that are not) create value. That value creation will be

gauged through two variables: reputation and shareholder value creation. It was found by authors that

CSR practices, especially those linked to enhancing a company's image, has a positive effect on

shareholder value creation, given that investors are able to detect the level of corporate commitment to

sustainable development.

Table 6.30

CSR and Long Term profits

“Good social performance shall lead to more profits in the long run.” The summarized responses to

statement are presented below. The table offers these responses in all the three geographical samples i.e.

Chandigarh, Delhi and then Ludhiana in array.

Chandigarh

Mean Response 3.0421 1- Strongly Disagree 3 3.157

Median response 3.0000 2- Disagree 19 20

Standard Deviation 0.79781 3- Agree 44 46.31

Sum 289.00 4- Strongly Agree 29 30.52

Valid Responses 95 95 100

Delhi

Mean Response 3.2667 1- Strongly Disagree 1 1.1

Median response 3.0000 2- Disagree 13 14.3


Sum 294.00 4- Strongly Agree 40 44.0

Valid Responses 91 100

Ludhiana

Mean Response 3.31 1- Strongly Disagree 0 00

Median response 3.00 2- Disagree 11 12.2


243

Sum 298 4- Strongly Agree 39 43.3

Valid Responses 90 100.0


The impact of CSR may not be visible in short run but good social performance shall lead to enhanced

level of profitability in the long run. The mean response to this view is 3.04 in Chandigarh, 3.26 in Delhi

and 3.31 in Ludhiana. The median response showing agreement with the statement is 3 in all the sub sets

of the respondents. This statement has seen little strong disagreement with 3.15% of respondents in

Chandigarh, 1.1% in Delhi and zero percent in Ludhiana. 30.52% of the respondents in Chandigarh, 44%

in Delhi and 43.3% in Ludhiana have strongly agreed and 46.31% of respondents in Chandigarh, 40.7%

in Delhi and 44.4% of respondents in Ludhiana have agreed with the statement. Carol et al (2008)

concluded that the CSR initiatives can lead to first mover advantage when it is central to the firm’s

mission, related to the firm specific benefits.

Table 6.31

CSR and Survival in Hard Times

“A CSR company can survive hard times more easily.” The summarized responses to statement are


Delhi and then Ludhiana consecutively.

Chandigarh






Delhi





Valid Responses 91 100%

Ludhiana


244






The CSR performance acts as a cushion to fall back upon, when companies see hard times in terms of

some social conflict or some kind of untoward event. The social performance can contain the damage to

the reputation and profitability in the bad times. The mean response to this statement is 2.74 in

Chandigarh, 2.70 in Delhi and 2.86 in Ludhiana indicating little less than overall agreement with the

view. The median response shows agreement. Overall, the statement has seen strong disagreement by

7.37% of respondents in Chandigarh, 6.6% in Delhi and 1.1% in Ludhiana. 44.21% respondents in

Chandigarh, 45.1% in Delhi and 57.8% in Ludhiana have expressed their agreement with the statement

whereas 18.95%, 16.5% and 14.4% of respondents have shown strong agreement with the view in

Chandigarh, Delhi and Ludhiana respectively. This view is supported by many earlier researchers who

propose that the provision of voluntary corporate social disclosure is often an outcome of legitimating

strategies by companies (Deegan and Rankin 1996; Kent et al 1997; Brown and Deegan 1999; Deegan et

al 2000; Deegan et al 2002; O'Donovan 2002). Adeolu et al (2010) has also suggested that a grassroots

approach be taken in studying the CSR profile of companies, especially in a developing economy, like

Nigeria; in order to serve as early warning signs of conflicts. Same kind of idea is also applicable in India,

as CSR can be used as a conflict identification and management strategy. Carol and Zutshi (2004) also

expressed the views that moral justification towards all the stakeholders (not simply to the shareholders)

and increasing realization that it is in business interest to report on social and environmental and ethical

issues compel the companies to act in socially responsible way. CSRD shall minimize the risks of

financial liabilities for non compliance with the legislature.

Table 6.32

CSR and Enhanced Goodwill & Reputation

“A CSR company has more reputation and goodwill.” The summarized responses to statement are


Delhi and Ludhiana successively.

Chandigarh



245




Delhi






Ludhiana







A socially responsible company enjoys more reputation and goodwill than a company indifferent to its

responsibilities towards society. This statement depicts the PR role of CSR. There seems to be wide

acceptability of the statement with the respondents as the mean response is found to be 3.34 in

Chandigarh, 3.35 in Delhi and 3.43 in Ludhiana. Even the median response is 4 indicating strong

agreement in Chandigarh and Ludhiana whereas median response is 3 in Delhi. A large chunk of

respondents i.e. 51.58% in Chandigarh, 47.3% in Delhi and 51.1% in Ludhiana have opted for strong

agreement with the statement. 34.74% of respondents in Chandigarh, 44% in Delhi and 43.3% in

Ludhiana have expressed agreement with the statement. So the clear cut verdict can be seen in favour of

PR and image building role of CSR. This view has been accepted by earlier research as well (Guthrie and

Parker, 1990; Zeghal and Ahmed, 1990). Saleh et al (2010) explored CSRD and its relation to

institutional ownership of Malaysian public listed companies and researchers suggested that companies

should be encouraged to be involved in CSR activities as one of their strategies to improve their

reputation and image. Increasing number of companies in UK, irrespective of their size is recognizing that

corporate social reporting is beneficial for them. UK companies are making reasonable efforts to disclose

their social and environmental efforts (Samuel and Brian, 2004). Carol and Zutshi (2004) also expressed

the views that moral justification towards all the stakeholders (not simply to the shareholders) can

improve the corporate image with press journalists, state authorities and consumers. In another study of

CSR reporting in seven Asian countries, Chambers et al. (2003) confirmed that with more CSRD, social

246

responsible companies are taken more seriously.” In the same way, Chomvilailuk and Butcher (2010)

established that all CSR initiatives in question had a modest but significant effect on brand preference in

banking industry of Thailand.

6.7 Disclosure of CSR activities

6.7.1 Need and Location: Whether a company should a company disclose its CSR activities or not, when

this query was put forward to the respondents, the answer was in clear-cut affirmative, demanding

disclosure of CSR information.

Table 6.33

Need for disclosure of CSR activities- Response Distribution

Response CHD DLH LDH Total

Yes 85 82 90 257 (93.15%)

No 10 9 0 19 (6.85%)

Total 95 91 90 276 (100%)


Figure 6.1

Need for disclosure of CSR activities

A large majority of the surveyed investors (93.15 percent) provided responses to a question which asked

for their opinions regarding need for disclosures in confirmatory tone showing strong need for CSD.

These responses relate to 85 respondents (total 95) in Chandigarh, 82 respondents (total 91) in Delhi. All

the 90 respondents in Ludhiana have responded ‘Yes’ to the need for disclosure of CSR activities. Just a

small percentage of respondents i.e. 10.5% in Chandigarh and 9.85% in Delhi have not advocated the

need for CSRD.

247

With an intention to understand the location of CSRD, the investors were asked to give their preferences

with regard to location within and outside the annual report of the company. The multiple responses were

also accepted. The options provided four locations namely a) In Chairman Speech of Annual Report b)

Management discussion and analysis in annual reports (MDA) c) In separate CSR reports d) In

advertisement campaigns.

Table 6.34

Investors Preferences Regarding the Location of CSR Disclosures

Chairman’s Speech of Annual Report

MDA Separate CSR

reports Advertisement

campaigns Place Response

No. % No. % No. % No. %

Yes 28 29.5 39 41.1 42 44.2 50 52.6 CHD

No 67 70.5 56 58.9 53 55.8 45 47.4

Yes 37 40.7 38 41.8 38 41.8 30 33.0 DLH

No 54 59.3 53 58.2 53 58.2 61 67.0

Yes 33 62.2 22 52.2 56 16.7 47 21.1 LDH

No 57 37.8 68 47.8 34 83.3 43 78.9


The disclosure of information at different places in annual reports and in other documents affects

readability and subsequent use of information in decision making. It is pertinent to ask and understand the

preferences of investors with regard to location of CSR information. The respondents in Chandigarh

region have preferred CSR disclosures in advertisement campaigns with 52.6% of respondents preferring

it, followed by separate CSR reports, MDA and last 29.5% of respondents preferring disclosures in

Chairman’s speech. In Delhi, MDA and separate reports have seen favour from 41.8% of the investors

marginally followed by Chairman’s speech (40.7% of investors). Advertisement campaigns have seen

least favour with only 33% of investors preferring it. In Ludhiana, the situation is altogether different

from other two regions. Here, high preference can be seen for Chairman’s speech as the location for CSR

disclosures with approximately 2/3 of respondents opting for it followed by MDA (52%). The other two

locations i.e. advertisement campaigns and separate CSR reports have been opted by 21.1% and 16.7% of

the respondents consecutively.

248

Figure 6.2

Location of CSR Disclosures

6.7.2 Best Form and Motives: The respondents were asked to define the normative quality of disclosures

in terms of what they consider as the best form of reporting CSR activities. The options provided included

Narrative/Descriptive, Quantitative, Monetary (expressed in rupees), Photographs, Charts, graphs and

tables and combination of earlier options. The respondents could tick multiple options, in case they

desired so. The responses are presented below:

249

Table 6.35

Response Distribution to Best Form of CSR Disclosures

Response Distribution to Best Form of CSR Disclosures Geographic

sample Response

No. % No. % No. % No. % No. %

YES 18 18.9 20 21.1 20 21.1 28 29.5 46 48.4 CHD

NO 77 81.1 75 78.9 75 78.9 67 70.5 49 51.6

YES 15 16.5 18 19.8 17 18.7 28 30.8 53 58.2 DLH

NO 76 83.5 73 80.2 74 81.3 63 69.2 38 41.8

YES 15 16.7 19 21.1 19 21.1 45 50.0 45 50.0 LDH

NO 75 83.3 71 78.9 71 78.9 45 50.0 45 50.0


Figure 6.3

Best Form of CSR Disclosures

The investors want the information to be disclosed in multiple forms i.e. narrative, quantitative monetary,

photographs. 18.9% of investors in Chandigarh, 16.5% in Delhi and 16.7% in Ludhiana have desired

information in narrative form explaining various CSR initiatives. The preference for higher quality of

information in quantitative terms can be seen across all geographical samples with 21.1% of respondents

in Chandigarh, 19.8% in Delhi and 21.1% in Ludhiana showing need for CSR disclosures in quantitative

form. This kind of preference is also visible in all the samples as 21.1% of respondents in Chandigarh,

18.7% in Delhi and 21.1% in Ludhiana have preferred mentioning CSR initiatives in monetary terms. A

noticeable difference can be seen for charts, graphs, tables and photographs as a quite high percentage of

250

respondents i.e. 29.5%, 30.8% and 50% of respondents have preferred disclosures in this format in

Chandigarh, Delhi and Ludhiana regions respectively. Overall, 48.4%, 58.2% and 50% of investors in

Chandigarh, Delhi and Ludhiana regions respectively want that the companies should be using all forms

of CSR disclosures.

Motives behind corporate social disclosures: It is important to comprehend the motives behinds

disclosures of CSR information as perceived by investors. The investors of the various companies have

been asked to make choices with perspectives of motives of CSR disclosures. The respondents were at

liberty to tick multiple options as well. The prior research leads to the following potential motives of CSR

disclosures. Enhanced goodwill with customers, increased short term profitability, Long term

sustainability, Better employee relationships, Compensation for unfair business practices. The views of

respondents are as mentioned below:

Table 6.36

Motives driving CSR disclosures

Enhanced goodwill

with customers

Increased short term

profitability

Long term sustainability

Better employee

relationships

Compensating their unfair

business practices

Total

58 11 44 42 14 169 CHD

61.1 11.6 46.3 44.2 14.7 100

48 10 46 38 28 170 DLH

52.7 11 50.5 41.8 30.8 100

52 19 53 28 21 173 LDH

57.8 21.1 58.9 31.1 23.3 100


As the multiple options were allowed to be ticked, 169 responses have been received in Chandigarh, 170

in Delhi and 173 in Ludhiana region in total. Of these 61.1% responses have been received for enhanced

goodwill customers distantly followed by long term sustainability 46.3% and narrowly followed by better

employee relations 44.2% in Chandigarh region. In Delhi region also, the reasons for disclosures for CSR

information follow the same sequence i.e. enhanced goodwill with customers 52.7% close follow up by

long term sustainability 50.5% and a distant follow up by better employee relation (41.8% of total

responses).

Figure 6.4

251

Motives driving CSR disclosures

In Ludhiana top reason for disclosures is perceived to be long term sustainability (58.9%) followed by

enhanced goodwill (57.8%) and next followed by better employee relations 31.1% of the total responses.

Another two prospective reasons for disclosure i.e. increased short term profitability and compensation

for unfair business practices have been least preferred as influential reasons. Different researchers have

presented different opinions regarding the need of corporate social disclosure. Some associate the need

for disclosure with globalization (Birch, 2003; Owen, 2003), some with alleviation of the negative

perceptions towards the business which is insensitive to the social issues (Jacoby, 1973), to position

themselves as responsible citizens, leaders, and contributing members of society (Manheim & Pratt,

1986), communication remains the “missing link” in the practice of corporate social responsibility (Rowe,

2006; Dawkins, 2004; Chaudhary and Wang, 2007), building corporate reputation and creating value

(Dawkins, 2004; Rowe, 2006), as a platform for constructive dialogue with relevant stakeholders to

foster mutual trust, collaborative action, and shared values (Choudhary & Wang, 2007), response to

necessary action to establish corporate governance of the listed companies by Securities and Exchange

Commission (SEC) the controlling body for the stock exchanges e.g. in Bangladesh (Sobhani et al 2009)

and pressures by a particular stakeholder groups as a consequent of expectations of the global

community, in turn determines the industry's social policies and related disclosure practices (Islam and

Deegan, 2008). Though there is almost unanimity among the researchers regarding the need for disclosing

corporate social responsibility information, but due to lack of standardized formats and regulatory

provisions, credibility of information, use of social reporting to compensate for mediocre performance

(Coope, 2004) remains a challenge. Increased goodwill had got the top position while considering the

252

perceptions of the managers in a report published by Center for Social Markets (CSM), 2001. The

survey provided the reasons for CSR and concluded that ‘Increasing awareness’ and ‘Reputation’ topped

the list, with ‘Community group pressure’ and ‘Public opinion’ as the least important. McKinsey Global

Survey, 2006 also reported that 90% of managers were active proponents of “Public good dimension”.

Whereas, in the study conducted by Chahoud et al (2007) it was suggested that 62% of the companies

presented “Business case” as motivator for corporate social responsibility. "CSR can be a value

proposition for companies,"

Table 6.37

Ranking of Motives behind CSR disclosures

Enhanced goodwill with

customers


profitability


Better employee relationships

Compensating their unfair business

practices Total

158 40 143 111 63 512

Rank 1 Rank 5 Rank 2 Rank 3 Rank 4


The overall ranking given at aggregate unanimously present the picture that the investors feel, that top

reason for disclosures is Enhanced goodwill (rank 1) followed by long term sustainability (Rank 2). The

third rank is attained by better employee relations. Pursuing and disclosing CSR as a compulsion for

compensation for unfair practice and increased short term profitability have got fourth and fifth ranks

respectively. In addition to these, the literature also presents a variety of reasons for CSRD. The most

prominent among them is to protect their own self-interests and deflect the attention and intervention of

regulatory bodies companies make corporate social disclosures to advocate and enhance the entity's

position and image, promote customer and community relations with the incentive of indirectly assisting

to promote products and customers (Guthrie and Parker, 1990: Zeghal and Ahmed, 1990). Jaggi and

Zhao (1996), for example, reported that Hong Kong managers appeared reluctant to disclose

environmental information for fear of increased costs and liabilities.

6.8 LEVEL OF SATISFACTION WITH QUALITY OF CSR DISCLOSURES

Keeping in mind the present level of CSR reporting, an investigation has been made with regard to the

level of satisfaction of the investors. The level of satisfaction has been measured on a five point scale

ranging from 5 to 1. Maximum marks 5 were to be assigned by the respondents when they perceive

253

themselves to be completely satisfied and on the other extreme, minimum marks/Score 1 was to be

assigned when they perceived themselves to be Completely Dissatisfied and 2, 3, 4 scores falling in

between them. The following table presents their response distribution with respect to measurement of

satisfaction:

Table 6.38

Satisfaction with CSRD

CHD DHL LDH

N 95 91 90

Mean 3.1895 3.0440 2.89

Std. Deviation 1.10410 0.99902 1.046

Sum 303.00 277.00 260

CHD DLH LDH Sample

Score F % F % F %

1 5 5.3 6 6.6 8 8.9

2 22 23.2 17 18.7 25 27.8

3 31 32.6 43 47.3 36 40.0

4 24 25.3 17 18.7 11 12.2

5 13 13.7 8 8.8 10 11.1

Total 95 100 91 100 90 100


The participants have shown their level of satisfaction with CSR reporting. The mean level of satisfaction

in Chandigarh is found to be highest at 3.19 as compared to 3.04 in Delhi and 2.89 in Ludhiana region.

The responses vary to maximum extent in Chandigarh with standard deviation equal to 1.10 followed by

variation in Ludhiana with standard deviation with 1.04. The least variations can be seen in responses of

participants in Delhi. To understand how the responses are distributed over five point Likert scale

measuring satisfaction, the frequency distribution and corresponding percentage has been computed. The

extreme dissatisfaction has been reported by 5.3% of participants in Chandigarh, 6.6% in Delhi and 8.9%

in Ludhiana. Extreme level of satisfaction is shown by only a small percentage of respondents i.e. 13.7%

in Chandigarh, 8.8% in Delhi and 11.1% in Ludhiana. Score 2 i.e. moderate dissatisfaction is assigned by

23.2% respondents in Chandigarh, 18.7% in Delhi and 27.8% in Ludhiana. Most of the investors i.e.

254

32.6% in Chandigarh, 47.3% in Delhi and 40% in Ludhiana have preferred a neutral view points on

satisfaction level i.e. score 3. Score 4 i.e. moderate level of satisfaction has been reported by 25.3%

participants in Chandigarh, 18.7% in Delhi and 12.2% in Ludhiana region. Though it seems strange but

overall 71.6% of participants in Chandigarh, 74.8% of participants in Delhi and 63.3% of participants

have shown satisfaction with current status of CSR disclosures. It seems that the investors have shown

low level of interest in CSR disclosures as an input variable for investment decision making context, at

this point of time, they feel satisfied. But as their orientation with CSR shall increase, their informational

requirements are expected to increase. The companies can make the investors seek better CSR disclosures

by enhancing the quality of disclosures. But the challenge here is, “Is it in their interest to do so?” and

“What could be the motivation for doing the same”. Only long term acumen may drive them to follow

CSR practices.

6.8.1 Level of satisfaction Vs. Level of investment: To test and conclude whether the level of

satisfaction differs significantly for three categories of investments i.e. category I (0 to 1 lac), category II

(1 to 10 lacs) and category III (more than 10 lacs) on annual basis, the ANOVA test and multiple range

tests have been conducted.

H 20: There is no difference between average levels of satisfaction of investors making investments in

various levels of amount invested.

Table 6.39

Level of satisfaction Vs. Level of investment

Average Annual

Amount Invested

N Average Standard deviation

Coeff. of variation

Stnd. skewness

Stnd. kurtosis

1-More than ten lacs 45 2.35 0.90 38.56% 1.49 0.68

2-one to ten lacs 131 2.76 1.22 44.16% 1.69 -1.67

3- less than one lakh 99 2.37 1.20 50.56% 2.63 -1.12

Total 275 2.55 1.18 46.18% 3.48 -1.84


255

Figure 6.5


1 2 3

Means and 95.0 Percent LSD Intervals

Average Annual Amount Invested

2.1

2.3

2.5

2.7

2.9

3.1

level of S

atisfa

ction

The Means Plot above displays the means graphically. It is found that the mean level of satisfaction is

found to be highest at 2.76 with the respondents in the second category, i.e. those investing in the range of

one to ten lakhs annually. For the other two categories i.e. small investors having investment range of

more than 10 lakhs and less than one lakhs have almost same level of satisfaction with average

satisfaction score approximately 2.35. It seems that those who are either investing small amounts or quite

large amounts are less bothered about the social performance, the company is showing. The standard

deviation in 2nd and 3rd category is almost same at 1.22 and 1.20 whereas in first category, standard

deviation is lesser at 0.90 showing more consistency in satisfaction of respondents in first category. As

the standard skewness in third category is more than the normal range of 2, in addition to ANOVA test,

Kruskal Wallis test and Mood’s test have been conducted to find out whether average satisfaction in one

category differs from other categories.

Table 6.40

ANOVA Table for Level of Satisfaction by Level of Investment

Source Sum of Squares Df Mean Square F-Ratio P-Value

Between groups 12.599 2 6.29948 5.68 0.0038

Within groups 302.879 273 1.10945

Total (Corr.) 315.478 275


256

The F-ratio, which in this case equals 5.67803, is a ratio of the between-group estimate to the within-

group estimate. Since the P-value of the F-test is less than 0.05, there is a statistically significant

difference between the mean level of satisfaction from one level of level of investment to another at the

95.0% and at 99% confidence level.

Table 6.41

Multiple Range Tests for level of Satisfaction by Average Annual Amount Invested

Level Count Mean Homogeneous Groups

1 45 2.35556 X

3 99 2.37374 X

2 131 2.76336 X

Contrast Sig. Difference +/- Limits

1 – 2 * -0.407803 0.397364

1 – 3 -0.0181818 0.413458

2 – 3 * 0.389621 0.306256

(Source: Author’s computations) * denotes a statistically significant difference.

This table applies a multiple comparison procedure to determine which means are significantly different

from which others. An asterisk has been placed next to 2 pairs, indicating that these pairs show

statistically significant differences at the 95.0% confidence level. At the top of the page, 2 homogenous

groups are identified using columns of X's. Within each column, the levels containing X's form a group

of means within which there are no statistically significant differences. The method currently being used

to discriminate among the means is Fisher's least significant difference (LSD) procedure.

Table 6.42

Kruskal-Wallis Test for Level of Satisfaction by Level of Investment

Level of Investment Sample Size Average Rank

1 45 107.167

2 132 147.417

3 99 140.854


257

With test statistic = 9.4648 and P-Value = 0.00880532, the Kruskal-Wallis test tests the null hypothesis

that the medians of Level of Satisfaction within each of the 3 levels of Level of Investment are the same.

The data from all the levels is first combined and ranked from smallest to largest. The average rank is

then computed for the data at each level. Since the P-value is less than 0.05, there is a statistically

significant difference amongst the medians at the 95.0% confidence level.

Table 6.43

Mood's Median Test for Level of Satisfaction by Level of Investment

Level of Investment Sample Size n<= n> Median 95.0% lower CL 95.0% upper CL

1 45 40 5 3.0 2.0 3.0

2 132 87 45 3.0 3.0 3.0

3 99 66 33 3.0 3.0 3.0


With total n = 276 and Grand median = 3.0; Test statistic = 9.20788 P-Value = 0.0100123, the Mood's

median test hypothesised that the medians of all 3 samples are equal. It does so by counting the number

of observations in each sample on either side of the grand median, which equals 3.0. Since the P-value

for the chi-squared test is less than 0.05, the medians of the samples are significantly different at the

95.0% confidence level.

6.8.2 Level of Satisfaction with CSR Disclosures and Educational Background: To understand

whether investor’s educational background has a role to play in satisfaction of investors, the investors

were categorized into three categories i.e. Matriculate, Graduate, and Post Graduate.

H 21: There is no difference between average levels of satisfaction of investors with various educational

profiles.

Table 6.44

Level of Satisfaction with CSR and Educational Background

Level Count Mean Stnd. error (pooled) Lower limit Upper limit

1 21 2.09524 0.255825 1.7391 2.45137

2 135 2.48889 0.100899 2.34843 2.62935

3 119 2.71429 0.107468 2.56468 2.86389

Total 275 2.55636

(Source: Author’s computations); 1- Matriculate, 2- Graduate, 3- Post graduate

258

This table shows the mean level of satisfaction for each level of education. The investors with post

graduate qualification have shown maximum level of satisfaction with the current level of CSR

disclosures with mean of 2.71 followed by the graduate investors with mean level of satisfaction at 2.49.

The investors with qualification up to matriculation have expressed lowest level of satisfaction. This may

be due to fact that with higher levels of education one may start to understand reservations of companies

in CSR disclosure as well. It also shows the standard error of each mean, which is a measure of its

sampling variability. The intervals displayed are based on Fisher's least significant difference (LSD)

procedure. To investigate the significant differences over education profile of participants ANOVA test

has been run.

Table 6.45

ANOVA Table for level of satisfaction by Educational Background


Between groups 8.04779 2 4.0239 2.93 0.0552

Within groups 373.829 272 1.37437

Total (Corr.) 381.876 274


The F-ratio, which in this case equals 2.92781, is a ratio of the between-group estimate to the within-

group estimate. Since the P-value of the F-test is greater than or equal to 0.05, there is no statistically

significant difference between the mean levels of satisfaction from one level of educational background to

another at the 95.0% confidence level.

Table 6.46

Multiple Range Tests for level of Satisfaction by Educational Background


1 21 2.09524 X

2 135 2.48889 XX

3 119 2.71429 X


1 – 2 -0.393651 0.541406

1 – 3 * -0.619048 0.546284

2 – 3 -0.225397 0.290211


259

1- Matriculate, 2- Graduate, 3- Post graduate. * denotes a statistically significant difference.

Figure 6.6

Level of satisfaction vs. Educational Background

1 2 3


Educational Backround

1.7

1.9

2.1

2.3

2.5

2.7

2.9

level of S

atisfa

ction


from which others. The table shows the estimated difference between each pair of means. An asterisk

has been placed next to 1 pair, indicating that this pair shows a statistically significant difference at the

95.0% confidence level. At the top of the page, 2 homogenous groups are identified using columns of

X's. Within each column, the levels containing X's form a group of means within which there are no

statistically significant differences. The method currently being used to discriminate among the means is

Fisher's least significant difference (LSD) procedure. With this method, there is a 5.0% risk of calling

each pair of means significantly different when the actual difference equals 0. The graphic presentation

of the means and LSD limits is also presented.

6.8.3 Level of Satisfaction with CSR Disclosures and Investment experience:

Table 6.47

Level of Satisfaction with CSR Disclosures and Investment experience:

Level Count Mean Stnd. error (pooled)

Lower limit Upper limit

1 146 2.60274 0.0978287 2.46655 2.73893

2 83 2.43373 0.129749 2.25311 2.61436

3 46 2.63043 0.174287 2.38781 2.87306

Total 275 2.55636

260


1- Less than 5 years, 2- Five years to 20 years and 3- More than 20 years

To understand whether investment age has a role to play in satisfaction of investors, three categories i.e.

less than 5 years, 5 years to 20 years and more than 20 years have been made.

This table shows the mean level of satisfaction for each level of investing experience. Maximum level of

satisfaction has been shown by those investors who are making investments for 20 years or more with

mean 2.63 closely followed by investors at level one i.e. investing for five years or less with mean equal

to 2.60. The investors in third category have shown quite lower level of satisfaction with mean to 2.43.

Multiple Range Tests and ANOVA are used to know which means are significantly different from which

others.

Figure 6.7

Level of satisfaction vs. Investing Experience

1 2 3


Investing Experience

2.2

2.4

2.6

2.8

3

level of S

atisfa

ction

Table 6.48

Multiple Range Tests for level of Satisfaction by Investing Experience


2 83 2.43373 X

1 146 2.60274 X

3 46 2.63043 X


1 – 2 0.169005 0.319912

1 – 3 -0.0276951 0.393481

261

2 – 3 -0.1967 0.427765

(Source: Author’s computations) * denotes a statistically significant difference.

1- Less than 5 years, 2- Five years to 20 years and 3- More than 20 years


from which others. The bottom half of the output shows the estimated difference between each pair of

means. There are no statistically significant differences between any pair of means at the 95.0%

confidence level. At the top of the page, one homogenous group is identified by a column of X's.

H 22: There is no difference between average levels of satisfaction of investors with various levels of

investment experiences.

In order to investigate the significant differences over various categories of age of investments of

participants ANOVA test has been run.

Table 6.49

ANOVA Tests for level of Satisfaction by Investing Experience

Source Sum of Squares D.f Mean Square F-Ratio P-Value

Between groups 3.07094 2 1.53547 1.34 0.2631

Within groups 312.407 273 1.14435

Total (Corr.) 315.478 275


The F-ratio, in this case equals 1.34179, is a ratio of the between-group estimate to the within-group

estimate. Since the P-value of the F-test is greater than or equal to 0.05, there is not a statistically

significant difference between the mean level of satisfaction from one level of investment experience to

another at the 95.0% confidence level.

6.8.4 Level of Satisfaction with CSR Disclosures and Gender: In order to investigate the significant

differences over Gender’s profile of participants t -test has been run.

H 23: Level of satisfaction with CSR disclosures does not vary with the gender of the investors.

Table 6.50

Level of Satisfaction with CSR Disclosures and Gender

Gender Count Mean S.E (pooled) Lower limit Upper limit

Male 235 2.47234 0.0759 2.36656 2.57813

Female 40 3.05 0.1841 2.79359 3.30641

Total 275 2.55636

262


Figure 6.8

Level of satisfaction vs. Gender

1 2


Gender

2.3

2.5

2.7

2.9

3.1

3.3

3.5

level of S

atisfa

ction

This table shows the mean level of satisfaction for each level of Gender. Female investors have expressed

higher level of satisfaction with mean equal to 3.05 as compared to male investors with mean at 2.47. The

table also displays an interval around each mean. The intervals currently displayed are based on Fisher's

least significant difference (LSD) procedure.

Table 6.51

T- test for Level of Satisfaction with CSR Disclosures and Gender

T Df Sig. (2-tailed) Mean Diff. Std. Error Diff. P-Value

.052 273 .959 .10432 2.345 0.0040


The t-statistics, here equals .052 and the P-value of the t-test is less than 0.05, there is a statistically

significant difference between the mean level of satisfaction between male and female investors at the

95.0% confidence level.

Next question put across to investors in various regions was, whether in their opinion the CSR disclosure

should increase, decrease or remain constant as compared to present. The descriptive statistics are as

follows:

263

Table 6.52

Descriptive Statistics Changes in Current Level of CSR Responses

Community Welfare

Employee welfare

Environment conservation

Energy conservation

Carbon emissions

Product safety

N= 95 CHD Respondents

Mean 1.12 1.29 1.29 1.35 1.14 1.25

Std. Deviation

0.48 0.71 0.71 0.77 0.52 0.66

Sum 107 123 123 129 109 119

N= 91 DLH Respondents

Mean 1.05 1.54 1.36 1.37 1.41 1.35

Std. Deviation

0.31 0.87 0.76 0.75 0.70 0.84

Sum 96 141 124 125 129 135

N= 90 LDH Respondents

Mean 1.13 1.29 1.28 1.39 1.23 1.57

Std. Deviation

0.50 0.70 0.67 0.77 0.62 0.90

Sum 102 116 115 125 111 141


Table 6.53

Response Sheet Suggesting Changes in Current Level of CSR Responses

Community Dev.

Employee Welfare

Environment Conservation

Energy

Carbon emissions

Product Safety

PLACE Rank

F % F % F % F % F % F %

1 89 93.7 81 85.3 81 85.3 78 82.1 88 92.6 83 87.4 CHD

3 6 6.3 14 14.7 14 14.7 17 17.9 7 7.4 12 12.6

1 88 96.7 64 70.3 74 81.3 72 79.1 64 70.3 68 74.7

2 1 1.1 4 4.4 1 1.1 4 4.4 16 17.6 2 2.2

DLH 3 2 2.2 23 25.3 16 17.6 15 16.5 11 12.1 21 23.1

LDH 1 84 93.3 77 85.6 76 84.4 71 78.9 78 86.7 77 85.5

264

2 6 6.6 0 0.0 3 3.3 3 3.3 3 3.3 10 11.1

3 0 0 13 14.4 11 12.2 16 17.8 17 10 3 3.33

(Source: Author’s computations) 1- Increase, 2- No change, 3- Decrease

Looking at the response given by the participants with regard to changes in level of CSRD 93.7% of

the respondents in Chandigarh have opined that community disclosures must increase from current

levels as against 96.7% in Delhi and 93.3% in Ludhiana. This increase has been found to be highest

when compared with other themes. This reflects the importance of community development theme in

the minds of investors because it has been found elsewhere in the study that most disclosed theme is

community development and further enhancements are proposed by the respondents. In Employee

welfare/Human resources which have been found to be the second most disclosed theme, further

increases are suggested by 85.3% of the investors in Chandigarh, 70.3% in Delhi and 85.6% in

Ludhiana. A very marginal number of investors have suggested that the disclosure in these two

categories should either decrease or should not change. More than 80% of the investors in all

categories recommended increased level of disclosure in environment conservation category. In

Energy theme, increases are suggested by 82.1% in Chandigarh, 79.1% in Delhi and still less at

78.9% in Ludhiana. The responses in Carbon mission category with regard to enhancement of

disclosures is varied as a quite high percentage of respondents i.e. 92.6% in Chandigarh as compared

to only 70.3% in Delhi and 78% in Ludhiana. In Product Safety and Innovation, more than 85% of

investors have demanded higher level of disclosures in Chandigarh and Ludhiana as compared to

approximately 3/4th of the investors in Delhi. Overall, it can be interpreted that the investors, across

regions have expressed the need for enhanced CSR reporting to make better decisions. This is

surprising that even though a very small percentage of investor consider social performance and give

first priority to CSR in making investment decision but they seek higher social performance and

reporting. Here, it seems that investors want to consider social performance as a factor while making

investment decisions but it is difficult to do so because of the reporting of this information at varied

places inconsistently over the companies. As it was found elsewhere in the study that 7 companies out

of 82 i.e. 8.5% have presented separate sections on environment. Dedicated sections in annual reports

do enhance the readability of CSR communication. 17 companies out of total 82 i.e. 20.75% have

dedicated separate sections to Corporate Social Responsibility communication. So, it is recommended

that having dedicated sections may facilitate the investors to consider and weight CSR performance

and reporting more seriously than the current position.

265

Figure 6.9

Changes in Current Level of CSR Responses

Is CSR reporting is successful was the next dichotomous question put forward to the respondents. The

investors in different geographical samples have responded in the manner underneath:

Table 6.54

Success of CSR Reporting

CHD DLH LDH

Response Respondent in Number and Percentages

Yes 58(61%) 40(44%) 45(50%)

No 37(39%) 51(56%) 45(50%)

Total 95(100%) 91(100%) 90(100%)


The response to this question is mixed as 61% of the respondents in Chandigarh, 44% in Delhi and 50%

in Ludhiana expressed that in their opinion, CSR reporting is successful. So, it can be inferred that almost

half of the respondents believe in success of CSR reporting. 39% of respondents in Chandigarh, 56% in

Delhi and 50% in Ludhiana believe that companies have not been able to communicate their CSR

performance to various stakeholders successfully. This indicates the need for companies to enhance their

CSR disclosures, keeping in mind various benefits that disclosures extend to social performing

companies. The findings of success of CSR reporting are shown in the pie charts below:

266

Figure 6.10


Chandigarh Delhi Ludhiana

6.9 REASONS FOR NON- DISCLOSURE OF CSR INFORMATION

Investors had also given opinions with regard to the reasons which could possibly make companies

having reservations in disclosing their CSR initiatives. On the basis of review of literature they were

given five options to choose from. There options were Poor ethical decision making, Laxity in regulation,

confused policies on CSR, and Increased cost of disclosure and Fear of damage to goodwill if perceived

to be less socially responsible due to lesser amount of disclosure. The respondents were given choice to

tick multiple options as well, if they felt that more than one reason was responsible for unsuccessful CSR

reporting.

Table 6.55

Reasons for Not Disclosing CSR Activities

Possible reason for not disclosing CSR activities- Respondents preference distribution

Sample of respondents R-1 R-2 R-3 R-4 R-5

No. % No. % No. % No. % No. %

CHD 25 26.3 26 26.3 21 22.1 16 22.1 18 18.9

DLH 32 35.2 31 34.1 24 26.4 15 16.5 25 27.5

LDH 16 17.8 27 30.0 38 42.2 14 15.6 37 42.1


R1- Poor ethical decision making, R2- Laxity in regulation, R3- Confused policies on CSR, R4-

Increased cost of disclosure, R5- Fear of damage to goodwill if perceived to be less socially responsible

due to lesser amount of disclosure

267

The participants were also requested to give reasons which in their opinion restrict companies not to

disclose their social performances. In Chandigarh poor ethical decision making and laxity in regulation

have been accused for lesser CSR disclosures by 26.3% of the respondents each. 22.1% of the

respondents have stated that confused policies on CSR and cost involved are the culprits that made the

companies not to disclose their CSR performances. Little more than 1/3rd of the respondents in Delhi have

blamed poor ethical decision making (35.2%) and laxity in regulation (34.1%) for not disclosing their

CSR performances. In their opinion, increased cost of disclosure has the least influence on intention of

companies to share their CSR initiatives. In Ludhiana, more than 2/5th of the respondents have indicated

that the fear of loosing reputation (42.1%) and confused policies on CSR (42.2%) are the primary reasons

for non-disclosures of CSR initiatives undertaken by the companies. Here also, it is felt that increased cost

of disclosures does not hold the companies back in context of sharing their social performances.

Figure 6.11

Reason for Not Disclosing CSR Activities

6.10 MODUS OPERANDI AND ISSUES RELATING TO CSR REPORTING

“Every company even if not making profits should disclose CSR activities.” The summarized responses

to statement are presented below. The table offers these responses in all the three geographical samples

i.e. Chandigarh, Delhi and Ludhiana successively.

268

Table 6.56

CSRD are Must

Chandigarh






Delhi

Mean Response 3 1-Strongly Disagree 6 6.59%




Valid Responses 91 91 100 %

Ludhiana




Sum 262 4- Strongly Agree 31.00 34.44%


((Source: Author’s computations)

If the company is not making profit, then would it be appropriate to mention their CSR initiatives was the

next question put forward to the respondents. The mean response received in Chandigarh is 3.10, in Delhi

3.00 and in Ludhiana 2.91. It indicates that except in Ludhiana, the respondents agree that even non-

profitable companies should convey their CSR works. The median response is 3 in all the three regions,

again indicative of the agreement with the statement. In Ludhiana region, the standard deviation is

maximum at 1.013 showing variations in the responses. 4/5th of respondents in Chandigarh, 70.33% in

Delhi and 68.88% of the respondents in Ludhiana have agreed/ strongly agreed with the statement. Strong

disagreement comes from only from 6.3% participants in Chandigarh, 6.59% in Delhi and 12.22% in

Ludhiana region. Overall, it can be inferred that participants believe that the companies need to disclose

their CSR achievements irrespective of their profitability.

“Companies normally exaggerate CSR claims.” The summarized responses to statement are presented

below. The table offers these responses in all the three geographical samples i.e. Chandigarh, Delhi and

Ludhiana sequentially.

269

Table 6.57

Exaggeration in CSR Claims

Chandigarh






Delhi





Valid Responses

Ludhiana





Valid Responses 90 90 100


To understand the beliefs of investors in reliability of CSR information released at various places like

Annual Reports, Media, Press Releases and websites, a question was put forward that whether companies

normally exaggerate their CSR claims? Investors in Chandigarh have shown their agreement with the

statement as the mean response is 3.01 and the median response is 3. 51.58% of the investors feel that

companies present exaggerate claims with regard to their CSR performance. 26.32% of the participants

strongly agree with the statement. The response in Delhi is also similar with a mean and median response

of 3.02 and 3 respectively. In Delhi region also, more than half of the participants present their disbelief

in the claims made by companies with regard to their CSR performance. More than 25% of the

participants have shown their strong reservations with regards to the claims made by companies. In

Ludhiana region, the response is similar, here a little less than 3/5 of the participants have chosen to

strongly agree that the companies exaggerate their CSR claims. In all the three regions, standard deviation

of responses is quite small at 0.76, 0.60 and 0.62 in Chandigarh, Delhi and Ludhiana regions respectively.

270

This kind of disbelief present serious repercussions on CSR disclosures i.e. companies knowing that their

claims will be discounted shall obviously tend to show inflated performances. This is in turn will lead to

enhanced gap between actual CSR performances and its disclosures, furthering the disbelief and

discounting of CSR reporting. It situation shall be working like a loop difficult to break. May be this is

the reason that CSR disclosures in various countries are found to be narrative/descriptive. These

descriptive disclosures are difficult to measure and compare with reality. In India like many other

countries, the CSR disclosures are found to be narrative. So, in sync with the existing literature the

respondents have given verdict that the corporate social responsibility communication reflects the action

on social responsibility is questionable. Fukukawa and Moon (2004) contended that CSR communication

and action are interrelated functions rather than mutually exclusive. CSR communication may or may not

be an accurate presentation of CSR action, there is a “reason to expect increasing congruence between

communication and action”.

Table 6.58

Mandatory CSRD

“CSR disclosures should be made mandatory.” The summarized responses to statement are presented

below. The table offers these responses in all the three geographical samples i.e. Chandigarh, Delhi and

Ludhiana sequentially.

Chandigarh





Valid Responses 3.19 95 100%

Delhi






Ludhiana



271





The companies always tend to disclose only the information which has been made mandatory by law. A

small example can be quoted here, the corporate governance report and the director’s report. When it

comes to voluntary information disclosures, the perceived costs as well as potential benefits overweight

the need for precise and true disclosures. So a statement was presented to the participants with the

suggestion that CSR disclosures should be made mandatory. The investors in Chandigarh have more than

agreed with the statement with mean response 3.19. In Delhi and Ludhiana regions the mean response is

closely the same at 3.08 and 3.04 respectively. The median response stood at 3 in all the regions again

showing the consistency in the agreement with the statement. 44.21% of investors in Chandigarh region,

40.66% in Delhi region and 44.44% in Ludhiana region have agreed that CSR disclosures should be a

compulsion under law. Whereas 38.95% of investors in Chandigarh region, 9.89% in Delhi region and

13.33% in Ludhiana region have strongly agreed that CSR disclosures should be a compulsion. Such

compulsion would also necessitate changes in existing accounting standards and relevant pieces of law

and legislation.

Shobani et al (2009) established that in Bangladesh, The Securities and Exchange Commission (SEC),

the controlling body for the stock exchanges, has taken necessary action to establish corporate governance

of the listed companies in Bangladesh. These socio-political and organizational changes might influence

the social responsibilities of the corporate bodies that might ultimately be reflected in the disclosure

practices of the listed companies. Adeolu et al (2010) found that, although the proportion of resources

committed to CSR is small, CSR expenditure rises with the firm's sales. So, the proportion of total sales

companies commit towards the CSR is difficult to interpret because monetary disclosures are quite small

in India. But, a word of caution is also relevant here, as higher regulatory mechanism may lead to lesser

quality disclosure. A recent study by Crawford and Williams (2010) aimed to investigate how country

contexts pressure firms for greater reporting activity and to explore the impact of these pressures on

disclosure quality. Expecting that countries with higher regulative pressures, such as France, will lead to a

“minimum-requirement” type of disclosure, while countries with more liberal markets, such as the USA,

will present higher quality disclosure, counter-theoretical evidence was found in the results, indicating

that French firms exhibited higher quality disclosure than US firms on average.

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Table 6.59

Honest but Little CSRD

“Less but honest information on CSR shall have negative effects rather than positive.” The summarized

responses to statement are presented below. The table offers these responses in all the three geographical

samples i.e. Chandigarh, Delhi and Ludhiana successively.

Chandigarh






Delhi






Ludhiana







This question is complimentary to earlier question regarding exaggeration of CSR claims by the

companies and provides further clarifications in believability and reliability of CSR reporting. If

companies are doing only little work in discharge of their social responsibilities and then they are

reporting these performances honestly, it may damage the goodwill of the company. The participants in

all the regions have almost disagreed with the apprehension of the companies with mean response of 2.53

each in Chandigarh and Delhi regions and 2.68 in Ludhiana region. The median response in Chandigarh is

2 as compared to 3 in each of the Delhi and Ludhiana regions. Overall response is mixed as investors are

not sure of implications of less social performances and their honest disclosures. Around 2/5 of the

participants have expressed their disagreement with the statement.

273

Table 6.60

CSRD due to Competition

“Companies disclose CSR activities because competitors also disclose their CSR activities.” The

summarized responses to statement are presented below. The table offers these responses in all the three

geographical samples i.e. Chandigarh, Delhi and then Ludhiana in turn.

Chandigarh






Delhi






Ludhiana



Standard Deviation 0. 884 3- Agree 50 55.6%




A query with regard to whether the competitive forces compel companies to disclose their CSR activities

was put forward to the respondents. The mean response of the participants is towards the disagreement

with the statement at 2.19 in Chandigarh, 2.05 and 2.18 in Delhi and Ludhiana regions respectively. The

median response is 2 in Chandigarh and Delhi regions and 3 in Ludhiana region. Approximately 1/3rd of

the respondents disagree with the statement that companies disclose CSR activities because competitors

also disclose their CSR activities. A clear cut opinion is not inferred because standard deviation is high at

0.993 in Chandigarh, 0.80 in Delhi and 0.884 in Ludhiana region. In a recent research in Europe, Gallego-

274

Álvarez, Isabel et al (2010) advised managers to design their CSR strategies with an orientation to

increasing corporate reputation through large investments in CSR which prevent them from being

imitated by direct rivals. Planken et al (2010) investigated corporate social responsibility (CSR) platforms

and the communication surrounding those platforms in India and established the CSR platforms that are

typically used, together with stakeholder attitudes to both the form and content of those platforms. It also

indicated, however, that Indian consumers may not value philanthropic CSR as highly as other CSR

initiatives and that this may in turn influence their attitudes to different marketing communication

strategies. Indian corporations may formulate the form and content of their CSR policies in the future

within a marketing strategy in order to influence their stakeholders positively and increase their

competitive advantage.

“There is need for standard instrument to measure CSR.” The summarized responses to statement are



Table 6.61

CSRD –Need for Standard Instrument

Chandigarh






Delhi






Ludhiana

Mean Response 3.52 1- Strongly Disagree 0 0%




275



The response of respondents to the question that whether there is need for standard instrument for

measuring CSR, lies between agreement and strong agreements with mean 3.30 in Chandigarh, 3.36 in

Delhi and 3.52 in Ludhiana. The earlier study by Shobani et al (2009) has expressed that the companies

have full discretion with regard to annual report disclosure. It is feared that this lack of standards may

mean that any existing CSR disclosures will be very much public-relations oriented. The median

response of 4 in all the three regions indicates strong agreement with the need for standard

format/instrument for measuring and reporting CSR performance. Gray et al (1996) reported that the

Cement Corporation of India produced a complete set of social accounts including social balance sheet

and income statement for 1981 in accordance with the Abt mode. Batra (1996) studied various model

formats for corporate social reporting and emphasized urgent need for social auditing. But it is always

easy saying than doing, given the diverse range of activities falling in CSR arena and diverse motives of

corporate pursuing them; it’s in reality a challenge to design such instrument which can capture the true

picture of CSR initiative in a meaningful manner. More unfortunate is the fact that International Financial

Reporting Standards (IFRS), which are expected to govern, the disclosure of financial and other

accounting information are silent upon this crucial issue. In a recent extensive review of literature Kaur

and Kansal, (2010) inferred that CSR disclosures still seems to be an attempt to define an abstract but

extremely relevant concept in vague format with ambiguous measurement techniques, churning out

mercilessly varied output. Along with it, a number of organizations, variety of formats, lack of audit and

inconsistency in timing and content make disclosures erratic.

6.11 PERCEPTIONS OF STOCK BROKERS WITH REGARD TO CORPORATE

SOCIAL DISCLOSURES - AN ANALYTICAL STUDY

6.11.1 Factors Influencing Investment Decision: The first question intended to gauss the investment

making behavioural pattern of brokers and whether the CSR activities have any place among the factors

influencing decision suggesting investments. The respondents were asked to give ranking, 1 for most

important, 2 for next important and so on, 5 for least important.

276

Table 6.62

Overall Ranking across Brokers– Factors Influencing Investment Decision

Option DELHI LDH Total RANK

Past Financial Performance of the Company 62 73 135 1

CSR activities of the Company 162 173 335 4

Management of the company 170 150 320 3

Future Prospects of the Company 65 75 140 2

Performance of sector based indices 180 202 382 5


Brokers’ decisions are influenced maximum by the past financial performance of the company followed

by future prospects of the companies. This reveals the importance the brokers attach to the financial

performance and economic performance. After past and anticipated performance the maximum weigh-age

is given to management of the companies. The management of companies does impact the CSR activities

of the companies but CSR activities individually do not act as an important input for the investment

decision. Moreover, the brokers give least preference to the performance of sector based indices as it has

been given lowest ranks by the brokers, followed by CSR activities of the company. Overall CSR

activities have often being given 3rd, 4th and 5th rank in importance while making the decision regarding

the investment decisions. Very few brokers gave 1st and 2nd order importance to CSR activities of the

companies

To analyse the brokers’ perception in greater detail, the analysis of priorities given to various options by

different set of sample brokers has been undertaken. The table gives the analysis of ranks given by

brokers:

277

Table 6.63

Descriptive Statistics Brokers -Factors Influencing Investment advice

Past

performance CSR

Management of the

company

Future prospects

Sector based indices

N 90 90 90 90 90

Mean 1.50 3.722 3.556 1.595 4.244

Median 1 3 4 3 3

Std. Deviation 1.084 1.241 1.227 1.654 1.278

Skewness 1.9536 -0.365 -1.155 0.255 0.266

S. E. Skewness 0.324 0.324 0.324 0.324 0.324

Kurtosis 1.458 -0.8130 -0.525 -1.236 -0.376

Std. Error of Kurtosis 0.485 0.485 0.485 0.485 0.485

Sum 135 335 320 140 382


Table 6.64

Broker’s Response Distribution Summary

Past performance CSR

Management of company Future prospects

Sector based indices Score

F % F % F % F % F %

1 46 51.11 4 4.44 7 7.78 6 6.67 30 33.33

2 29 32.22 9 10.00 3 3.33 13 14.44 29 32.22

3 10 11.11 22 24.44 30 33.33 14 15.56 20 22.22

4 4 4.44 24 26.67 17 18.89 39 43.33 7 7.78

5 1 1.11 31 34.44 33 36.67 18 20.00 4 4.44

Total 90 100 90 100 90 100 90 100 90 100


The tables 6.63 and 6.64 show the response distribution and descriptive statistics of brokers. The mean

preference given to the past performance is 1.50, followed by future prospects with mean 1.59 indicating

that the brokers consider the past and future performance of the company while making/advising the

investment decisions. The management of the company has got the third priority with mean 3.56 followed

by CSR information at the fourth place with mean of 3.72. Least priority is shown towards performance

of sector based indices with mean 4.24. This can be concluded here that CSR information does not have

278

very influential role in investment decisions. Just four brokers out of a total of ninety (4.4% of the

sample) have given first priority to CSR performance of the companies. Nine brokers (10% of the sample)

have given second preference whereas 24.44%, 26.67%, 34.44% of the brokers have preferred to assign

third, fourth and fifth rank to CSR information in making investment decisions. Brokers have also shown

most influential factor as past performance followed by future performance of the company.

6.11.2 Awareness of CSR activities- Brokers Response: Responses to Question no. 2 have been

analysed to find out which CSR activities of the companies get noticed. The respondents were asked to

name two major CSR activities undertaken by Indian companies. This section of analysis shall help the

company to identify and focus more on those activities that different stakeholders notice more.

Table 6.65

Awareness of CSR activities- Brokers Response Distribution

Education Healthcare Environment EHS Rural

Development Any other Respo

nse

F % F % F % F % F % F %

Yes 63 70 44 48.88 51 56.7 35 38.89 28 31.11 24 26.66

No 27 30 46 51.12 39 43.3 55 61.11 62 96.88 66 73.34

Total 90 100 90 100 90 100 90 100 90 100 90 100


The brokers have shown the maximum awareness with regard to Education initiatives taken by the

companies. Education have received maximum attention from the brokers with 70% of the respondents

have been found to be aware of these efforts. This was followed by environment (56.7%) of the brokers

saying in affirmative that they were aware of the efforts done in this direction. Third preference has been

shown towards healthcare with 56.7% of the brokers showing awareness for it. The activity least noticed

are Rural Development (31.11%) and EHS with 39.89 % of brokers showing awareness with regard to

these activities. The other initiatives were noticed by just 26.66% of the brokers.

6.11.3 Source of Information of CSR Activities: The brokers in both the geographic areas selected in

the sample had been asked to mention their source of information. Four options had been provided to

them to select from. The responses that have been received are as under:

279

Table 6.66

Source of Information of CSR Activities- Brokers Response Distribution


F % F % F % F %

Yes 48 53.3 32 35.6 26 28.8 33 36.7

No 42 46.7 58 64.4 64 71.2 57 63.3

90 100 90 100 90 100 90 100


To know the actual source of information dissemination of CSR information, the respondents have used

annual reports (53.3%) as a source of information. The Media as a source of information has been used by

36.7% of brokers. The company’s websites have been used as a source of information dissemination by

maximum 39.6% of brokers in Delhi region followed by 35.6%. The standalone reports are clearly least

used by brokers (28.8% of the total respondents). So overall, it can be concluded that the annual reports

are preferred as the main source of information with regard to CSR activities. This may be due to fact that

annuals reports are perceived to be reliable and most accessible source of corporate information. These

days the impact of media is also increasing. That explains the increasing trend towards the companies

going for massive media advertising of their CSR activities. Brokers do not seem to bother to go through

standalone reports on CSR. This has the implication that instead of separate reports, CSR disclosure

should be made in the annual report itself. Online reports may find an only a limited usage as these can be

used only by the stakeholders having internet access and a threshold of internet expertise. Rowbottom and

Lymer (2010) also explored users of narrative reporting information contained within online corporate

annual reports and reported that the most frequent users of the online annual report were found to be

respectively, private individuals, employees and professional brokers/creditors.

6.11.4 Priority of Different Stakeholders Interests: Next question posed to brokers was to rank

different parties (stakeholders) whose interest should be given preference. The response to this question is

as follows:

280

Table 6.67

Priority of Different Stakeholders Interests – Brokers Response


F % F % F % F %

1 13 14.44 42 46.67 15 16.67 38 42.22

2 31 34.44 21 23.33 30 33.33 12 13.33

3 23 25.56 20 22.22 20 22.22 11 12.22

4 23 25.56 7 7.78 25 27.78 29 32.23

Total 90 100 90 100 90 100 90 100


Brokers have shown a clear preference for normative priority given to “investors” while a company plans

its CSR activities. 46.67 % of the brokers have given first rank to the consideration of shareholders

interests. Overall taking aggregate of all brokers in the sample, a clear cut second priority is suggested to

be given to interest of Community, as 42.22% of brokers give it the first rank. The interests of the

employees and customers are to be considered at last while the companies chalk out their CSR

endeavours. The situation seems quite practical, as brokers have their self interest in benefits extended to

the investors, the investors being more inclined towards dealing in the shares of these companies and

next, if the community at large receives more benefits, overall prosperity in the society again improves

the well being of the brokers in an indirect manner.

Table 6.68

6.11.5 Ranking of Impact of various themes of CSR – Brokers Response


F % F % F % F % F % F %

1 43 47.78 16 17.78 20 22.22 8 8.89 2 2.22 5 5.56

2 26 28.89 22 24.44 24 26.67 8 8.89 14 15.56 4 4.44

3 2 2.22 30 33.33 16 17.78 20 22.22 13 14.44 10 11.11

4 4 4.44 15 16.67 20 22.22 20 22.22 16 17.78 10 11.11

5 7 7.78 4 4.44 5 5.56 24 26.67 34 37.78 16 17.78

6 8 8.89 3 3.33 5 5.56 10 11.11 11 12.22 45 50.00

Total 90 100 90 100 90 100 90 100 90 100 90 100


281

Next, the brokers have been provided with options so as to rank various initiatives of CSR with respect to

the impact. The maximum impact was required to be assigned Rank 1, 2 for next lesser impact and so on,

and rank 6 indicated minimum impact. The response distribution and the descriptive statistics are given in

the table above:

Community development has been given the first preference by 47.78%, second priority by 28.9% of the

participants, third by 2.22% of the participants. 4.44%, 7.78 %, 8.89% of the participants have given 4th,

fifth and sixth preference to community development. After community development, no other CSR

theme is perceived to be as importance as Community Development because Environment, Labour

welfare, energy conservation, carbon and other harmful gases emissions and PSI have been perceived to

have maximum impact by only 22.22%, 17.78%, 8.89%, 2.22%, 5.56 % respectively. These figures are

quite low as compared to Community development. From this it can be inferred that like investors, the

brokers also feel that CD theme has maximum influence in comparison to other themes.

6.11.6 Who should perform CSR and How: Brokers Responses: To understand the broker perceptions

with regard to objectives of pursuing socially responsible activities the brokers were asked why

companies conduct social responsibility these days. The respondents have been to choose among the

following alternatives given to them: Strongly Agree (4), Agree (3), Disagree (2), and Strongly Disagree

(1). The summarized responses to statement are presented below.

Table 6.69

Companies Not Earning Profits and CSR - Broker’s Response







In consistent with the earler research by Balabanis, G., & Phillips, H. C. (1998), Banerjee (2005) brokers

in Delhi and ludhaina have perceived that even if the firms is not making profits, it should perform, CSR

activities as such. The brokers have stated that a company should perform CSR activities even if it is not

profitable with mean score of 3.03 and standard deviation 0.78. The median response 3 indicates that

brokers agree that every company should perform CSR irrespective of its profitability. Just 5 brokers

(5.56% of the sample) strongly disagree, 50 brokers (55.56% of the sample) agree, 24 brokers i.e. 26.67%

282

of the sample have shown their strong agreement with the statement that CSR is every company’s

responsibility-making profit or not making any profit.

The summarized responses to statement namely “large companies should invest more in CSR activities

than small companies” are presented below.

Table 6.70

Large companies and CSR- Broker’s Response







As large companies have larger resources available with them and also the impact of their activities on

community at large, society, environment and natural resources is also large in comparison to small

companies, it was expected that large companies should invest more in CSR activities than smaller

companies. This view has been explicitly agreed by brokers in Delhi and Ludhiana is with mean 3.08

showing agreement with the statement whereas the median response is 3 showing overall agreement with

the view. Only 3.33% and 26.67% of the brokers disagree and strongly disagree with the view presented.

Moreover, a large body of respondents i.e. 41.11% has strongly agreed that larger companies should bear

more burden of social responsibility than the smaller companies. Goltagunta, (2008) stated in their study

that Tata group, Reliance, Ranbaxy and Infosys, followed by Maruti Udyog, ICICI, ST Microelectronics,

ITC, Phillips, Escorts, HCL, and Hero group are top most companies in social responsibility. It shows that

corporate social responsibility has been adopted by giant firms only. Previous research (Cowen et al,

1987; Patten, 1991; Roberts, 1992; Hackston and Milne 1996; Adam et al., 1998) has also provided same

kind of perspective.

“Multinational corporations should perform more corporate social responsibility activities than domestic

companies.” The summarized responses to statement are presented below.

283

Table 6.71

Multinational Companies and CSR- Broker’s Response







Multinational companies are expected to make more CSR activities than domestic companies, has been

agreed by Delhi and Ludhiana brokers with a mean response of 3.14. The median response of the sample

is 3 indicating agreement with the said statement. 42.22% brokers strongly agreed with the statement.

1.11% of the respondents have strongly disagreed with the statement. This agreement has been shown by

31.11% respondents. More than two third of respondents have shown agreement/strong agreement with

the statement.

“For CSR, companies must collaborate with NGO's.” The summarized responses to statement are

presented below.

Table 6.72

Collaboration with NGO- Broker’s Response







As social and environmental NGOs are the stakeholders (Gray et al. 1996; Elkington 1997; Greenwood

2001), they can influence corporations to increase social disclosures as a response to stakeholder group

needs (Deegan 2000; Delfgaauw 2000; Hooghiemstra 2000; Gelb and Strawser 2001). In this context it is

relevant to understand what the brokers believe with regard to companies collaborating with NGO’s for

performing their CSR activities and this shall have automatic implications for the disclosure of CSR as

well. In India, the role of NGO’s in helping the companies in CSR by collaborating with them has been

little more than agreed by the brokers. The mean response to need for collaboration has been found at

3.12 by brokers. Median response is 3 suggesting agreement with the view presented. 45.56% of the

284

brokers agree with the perspective presented. Many pieces of existing research work (Hackston and Milne

1996; O'Dwyer et al. 2004; Tilt 2004,) suggest that Social and environmental NGOs are unconvinced of

CSD content.

“For CSR, companies should collaborate with government.” The summarized responses to statement are

presented below.

Table 6.73

Collaboration with Government - Broker’s Response

Mean Response 3.13 1-Strongly Disagree 2 2.22 %


Standard Deviation 0.646 3- Agree 54 60.00%%




In addition to NGO’s, the opinion was sought with regard to role of government in promoting CSR

activities. The mean response received from this set of stakeholders is 3.13. Overall, little more than

agreement can be interpreted. 60% of brokers region have shown agreement whereas 27.78 % brokers

have shown strong agreement towards need for collaboration by the organizations with government for

performing their CSR activities. 12.22% of the brokers have expressed their disagreement/strong

disagreement with the need for collaboration with the government. The median response 3 suggests that

the brokers feel the government has to play a role for the implementation and facilitation of CSR

initiatives.

“Business is for earning profits not for charity/CSR.” The summarized responses to statement are

presented below.

Table 6.74

Business and Charity - Broker’s Response







285

The primary motive of any business organization is its survival and growth for which earning profit is

foremost necessity. Every business should focus on earning profits and charity/CSR fall beyond the ambit

of business organization. This view has not been agreed by respondents. The mean response to this

statement is 2.32. Forty eight percent of the respondents have either strong disagreement or disagreement

with the opinion.

6.11.7 Motives behind CSR- Brokers Responses: “A socially responsible company enjoys better profits

in the short run through increased confidence of customers.” The summarized responses to statement are

presented below.

Table 6.75

CSR and Better Profits in Short Profits - Broker’s Response







The motives for CSR activities which could come out to be higher profitability in short term, higher stock

price, enhanced profits in long run, competence to bear hard times and enhanced goodwill and reputation

have been presented to another set of the stakeholders i.e. brokers. The respondents have opined that a

socially responsible company enjoys better profitability through higher level of confidence of customers

in such companies. The mean response is 3.00 and the median response is 3, expressing agreement with

the said statement. This statement has seen little strong disagreement with 2.22% of respondents and

37.78% of the respondents have agreed.32.22% of respondents have strongly agreed with the statement.

“A CSR company enjoys higher level of confidence of brokers in form of higher stock.”

Table 6.76

CSR and Higher Stock Prices - Broker’s Response






286

Earlier research work on whether the CSR disclosures impact market prices positively or negatively, has

been inconclusive as Chugh (1978), Trotman and Bradley (1981), Mahapatra (1984) concluded that

corporate social responsibility activities may lead to increased systematic risk showing cost associated

with CSR disclosures. On the other hand, the more recent research exertion by Hussainey and Salama

(2010) explored and found that firms with higher levels of CER scores exhibit higher levels of share price

anticipation of earnings than firms with lower levels of CER scores. The brokers have exhibited that a

CSR company enjoys higher level of confidence of investors in form of higher stock with mean of 2.97.

Just 1.11% of the brokers strongly disagreed with the view. 50% of the respondents have agreed and

24.44% have strongly agreed with the statement.

“Good social performance shall lead to more profits in the long run.” The summarized responses to

statement are presented below.

Table 6.77

CSR and Long Term profits - Broker’s Response







The impact of CSR may or may not be visible in short run but good social performance shall lead to

enhanced level of profitability in the long run. The mean response to this view is 3.23. The median

response showing agreement with the statement is 3. This statement has seen little strong disagreement

with 1.11% of respondents. 40% of the respondents have strongly agreed and 44.44 % of respondents

have agreed with the statement.

“A CSR company can survive hard times more easily.” The CSR performance acts as a cushion to fall

back upon, when companies see hard times in terms of some social conflict or some kind of untoward

event. The social performance can contain the damage to the reputation and profitability in the bad times.

The summarized responses to statement are presented below. The table offers these responses in all the

three geographical samples i.e. Chandigarh, Delhi and then Ludhiana consecutively.

287

Table 6.78

CSR and Survival in Hard Times - Broker’s Response







The mean response to this statement is 2.80 indicating little less than overall agreement with the view.

The median response 3 shows agreement. Overall, the statement has seen strong disagreement by 3.33 %

respondents. 50% of the participants have expressed their agreement with the statement whereas 16.67%

of respondents have shown strong agreement with the view. This view is supported by many earlier

researchers who propose that the provision of voluntary corporate social disclosure is often an outcome of

legitimating strategies by companies (Deegan and Rankin 1996; Kent et al 1997; Brown and Deegan

1999; Deegan et al 2000; Deegan et al 2002; O'Donovan 2002; Adeolu et al 2010).

“A CSR company has more reputation and goodwill.” The summarized responses to statement are


Delhi and Ludhiana successively.

Table 6.79

CSR and more Goodwill & Reputation - Broker’s Response







A socially responsible company enjoys more reputation and goodwill than a company indifferent to its

responsibilities towards society. This statement depicts the PR role of CSR. There seems to be wide

acceptability of the statement with the respondents as the mean response is found to be 3.46 and the

median response is 4 indicating strong agreement. A large chunk of respondents’ i.e. 53.33% has opted

288

for strong agreement with the statement. 41.11 % of respondents have expressed agreement with the

statement. So the clear cut verdict can be seen in favour of PR and image building role of CSR. This view

has been accepted by earlier research as well (Guthrie and Parker, 1990; Zeghal and Ahmed, 1990; Saleh

et al, 2010, Carol and Zutshi 2004; Chambers et al, 2003, Chomvilailuk, and Butcher 2010; Saleh et al,

2010). These studies have suggested that companies should be encouraged to be involved in CSR

activities as one of their strategies to improve their reputation and image.

6.12 BROKERS RESPONSES DISCLOSURE OF CSR ACTIVITIES

Whether a company should discloses its CSR activities or not, when this query was put forward to the

respondents, the answer was in clear-cut affirmative, demanding disclosure of CSR information.

Table 6.80

Need for disclosure of CSR activities - Broker’s Response

Response DLH LDH Total

Yes 42 39 81 (90%)

No 4 5 9 (10%)

Total 46 44 90 (100%)


Figure 6.12

Need for disclosing CSR Activities

A large majority of the surveyed brokers (90 percent) provided responses to a question which asked for

their opinions upon need for disclosures in confirmatory tone showing strong need for CSD. These

responses relate to 42 respondents (out of total 46) in Delhi and 39 respondents out of total 44 have

responded ‘Yes’ to the need for disclosure of CSR activities. Just a small percentage of respondents i.e.

10% of the total sample have shown disinterest in the need for disclosure of CSR initiatives.

289

6.12.1 Need and Location- Brokers Responses: With the intention of understanding the location of CSR

information, the brokers were required to give their preferences with regard to location, within and

outside the annual report of the company. The respondents have been given the option to give multiple

responses as well. The options provided four parts namely a) In Chairman Speech of Annual Report b)

Management discussion and analysis in annual reports c) In separate CSR reports d) In advertisement

campaigns.

Table 6.81

Brokers preferences regarding the Location of CSR Disclosures

Chairman’s Speech of Annual Report

MDA Separate CSR

reports Advertisement

campaigns Place Response

No. % No. % No. % No. %

YES 25 54.35 19 41.30 12 26.09 24 52.17 DLH

NO 21 45.65 27 58.70 34 73.91 22 47.83

YES 20 45.45 19 43.18 18 40.91 26 59.09 LDH

NO 22 50.00 25 56.82 26 59.09 18 40.91


The disclosure of information at different places in annual reports and in other documents affects

readability and subsequent use of information in decision making. It has been assumed pertinent to ask

and understand the preferences of brokers with regard to location of CSR information. The respondents in

Delhi have shown high preference for Chairman’s speech as the location for CSR disclosures with

approximately 55% of respondents opting for it, followed by advertisement campaigns (52%). The other

two locations i.e. MDA and separate CSR reports have been opted by 41.30% and 26.09% of the

respondents consecutively. In Ludhiana, highest preference has been shown for advertisement campaigns

(59.09%) of respondents followed by Chairman’s speech in annual report of the companies with 45.45%

of respondents. The next two locations i.e. MDA in annual report and separate CSR reports have been

preferred by 43.18% and 40.91% of the respondents consecutively. It can be concluded here that brokers

prefer brief information only. This may be due to the fact that they have to study a number of companies

for analysis and CSR parameter may not seem to be that important to justify disclosures in detailed form

in MDA and separate CSR reports.

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Figure 6.13

Location of CSR Disclosures

6.12.2 Best Form and Motives- Brokers Responses: The respondents were asked to define the

normative quality of disclosures in terms of what they consider as the best form of reporting CSR

activities. The options provided were Narrative/Descriptive, Quantitative, Monetary (expressed in

rupees), Photographs, and Charts, graphs and tables and combination of all earlier options. The

respondents could tick multiple options, in case they so desired. The responses are presented below:

Table 6.82

Response Distribution to Best Form of CSR Disclosures

Response Distribution to Best Form of CSR Disclosures Geographic sample

Response No. % No. % No. % No. % No. %

YES 15 32.61 18 39.13 16 34.78 20 43.48 33 71.74 DLH

NO 31 67.39 28 60.87 30 65.22 26 56.52 13 28.26

YES 8 18.18 12 27.27 18 40.91 25 56.82 32 72.73 LDH

NO 36 81.82 32 72.73 26 59.09 19 43.18 12 27.27


The figures are presented in the graphical form as below:

291

Figure 6.14

Best Form of CSR Disclosures

The brokers want the information to be disclosed in multiple forms i.e. narrative, quantitative monetary,

photographs. 32.61% of brokers in Delhi and 18.18% of the brokers in Ludhiana have desired information

in narrative form explaining various CSR initiatives. The preference for higher quality of information in

quantitative terms can be seen in both the regions with 13.19% of respondents in Delhi and 27.27% in

Ludhiana region, showing need for CSR disclosures in quantitative form. This kind of preference is also

visible in all the samples in both the regions as 34.78% of respondents in Delhi and 40.91% have

preferred mentioning CSR initiatives in monetary terms. A noticeable difference can be seen for charts,

graphs, tables and photographs as a high percentage of respondents i.e. 43.48% and 56.82% of

respondents have preferred disclosures in this format in Delhi and Ludhiana regions respectively. Overall,

71.14%, 72.73% of respondents in Delhi and Ludhiana regions respectively want that the companies

should be using all forms of CSR disclosures.

Motives supporting corporate social disclosures: It is important to comprehend the motives behinds

disclosures of CSR information. The brokers of the various companies have been asked to make choices

with perspectives of motives of CSR disclosures. The respondents were at liberty to tick multiple options

as well. The prior research leads to the following potential motives of CSR disclosures. Enhanced

goodwill with customers, increased short term profitability, Long term sustainability, Better employee

relationships, compensation for unfair business practices. The views of respondents are as mentioned

below:

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Table 6.83

Motives driving CSR disclosures- Broker’s Response

Enhanced goodwill

with customers


profitability


Better employee

relationships

Compensating their unfair

business practices

YES 35 20 32 22 35 DLH

In % 76.09 43.77 69.57 47.62 76.09

YES 36 17 34 25 15 LDH

In % 81.82 38.83 77.27 56.61 34.09


Figure 6.15

Motives driving CSR disclosures- Broker’s Response

In Delhi, the reasons for disclosures for CSR information show the following sequence i.e. enhanced

goodwill with customers 76.09% and compensating unfair business practices with same percentage of

people opting for it. This is closely followed by long term sustainability with 69.57% and a distantly

follow up by better employee relation (47.62% of total responses). Another prospective reasons for

disclosure i.e. increased short term profitability has seen least preference as an influential reason for

CSRD. In Ludhiana, brokers have expressed the opinion that enhanced goodwill with customers (81.82%

of the respondents) and long term sustainability (77.27% of the respondents) are the two topmost reasons

for CSR disclosures. Better employee relationship increased short term profitability and compensation for

unfair business practices are presumed to be reasons for CSR disclosures. These reasons are expressed by

77.27%, 38.83% and 34.09% of the respondents respectively. Different researchers have presented

293

different opinions regarding the need of corporate social disclosure (Dawkins, 2004; Rowe, 2006,

Chahoud et al, 2007; Center for Social Markets, 2001; Choudhary & Wang, 2007).

Table 6.84

Ranking of Motives behind CSR disclosures- Broker’s

Enhanced goodwill with

customers

Increased short term profitability


Better employee relationships

Compensating their unfair business

practices

71 22 76 66 27

Rank 2 Rank 5 Rank 1 Rank 3 Rank 4


The overall ranking given at aggregate present the picture that the brokers feel, that top reason for

disclosures is long term sustainability (Rank 1) followed by Enhanced goodwill (Rank 2). The third rank

is attained by Better employee relations. Pursuing and disclosing CSR as a compulsion for compensation

for unfair practice and increased short term profitability have got fourth and fifth ranks respectively.

Additionally, the literature also presents a variety of reasons for CSR reporting. The most prominent

among them is to protect their own self-interests and deflect the attention and intervention of regulatory

bodies. Companies make CSRD to advocate and enhance the entity's position and image, promote

customer and community relations with the incentive of indirectly assisting to promote products and

customers (Guthrie and Parker, 1990: Zeghal and Ahmed, 1990).

6.13 LEVEL OF SATISFACTION WITH QUALITY OF CSR DISCLOSURES

Keeping in mind the present level of CSR reporting, an investigation was made with regard to the level of

satisfaction of the brokers. The level of satisfaction has been measured on a five point scale ranging from

5 to 1. Maximum marks 5 were to be assigned by the respondents when they perceive themselves to be

completely satisfied and on the other extreme, minimum marks/Score 1 was to be assigned when they

perceived themselves to be Completely Dissatisfied and 2, 3, 4 score falling in between them.

The participants have shown their level of satisfaction with CSR reporting. The mean level of satisfaction

in Ludhiana is found to be higher at 3.56 as compared to 3.13 in Delhi. The responses vary more in

Ludhiana with standard deviation equal to 0.89 followed by Delhi brokers with standard deviation in with

0.9987.The following table presents the response distribution to this measurement of satisfaction:

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Table 6.85

Satisfaction with CSRD- Broker’s Response

DHL LDH

N 46 44

Mean 3.130 3.568

Std. Deviation 0.8999 .9987

Sum 144 157

DLH LDH Sample

Score F % F %

1 2 4.35 3 6.82

2 10 21.74 9 20.45

3 12 26.09 18 40.91

4 18 39.13 12 27.27

5 4` 8.70 2 4.55

Total 46 100 44 100


To understand how the responses are distributed over five point Likert scale measuring satisfaction, the

frequency distribution and corresponding percentage has been computed. The extreme dissatisfaction has

been reported by 4.35% of participants in Delhi and 6.82% in Ludhiana. Even the extreme satisfaction is

shown by only a small percentage of respondents i.e. 8.70% in Delhi and 4.55%. Score 2 i.e. moderate

dissatisfaction is assigned by 21.74% of respondents in n Delhi and 20.45% in Ludhiana. Most of the

brokers i.e. 26.09% in Delhi and 40.91% have preferred to give a neutral view points on satisfaction level

i.e. score 3. Score 4 which represented moderate level of satisfaction has been reported by 39.13%

participants in Delhi and 27.27% of the participants in Ludhiana region.

6.13.1 Level of satisfaction Vs. Level of investment: To test and conclude whether the level of

satisfaction differs significantly for five categories of investments i.e. category I (Up to 50 lacs), category

II (50-150 lacs), category III (150-500 lacs), category IV (500-1000 lacs) and category V (more than 1000

lacs) on annual basis, the ANOVA test and multiple range tests have been conducted.

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Table 6.86


Average Annual

Amount Invested

N Average Standard deviation

Coeff. of variation

Stnd. skewness

Stnd. kurtosis

Category I 20 2.76 0.88 28.56% 1.39 1.68

Category II 25 2.48 1.48 44.16% 2.05 -1.25

Category III 19 2.77 1.24 47.56% 1.43 -1.23

Category IV 19 2.88 1.45 42.16% 2.04 -1.45

Category V 7 2.95 1.120 49.56% 1.83 -1.52


It is found that the mean level of satisfaction is found to be highest at 2.95 with the respondents in the Vth

category, i.e. those investing in the range of more than 1000 lakhs annually. This is followed by two

categories IV and III i.e. middle level brokers with average satisfaction score 2.88 and 2.77 respectively.

The brokers in Ist and IInd category are least satisfied with the current levels of CSR disclosures with mean

satisfaction at 2.77 and 2.48 respectively. It seems that those who are having small broking businesses are

more bothered about the social performance the company is showing.

Table 6.87

ANOVA Table for Level of Satisfaction by Level of Investment


Between groups 11.589 2 6.29948 4.75 0.0027

Within groups 282.879 88 1.10945

Total (Corr.) 294.468 90


The F-ratio, in this case equals 4.75, is a ratio of the between-group estimate to the within-group estimate.

Since the P-value of the F-test is less than 0.05, there is a statistically significant difference between the

mean Level of Satisfaction from one level of Level of annual Investment to another at the 95.0%

confidence level.

6.13.2 Level of Satisfaction CSRD and Educational Background: To understand whether Brokers

educational background has a role to play in satisfaction of brokers, the brokers were categorized into

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three categories i.e. Matriculate, Graduate, and Post Graduate. In order to investigate the significant

differences over various categories of educational profile of participants ANOVA test has been run.

Table 6.88

Level of satisfaction vs. Educational Background

Table of Means for level of satisfaction by Educational Profile with 95.0% LSD intervals

Level Count Mean Stnd. error (pooled) Lower limit Upper limit

1 23 2.1455 0.825256 1.7452 2.5896

2 43 2.37778 0.217899 2.43483 2.9354

3 24 2.72917 0.201056 2.57496 2.89396

Total 90 2.6365

(Source: Author’s computations) 1- Matriculate, 2- Graduate, 3- Post graduate

This table shows the mean level of satisfaction for each level of Educational Profile. It also shows the

standard error of each mean, which is a measure of its sampling variability.

Table 6.89

ANOVA Table for level of satisfaction by Educational Background


Between groups 6.04562 2 3.08965 3.13 0.0642

Within groups 113.456 88 1.43789

Total (Corr.) 119.502 90



Since the P-value of the F-test is greater than or equal to 0.05, there is not a statistically significant

difference between the mean levels of Satisfaction from one level of Educational Background to another

at the 95.0% confidence level.

6.13.3 Level of Satisfaction CSRD and Investment experience: To understand whether Brokers age of

investment has a role to play in satisfaction of brokers, the brokers were categorized into three categories

i.e. less than 5 years, 5 years to 20 years and more than 20 years. In order to investigate the significant

differences over various categories of age of investments of participants ANOVA test has been run.

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Table 6.90

Level of satisfaction by Investment experience

Level Count Mean S.E.(pooled) Lower limit Upper limit

1 39 2.5037 0.0879287 2.55426 2.76895

2 35 2.37343 0.972149 2.31254 2.66541

3 16 2.54630 0.241787 2.78152 2.05460

Total 90 2.26555

(Source: Author’s computations) 1- Less than 5 years, 2- Five years to 20 years and 3- More than 20

years

This table shows the mean level of Satisfaction for each level of Investing Experience. It also shows the

standard error of each mean, which is a measure of its sampling variability.

Table 6.91

ANOVA Table for level of satisfaction by Investment experience


Between groups 3.01423 2 1.74535 2.34 0.4531

Within groups 263.15 88 1.53217

Total (Corr.) 266.164 90



Since the P-value of the F-test is greater than or equal to 0.05, there is not a statistically significant

difference between the mean levels of satisfaction from one level of investment experience to another at

the 95.0% confidence level.

6.13.4 Level of Satisfaction with CSR Disclosures and Gender: In order to investigate the significant

differences over Gender’s profile of participants ANOVA test has been run. Table of Means for level of

Satisfaction by Gender with 95.0 percent LSD intervals

Table 6.92

Level of satisfaction by Gender

Gender Count Mean Stnd. error (pooled)

Lower limit Upper limit

Male 77 2.2545 0.12107 2.35644 2.58714

Female 13 2.5654 0.56418 2.59456 3.64715

298


This table shows the mean level of satisfaction for each level of Gender. It also shows the standard error

of each mean, which is a measure of its sampling variability. Female brokers have higher level of

satisfaction with CSR disclosure with mean 2.57 against the mean satisfaction of male brokers 2.25.

Table 6.93

ANOVA Table for level of Satisfaction by Gender


Between groups 12.536 1 10.4568 7.25 0.0047

Within groups 145.521 89 1.45810

Total (Corr.) 158.057 90


The F-ratio, which in this case equals 7.25, is a ratio of the between-group estimate to the within-group

estimate. Since the P-value of the F-test is less than 0.05, there is a statistically significant difference

between the mean level of satisfaction between male and female brokers at the 95.0% confidence level.

Next question put across to brokers in two regions was, whether in their opinion the CSR disclosure

should increase, decrease or remain constant as compared to present. The descriptive statistics are as

below:

Table 6.94

Changes in current level of CSR responses

Community Development

HR Environment Conservation

Energy Carbon emissions

Product Safety Rank

F % F % F % F % F % F %

1 80 88.8 78 86.67 75 83.3 72 80 78 86.67 65 72.22

2 6 6.67 1 1.11 6 6.67 4 4.4 5 5.5 15 16.67

3 4 4.4 11 12.22 9 10 14 24.44 7 7.8 10 10.1

(Source: Author’s computations) 1- Increase, 2- No change, 3- Decrease

Looking at the response given by the participants with regard to changes in level of CSR disclosures 88.8

% of the brokers have opined that community disclosures must increase from current levels. This increase

has been found to be highest when compared with other themes. This reflects the importance of

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community development theme in the minds of brokers because it has been found elsewhere in the study

that most disclosed theme is CD and further enhancements are proposed by the respondents. In Employee

welfare/Human resources which have been found to be the second most disclosed theme, further increases

are suggested by 86.67 % of the brokers. A very small number of brokers have suggested that disclosure

in these two categories should either decrease or should not change.

Is CSR reporting is successful was the next dichotomous question put forward to the respondents. The

brokers in different geographical samples have responded in the manner underneath:

Table 6.95


Response DLH Ludhiana

Yes 35(76.09 %) 25(56.82 %)

No 11(23.91 %) 19(43.18 %)

Total 46(100%) 44(100%)


The response to this question is mixed as 76% in Delhi and 56.82% expressed that in their opinion, CSR

reporting is successful. 23.91% of respondents in Delhi and 43% believe that companies have not been

able to communicate their CSR performance to various stakeholders successfully. This indicates the need

for companies to enhance their CSR disclosures, keeping in mind various benefits that disclosures extend

to social performing companies.

6.14 REASONS FOR NON- DISCLOSURE OF CSRD- BROKERS RESPONSES

Brokers had also given opinions with regard to the reasons which could possibly make companies having

reservations in disclosing their CSR initiatives. On the basis of review of literature they were given five

options to choose from. There options were Poor ethical decision making, Laxity in regulation, confused

policies on CSR, and Increased cost of disclosure and Fear of damage to goodwill if perceived to be less

socially responsible due to lesser amount of disclosure. The respondents were given choice to tick

multiple options as well, if they felt more than one reason responsible for unsuccessful CSR reporting.

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Table 6.96

Reason for Not Disclosing CSR Activities

Sample of respondents R-1 R-2 R-3 R-4 R-5

DLH 32 30 25 18 24

LDH 17 29 36 17 36

DLH (IN %) 35.6 33.3 27.8 20.0 26.7

LDH (IN %) 18.9 32.2 40.0 18.9 40.0

(Source: Author’s computations) R1- Poor ethical decision making, R2- Laxity in regulation, R3-

Confused policies on CSR, R4- Increased cost of disclosure, R5- Fear of damage to goodwill if

perceived to be less socially responsible due to lesser amount of disclosure

The participants were also requested to give reasons which in their opinion restrict companies not to

disclose their social performances. Little more than 1/3rd of the respondents in Delhi have blamed poor

ethical decision making (35.6%) and laxity in regulation (33.3%) for not disclosing their CSR

performances. In their opinion, increased cost of disclosure has the least influence on intention of

companies to share their CSR initiatives. In Ludhiana, 2/5th of the respondents have indicated that the fear

of loosing reputation (40%) and confused policies on CSR (40%) are the primary reasons for non-

disclosures of CSR initiatives undertaken by the companies. Here also, it is felt that increased cost of

disclosures does not hold the companies back in context of sharing their social performances.

6.15 MODUS OPERANDI AND ISSUES RELATING TO CSR REPORTING- BROKERS

RESPONSES

“Every company even if not making profits should disclose CSR activities.” The summarized responses

to statement are presented below:

Table 6.97

CSRD are Must






301

If the company is not making profit, then would it be appropriate to mention their CSR initiatives was the

next question put forward to the respondents. The mean response received is 2.86. It indicates that the

respondents disagree that non-profitable companies should convey their CSR works. The median

response 3 indicates agreement. The standard deviation is 1.013 showing variations in the responses.

66.66% percent of respondents have agreed/ strongly agreed with the statement. Strong disagreement

comes from only from 14.44% participants. Overall, it can be inferred that participants believe that all

companies (profit making or not) need to disclose their CSR achievements.

“Companies normally exaggerate CSR claims.” The responses to statement are presented:

Table 6.98

Exaggeration in CSR Claims







To understand the beliefs of brokers in reliability of CSR information released at various places like

Annual Reports, Media, Press Releases and websites, a question was put forward that whether companies

normally exaggerate their CSR claims? Brokers have shown their agreement with the statement as the

mean response is 3.04 and the median response is 3. Fifty nine percent of the brokers strongly feel that

companies present exaggerate claims with regard to their CSR performance. This kind of disbelief present

serious repercussions on CSR disclosures i.e. companies knowing that their claims will be discounted

shall tend to show inflated performances. This is in turn will lead to enhanced gap between actual CSR

performances and its disclosures, furthering the disbelief and discounting of CSR reporting. “CSR

disclosures should be made mandatory.” Here are the summarized responses:

Table 6.99

Mandatory CSRD






302

The companies always tend to disclose only the information which has been made mandatory by law just

like the corporate governance report, the director’s report. When it comes to voluntary information

disclosures, the perceived costs as well as potential benefits overweight the need for precise and true

disclosures. The brokers have more than agreed with the statement with mean response 3.46 in Delhi and

Ludhiana regions. The median response stood at 4 again showing the consistency in the agreement with

the statement. 35.56% of brokers have agreed that CSR disclosures should be a compulsion under law.

Whereas 56.67% of brokers have strongly agreed that CSR disclosures should be a compulsion. Such

compulsion would also necessitate changes in existing accounting standards and relevant pieces of law

and legislation. Such prepositions have also been found in earlier research for example Shobani et al

(2009), Adeolu et al (2010).

“Honest and less information on CSR shall have negative effects rather than positive.” The summarized

responses to statement are presented below.

Table 6.100

Honest but Little CSRD







This question is complimentary to earlier question regarding exaggeration of CSR claims by the

companies and provides further clarifications in believability and reliability of CSR reporting. If

companies are doing only little work in discharge of their social responsibilities and then they are

reporting these performances honestly, it may damage the goodwill of the company. The participants in

all the regions have almost disagreed with the apprehension of the companies with mean response of 2.63.

The median response is found to be 3. Overall response is mixed as brokers are not sure of implications of

less social performances and their honest disclosures. More than half of the participants have expressed

their agreement/ strong agreement with the statement. “Companies disclose CSR activities because

competitors also disclose their CSR activities.” The summarized responses to statement are presented

below.

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Table 6.101

CSRD due to Competition







A query with regard to whether the competitive forces compel companies to disclose their CSR activities

was put forward to the respondents. The mean response of the participants is towards the disagreement

with the statement at 2.74. The median response is 3. Approximately 1/3rd of the respondents disagree/

strongly disagree with the statement that companies disclose CSR activities because competitors also

disclose their CSR activities.

“There is need for standard instrument to measure CSR.” The summarized responses to statement are

presented below.

Table 6.102

CSRD –Need for Standard Instrument



Standard Deviation 0. 884 3- Agree 53 58.89%


Valid Responses 2.88 90 100


The response of respondents to the question that whether there is need for standard instrument for

measuring CSR is less than agreed with mean 2.90. The earlier study by Shobani et al (2009) has

expressed that lack of standards may mean that any existing CSR disclosures will be very much public-

relations oriented. The median response of 3 indicates strong agreement with the need for standard

format/instrument for measuring and reporting CSR performance. Batra (1996) studied various model

formats for corporate social reporting and emphasized urgent need for social auditing. But it is always

easy saying than doing, so given the diverse range of activities falling in CSR arena and diverse motives

304

of corporate pursuing them; it’s in reality a challenge to design such instrument which can capture the

true picture of CSR initiative in a meaningful manner.

6.16 Summary of the chapter: CSR information does not have very influential role in investment

decisions. Very few investors and brokers have given CSR disclosures the first preference while making

investment decision/recommending investment. Past and future performances enjoy higher level of

credence for investing. This may due to fact that CSRD currently are low and are in narrative form. It has

also been observed that investors and brokers feel that the companies exaggerate their CSR claims.

Moreover, the almost all the investors and brokers have demanded higher levels of information on CSR

initiatives. Initiatives taken by the companies in education, employee’s health and safety, rural

development efforts received relatively higher attention from the investors and brokers. Annual reports

are preferred as the main source of information with regard to CSR activities. The investors and brokers

have expressed their opinion that first preference should to be given to the community at large and then

shareholders/investors interest. Overall mixed reaction can be noticed in regard to the location and forms

of CSR information. Around 50% of investors want that the companies should be using all forms of CSR

disclosures. The overall ranking given at aggregate level, depict that the investors feel, that top reason for

disclosures is Enhanced goodwill (rank 1) followed by long term sustainability (Rank 2). The

participants have shown their level of satisfaction with CSR reporting. The mean level of satisfaction in

Chandigarh is found to be highest at 3.19 as compared to 3.04 in Delhi and 2.89 in Ludhiana region.

Though it seems strange but overall 71.6% of participants in Chandigarh, 74.8% of participants in Delhi

and 63.3% of participants have shown satisfaction with current status of CSR disclosures. It seems that

the as investors have shown low level of interest in CSR disclosures as an input variable for investment

decision making context, at this point of time, they feel satisfied. But as their orientation with CSR shall

increase, their informational requirements are expected to increase. The companies can make the

investors seek better CSR disclosures by enhancing the quality of disclosures. But the challenge here, “Is

it in their interest to do so?” and “What could be the motivation for doing the same”. Only long term

vision may compel the companies to follow CSR practices. It is found that the mean level of satisfaction

is found to be highest at 2.76 with the respondents in the second category, i.e. those investing in the range

of one to ten lakhs annually. For the other two categories have almost same level of satisfaction with

average satisfaction score approximately 2.35. It seems that those who are investing small amounts and

quite large amounts are less bothered about the social performance is showing. Investment experience

does not affect the level of satisfaction of different types of investors. Investors have been categorized

into three categories i.e. less than 5 years, 5 years to 20 years and more than 20 years but female investors

have a higher level of satisfaction with the CSRD at 3.05 as compared to male investors at 2.47. This

level of satisfaction is statistically significant different from satisfaction of males at the 95.0% confidence

305

level. It is found that almost half of the respondents believe in success of CSR reporting. This indicates

the need for companies to enhance their CSR disclosures, keeping in mind various benefits that

disclosures extend to social performing companies. Poor ethical decision making and laxity in regulation

have been accused for lesser CSR disclosures. In the opinion of the investors and brokers, increased cost

of disclosure has the least influence on intention of companies to share their CSR initiatives. Large

companies and multinational companies need to have CSRD than smaller and domestic firms.

Collaboration with Government and NGO can be welcomed by investors and brokers. As the primary

motive of any business organization is its survival and growth for which earning profit is foremost

necessity. Every business should focus on earning profits and charity/CSR fall beyond the ambit of

business organization. This view has been disagreed by all sets of respondents. The investors and brokers

have expressed their opinion that a socially responsible company enjoys better profitability through

higher level of confidence of customers in such companies and enjoys higher level of confidence of

investors in form of higher stock prices. The impact of CSR may not be visible in short run but good

social performance shall lead to enhanced level of profitability in the long run. The mean response to this

view is 3.04 in Chandigarh, 3.26 in Delhi and 3.31 in Ludhiana. The CSR performance acts as a cushion

to fall back upon, when companies see hard times in terms of some social conflict or some kind of

untoward event. The social performance can contain the damage to the reputation and profitability in the

bad times. The mean response to this statement is 2.74 in Chandigarh, 2.70 in Delhi and 2.86 in Ludhiana

indicating little less than overall agreement with the view. 44.21% respondents in Chandigarh, 45.1% in

Delhi and 57.8% in Ludhiana have expressed their agreement with the statement. A socially responsible

company enjoys more reputation and goodwill than a company indifferent to its responsibilities towards

society. This statement depicts the PR role of CSR. The view has seen strong agreement. Investors in

Chandigarh have shown their agreement with the statement that the companies normally exaggerate their

CSR claims. This kind of disbelief present serious repercussions on CSR disclosures i.e. companies

knowing that their claims will be discounted shall obviously tend to show inflated performances. This is

in turn will lead to enhanced gap between actual CSR performances and its disclosures, furthering the

disbelief and discounting of CSR reporting. It situation shall be working like a loop difficult to break.

May be this is the reason that CSR disclosures in various countries are found to be in narrative/descriptive

mainly. These descriptive disclosures are difficult to measure and compare with reality. In India like

many other countries, the CSR disclosures are found to be narrative. So, in sync with the existing

literature the respondents have given verdict that the corporate social responsibility communication

reflects the action on social responsibility is questionable. The investors have strongly agreed with

the need to make CSR disclosures mandatory. Such compulsion would also necessitate changes in

existing accounting standards and relevant pieces of law and legislation. The competitive pressures and

306

‘little CSR work and honest disclosure damaging the goodwill of the company, these views have not

found unambiguous acceptability. Need for standard instrument for measuring CSR, has seen strong

agreement. It is feared that this lack of standards may mean that any existing CSR disclosures will be very

much public-relations oriented. Brokers’ decisions are influenced maximum by the past financial

performance of the company followed by future prospects of the companies. There is an increasing trend

towards the companies going for massive media advertising of their CSR activities. Investors and brokers

do not bother to read standalone reports on CSR. This has the implication that instead of separate reports,

CSR disclosure should be made in the annual report itself. Online reports may find an only a limited

usage as these can be used only by the stakeholders having internet access and a threshold of internet

expertise. The brokers have preferred that a company should perform CSR activities even if it is not

profitable and large companies and MNC should invest more in CSR activities than smaller and domestic

companies. The mean response to need for collaboration has been found at 3.12 by brokers. The same is

the case with regard to collaboration with government. The impact of CSR may not be visible in short run

but good social performance shall lead to enhanced level of profitability in the long run. The CSR

performance acts as a cushion to fall back upon, when companies see hard times in terms of some social

conflict or some kind of untoward event, the view has not found plain agreement. A SR company enjoys

more reputation and goodwill than a company indifferent to its responsibilities towards society. A clear

cut verdict can be seen in favour of PR and image building role of CSR. The brokers want the information

to be disclosed in multiple forms i.e. narrative, quantitative monetary, photographs. The participants have

shown their level of satisfaction with CSR reporting. The mean level of satisfaction in Ludhiana is found

to be higher at 3.68 as compared to 3.013 in Delhi. It seems that those who are having small broking

businesses are relatively more bothered about the social performance is showing. It has also been found

that there is a statistically significant difference between the mean levels of satisfaction from one level of

Level of annual Investment to another at the 95.0% confidence level. Educational background,

investment experience and age of brokers do not influence the mean levels of satisfaction of the brokers

but female brokers have significantly higher level of satisfaction with regard to CSR disclosures than

males. Poor ethical decision making and laxity in regulation are the reasons for not disclosing their CSR

performances. It is felt that increased cost of disclosures does not hold the companies back in context of

sharing their social performances. 53% of the brokers strongly feel that companies present exaggerate

claims with regard to their CSR performance. The brokers also suggest that CSR disclosures should be

made mandatory.

CHAPTER 6 PERCEPTIONS OF INVESTORS AND STOCK BROKERS...

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