Corporate Social Responsibility Disclosure Practices and Banks Financial Performance: A Study on Listed Private Commercial Banks in Bangladesh
By Nazma Akter
2 weeks ago
Corporate Social Responsibility Disclosure Practices and Banks Financial Performance: A Study on Listed Private Commercial Banks in Bangladesh
- JBT No #01, Volume –XIII, January-June, 2018 Corporate Social Responsibility Disclosure Practices and Banks Financial Performance: A Study on Listed Private Commercial Banks in Bangladesh NAZMA AKTER* ABU BAKKAR SIDDIK MD. SAHEB ALI MONDAL *** Abstract The study aims to identify the nature and trend of corporate social responsibility (CSR) practices as well as find out the relationship between the different dimensions of CSR disclosures practice and financial performance of listed private commercial banks (PCBs) in Bangladesh. All data were collected from annual reports of listed 26 PCBs and content analysis has been done for getting CSR dimensional data. Multiple regression analysis was used to estimate the relationship of CSR disclosures and financial performance. We found that only two banks are extensively disclosing CSR among others. Islamic Bank Bangladesh Limited (IBBL) is disclosing the highest number of information. We also found CSR disclosers are strongly correlated with the Return on Asset (ROA) which is statistically significant through humanitarian and disaster relief of CSR disclosure; it has significant positive effect on financial performance. We argue that PCBs should not seek direct financial earnings rather they can aim at long term benefit indirectly and government should impose some rules on other PCBs to disclose all CSR, especially, where PCBs can be benefited financially. Assistant Professor of Accounting, Department of Business Administration, Northern University Bangladesh and Research Fellow, Bangladesh University of Professionals (BUP); E-mail: firstname.lastname@example.org ** Department of Business Administration, Northern University Bangladesh, E-mail: email@example.com *** Assistant Professor of Accounting, Department of Business Administration, Northern University Bangladesh and Research Fellow, Bangladesh University of Professionals (BUP); E-mail: firstname.lastname@example.org *
- 2 Journal of Business and Technology (Dhaka) Keywords: PCSs, Annual report, Corporate Social Responsibility, Bank Financial Performance, Humanitarian and Disaster Relief, Education, Health, Environmental and Cultural Welfare. I. INTRODUCTION During the last three decades, we have noted a mounting pressure on corporations to engage in Corporate Social Responsibilities. The concept of corporate social responsibility (CSR) emphasizes on the corporate commitments to social and environmental practices. The primary motive of financial manager of an organization is to maximize shareholders’ wealth but to the extent which covers ethical, social and environment protection related duties of companies is called CSR. CSR is not a new activity of interest for businesses in the world but the development of the Corporate Governance practice in Bangladesh has become a focal point in the recent years. CSR can increase both long term profitability and sustainability of the company as well as enhance the goodwill of the organization. Among most global companies some simply view CSR as a costly hindrance, while a few have managed to use CSR methods, logics as a strategic tactic to obtain public appreciation for their presence in the global markets. Notwithstanding this advantage, the companies sustain a competitive advantage by using their social contributions. Accordingly, CSR is important because it influences all the aspects of bank’s operations. European commission defined “CSR as a concept which shows the contribution of various companies towards a better society and cleaner environment”. An efficient Corporate Governance and CSR framework will ensure that corporations act as good corporate citizens with regard to human rights, social responsibility and environmental sustainability. No doubt, it ensures the quality of life. The purpose of business is not only to earn profit but also to ensure the welfare of society as well by showing a part of their profit and therefore CSR has become a standard practice for business in the contemporary period. With CSR insight, this paper is driven to analyze the outcome of CSR on financial performance of listed banks in Dhaka Stock Exchange (DSE) of Bangladesh to investigate the relationship between CSR dimensions (Environment, Community, Human Resource and others) and Corporate Financial Performance using secondary data of said institutions. For this purpose, the study considers financial performance measuring tools like ROA, ROE, and EPS etc. to analyze the CSR impact on banks. The cabalistic and positive
- Akter , Siddik & Mondal : Corporate Social Responsibility Disclosure Practices 3 relationship explains CSR and Banks’ financial performance. On the other hand the authors also got some of the indicators not to get the uphill of success due to unawareness and less attention-payment on CSR. The rest of the study is arranged as follows. The next section presents the literature review. Then the hypotheses development and research methodology are explained. Further next is presented by discussing the research findings. The last and final part concludes the paper followed by the limitations of the study and recommendations for future study. II. LITERATURE REVIEW Commitment to social and environmental activities is just a matter of satisfying the minimum requirement of the law (Micah et al., 2012). But now the CSR is considered most important factor for enhancing performance of banks and today the corporate world is walking with CSR wings to meet the sustainability target. Therefore, different researchers and authors nationally and internationally, conducted the studies on CSR and its impacts on financial performances of the organizations which are as follows: The concept of CSR has been defined by different people in different ways. CSR represents the overall activities of organization that inform business obligations to all momentous stakeholders according to the commitment. Kotler and Lee defined CSR in their book as “Corporate social responsibility is a commitment to improve community well-being through discretionary, business practices and contribution of corporate resources. Corporate social initiatives are major activities undertaken by a corporation to support social causes and to fulfill commitments to corporate social responsibility.” The idea of CSR is receiving growing attention in the academic literature as the role that CSR plays in business has grown (Orlitzky et al., 2003; Gouldson, 2006; Siegele and Ward, 2007). Matten and Moon (2008) stated that the motives of managers, shareholders, and other key stakeholders shape the way corporations are governed and institutional theory brings interdependencies and interactions among stakeholders into the analysis, which is vital to understanding CSR, given its societal orientation. Carroll (1991) found philanthropic, ethical, legal and economic responsibilities as CSR. Corporate social responsibility as actions that appear to further some social good, beyond the interests of the firm and that which is required by law (McWilliams and Siegel, 2001). Sharma (2011) argued
- 4 Journal of Business and Technology (Dhaka) that, CSR recognizes an organization’s commitment to operate in a socially responsible manner. Although Hackston and Milne, (1996); Teoh et al. (1999) failed to get any significant relationship between the CSR disclosures and the degree of profitability but Babalola (2012) using least square analysis got a negative relationship between firms’ financial performance with investment in social responsibility where Mehar and Rahat (2007) also disclosed a significant negative relationship between CSR and financial performance of pharmaceutical industry. However, Guthrie and Parker (1990) also examined 150 companies’ annual reports in three countries by using content analysis which covered United Kingdom (U.K), United States (U.S) and Australia where they found the companies which provided CSR disclosures, were 98 percent of the Australian companies and that CSR disclosures cover these subjects: community, environment, human resource, product, energy and other CSR issues. Masud and Hossain (2012) conducted a survey among 10 commercial banks of different countries and found that 100 percent banks reported their CSR activities but 60 percent banks participated in prescribed CSR area according to financial Act. Krasodomska (2015) found increasing trend of CSR disclosure. Previous literature found that higher profit companies have the strong CSR disclosure in their annual report comparing to the lower profit companies. Mallin, and Farag (2014) found that CSR disclosure is determined by financial performance. Farook, Hassan and Lanis (2011) revealed that there is a smooth and regular relationship in statement of Islamic Banks’ on CSR disclosures. But, financial performance considers one of the most important studied indicators of the strategic value of CSR (Orlitzky, et al. 2003). Financial performance can be defined as-; it measures all the financial position of banks over some specific time period and also sees that how efficiently a bank generates its resources and expands income. Some variables like: return on asset (ROA), return on equity (ROE), earning per share (EPS), etc evaluate all the wealth of banks (Knan, Tariq 2017). Laskar and Maji (2017); Yusoff and Ademu (2016) found CSR has a positive and supportive involvement of CSR activities to enhance financial performance of companies. Al- Samman (2016) indicated that three components of CSR like economic, ethical and legal have a positive and significant relationship between each other.
- Akter , Siddik & Mondal : Corporate Social Responsibility Disclosure Practices 5 Kamrujjaman and Obaidullah (2016) found CSR initiatives currently is playing a significant role in reducing poverty in developing countries as part of corporate performances. Taskin (2015) got interconnection among CSR practices and Turkish banks’ performance. Murtuza and Akhtar (2014) CSR is really important to increase financial performance of firms. Awan and Nazish (2016); Malik and Nadeem (2014); Akanbi and Ofoegbu (2012); Masood, Ashraf (2015); Khan and Tariq (2017) found CSR has a significant and positive relationship on financial performance. Kanwal and Khanamk (2013) CSR and financial performance are correlated each other of firms and CSR brings continuous long term development. Weshah and Dahiyat (2012) under quantitative research they found CSR has most important and significant relationship between the level of risk, level of all advertising expenses, levels of banks, banks’ size and CSR. Ebiringa et al. (2013) found significant negative link between CSR disclosure and firm size but profitability was positively and significantly related to CSR disclosures of the companies. Crisostomo et al.(2011), there are positive, negative and neutral arguments on the relationship between CSR and corporate financial performance (CFP). Orlitzky et al. (2003) commitment to social and environmental responsibility likely to improve corporate performance. Yuksel, Bulut and Tuzuner (2015) CSR has an important role in growth and sustainability in developed economies. On the basis of literature review the authors feel to conclude that there is a dearth of available literature studied on CSR and financial performances especially on the listed private commercial banks in Bangladesh. III. RESEARCH METHODOLOGY The nature of the study is quantitative. To achieve the required objectives the study included all the listed commercial banks in Dhaka Stock Exchange (DSE), Bangladesh over the period of 2014-2016.The study has been done based on secondary data and information has been collected from the annual reports of listed commercial banks in DSE. To determine the appropriate sample size for this study, due to unavailability of required information 4 banks were eliminated and the final sample size was 26 banks by using convenient sampling method. Content analysis has been done to extract the CSR initiatives information with respect to Bangladesh Bank’s CSR dimensions guidelines. To measure the nature and trend of CSR practice with respect to CSR dimensions, here used sentencecounting method (Joshi and Gao, 2009). When annual report contains no CSR information, it is considered as none but when it is below 100 words, it is
- 6 Journal of Business and Technology (Dhaka) summarized and above 100 words, it is extensive. Measures of financial performance and related control variables were collected from the annual reports and variables are adopted based on accounting measures which indicate the profitability of the organizations. The study has considered independent variables in CSR as Education, Health, Humanitarian and Disaster relief, Environmental; Cultural Welfare as the drivers to change the financial performances and the dependent variables are Return on Asset (ROA); Return on Equity (ROE); and Earning per Share (EPS) of a bank. Research Hypotheses The following three alternative hypotheses have been settled for examination in order to test the relationship between the dimensions of CSR disclosures practice and banks financial performance among selected commercial banks. H1: There is a positive relationship between CSR disclosure practice and ROA in the listed commercial banks in Dhaka Stock Exchange (DSE). H2: There is a strong relationship between CSR disclosure practice and EPS in the listed commercial banks in Dhaka Stock Exchange (DSE). H3: There is a highly positive relationship between CSR disclosure practice and ROE in the listed commercial banks in Dhaka Stock Exchange (DSE). Research Model The determinants of banks financial performance are analyzed from panel data. To test H1 to H3, we used the following research model: BFP= β0 + β1+ β2 + β3 + β4 + β5+ α (1) Where, BFP= (Banks financial performance, measured by Return on Asset, Earnings per Share and Return on Equity); β0= the intercept estimates; β1=Education; β2= Health; β3= Humanitarian and Disaster relief; β4= Environmental; β5= Cultural Welfare; and
- 7 Akter , Siddik & Mondal : Corporate Social Responsibility Disclosure Practices α= Error term which represents the differences between actual BFP and predicted by the model. In the model, bank’s financial performance represents as a dependent variable denoted by BFA and independent variables represent the dimensions of CSR denoted by β1 to β5. The banks’ financial performance is measured by the Return on Asset (ROA), Return on Equity (ROE), and Earning per Share (EPS). The regression models have been developed which are as follows: ROA=β0+β1+β2+β3+ β4 + β5+ α (2) ROE=β0 + β1+ β2 + β3 + β4 + β5+ α (3) EPS= β0 + β1+ β2 + β3 + β4 + β5+ α (4) The graphical model portrays variables in figure used to analyze the impact of corporate social responsibility disclosure practices on the banks performance in Bangladesh. FIGURE 1: Conceptual Model to Give A Clear View of the Study The following model has been developed by the authorsEducation Health Humanitarian & Disaster Relief Independent Variable CSR Practice Dependent Variable ROA Banks Performance EPS ROE Environment Cultural Welfare
- 8 Journal of Business and Technology (Dhaka) TABLE 1 DETERMINANTS OF BANK PROFITABILITY AND CSR DISCLOSURE PRACTICES Determinants Profitability Corporate Social Responsibility Variables Measures Notations Return on asset Net profit/Total assets ROA Return on equity Net profit/Total equity ROE Earnings per share Net income/Average outstanding share EPS Education - EDU Health - HH Humanitarian and Disaster relief - H&D Environmental - EN Cultural Welfare - CW IV. DATA ANALYSIS AND FINDINGS Banks should be the pioneer to follow norms like GRI guidelines in printing sustainability report, which will be followed later on by the other sectors. BB issued various circular on green banking to adopt a comprehensive green banking policy in a formal and structured manner in line with the global norms so as to protect environment degradation and ensure sustainable banking practices. A part from doing environmentally and socially responsible business, banks can therefore encourage corporate sector to do the sustainable business through prudent lending and make a bridge between green banking and green financing. To find out whether the alternative hypotheses shall be accepted or not, we conducted a multiple regression test, in which the significance level of .05 is used. The analysis was done with the help of statistical software SPSS 17 and MS Excel.
- 9 Akter , Siddik & Mondal : Corporate Social Responsibility Disclosure Practices TABLE 2 DESCRIPTIVE STATISTICS Minimum Maximum Mean SD ROA % -1.60 1.60 .8808 .57690 EPS -.40 5.90 2.4654 1.14436 ROE % 6.20 18.10 11.9423 2.79058 Education 1.30 3.00 2.2462 .51321 Health 1.00 3.00 2.1154 .64541 Humanitarian & Disaster Relief 1.00 3.00 2.2308 .49781 Environment 1.00 3.00 1.4500 .59883 Cultural Welfare 1.00 3.00 2.0731 .60303 Notes: ROA = Return on Asset; EPS = Earnings per Share; ROE = Return on Equity, SD= Standard Deviation Table 2 indicates the descriptive statistics where the average value of ROA is .88. This figure shows that for Tk.1 of assets, the bank investments increase by .88 per cent on the average to the maximum of 1.6 per cent. The minimum value of ROA is -1.6 per cent, which shows a decrease in ROA for banks listed on DSE. EPS for full sample banks ranged from minimum -.4 to maximum 5.90 and mean of 2.46. Also from Table 2, it can be noticed that return on equity (ROE) range from 6.20 to 18.10 with an average value of 11.94. The average for the independent variables from the highest to the lowest are 2.25, 2.23, 2.11, 2.07 and 1.45 for education, humanitarian & disaster relief, health, cultural welfare and environmental disclosure. Assessment of these numbers reveal that education dimensions received the highest attention making it the most disclosed CSR practices among Bangladeshi banks. This is followed by humanitarian & disaster relief, health and cultural welfare activities were second, third and fourth most disclosed information, while environmental disclosure is the smallest disclosed information among the banks in Bangladesh.
- 10 Journal of Business and Technology (Dhaka) TABLE 3 YEAR-WISE CSR EXPENDITURE OF LISTED PRIVATE COMMERCIAL BANKS (PCBS) IN BANGLADESH (TAKA IN MILLION) 2016 2015 2014 Education 403.84 390.48 340.85 Health 140.51 615.74 433.63 Humanitarian & Disaster Relief 1031.89 962.24 649.05 Environment 34.25 18.97 21.24 Cultural Welfare 16.73 140.44 162.45 1712.99 2306.84 1403.93 Total Source: Annual Report (2014-2016) The Table 3 shows that year-wise CSR expenditures of listed private commercial banks (PCBs) in Bangladesh. The highest CSR expenditure happened in 2015 and it was Tk. 2306.84 million. The lowest CSR expenditure recorded in 2014 and it was Tk.1403.93 million after one year later in 2015 it increased by Tk. 902.91million. But in 2016 it decreased by Tk. 593.85 million. The table also shows that the highest CSR expenditures recorded in Humanitarian and Disaster Relief in all years while the lowest expenditure happened in Environment in 2014 and 2015 and in Cultural Welfare in 2016. TABLE 4 SECTOR WISE CSR DISCLOSURE PRACTICE OF TOP 5 BANKS (APPENDIX 2) CSR Practice IBBL Exim Bank FSIB AIBL NBL Education 497.6 97.1 64.6 19.4 11.8 Health 332.4 60.8 44.8 223.7 40.5 Humanitarian & Disaster Relief 940.0 427.9 209.8 35.6 144.2 Environment 68.6 0.0 5.5 7.6 0.0 Cultural welfare 20.5 30.2 79.0 8.7 83.1 1859.0 616.0 403.7 295.0 279.6 Total Source: Annual Report (2014-2016) Table 4 provides a clear picture over the stated period in total of the CSR dimension positions of the top ranking banks based on content analysis and their
- 11 Akter , Siddik & Mondal : Corporate Social Responsibility Disclosure Practices investment amount on CSR. Here we observed in total CSR is high for IBBL, Exim Bank, NBL, AIBL and FSIB respectively among all the sample banks and we found that the highest position of CSR activities in Humanitarian and disaster relief. The findings indicate that todays’ corporations specially the banks are much more careful for the society’s wellbeing. The environment dimension is yet left behind which is alarming to us. Another most important finding is that, among topmost five banks in terms of environmental expenditure and disclosure, four banks are from Islamic perspective which is strongly comply with the findings of Farook, Kabir and Lanis 2011 which indicates the robustness of the findings. TABLE 5 ANALYSIS OF THE NATURE AND EXTENSIVENESS OF CSR PRACTICES IN LISTED COMMERCIAL BANKS IN DSE (BANGLADESH) CSR Activities 2016 2015 2014 Ext N (%) Sum N (%) None N (%) Ext N (%) Sum N (%) None N (%) Ext N (%) Sum N (%) None N (%) Environment 3 (12) 11 (42) 12 (46) 2 (8) 8 (31) 16 (62) 2 (8) 4 (15) 20 (77) Humanitarian & Disaster relief 7 (27) 18 (69) 1 (4) 7 (27) 18 (69) 1 (4) 7 (27) 18 (69) 1 (4) Education 7 (27) 13 (50) 6 (19) 8 (31) 17 (65) 1 (4) 8 (31) 16 (61) 2 (8) Health 7(27 ) 13 (50) 6 (23) 8 (31) 14 (54) 4 (15) 8 (31) 14 (54) 4 (15) Cultural Welfare 6 (23) 14 (54) 6 (23) 7 (27) 14 (54) 5 (19) 7 (27) 17 (65) 2 (8) Notes: Ext= Extensively disclosed; Sum = Summarized information; None = Not disclosed Sources: Annual Report (2014-2016) To further raise the trend of CSR practices in Bangladesh, we scrutinize the CSR dimensions individually as presented in Table V. The descriptive statistics show that on the average, CSR initiatives are used by the sampled banks as an intermediate of communication to their stakeholders. Analysis of individual dimension revealed that 20, 16 and 12 companies of the 2014, 2015 and 2016 reports (77, 61 and 46 per cent) showed no evidence regarding environmental issues. About 4, 8 and 11 banks of the total sample (15, 31 and 42 per cent) disclosed summarized information related to the impact and measures taken to maintain healthy environment. Only 2, 2 and 3 of the sampled banks (8, 8 and 12 per cent) in 2014, 2015 and 2016 extensively disclosed information on their environmental activities. Seeing the environmental challenges in Bangladesh, the
- 12 Journal of Business and Technology (Dhaka) level of environmental disclosure in the annual reports is still in its initial stage from what is desired. On humanitarian & disaster relief -related CSR, about 7, 7 and 7 banks (27, 27 and 27 %) in 2014, 2015 and 2016 extensively evidenced their commitment to communities in their annual reports. Between 2014 and 2016, comparatively few banks representing around 4 % did not disclose any information concerning community involvement initiatives. However, a good number of banks constituting nearly about 69 % in 2014, 2015 and 2016, respectively, disclosed summarized (less than100 words) information on their humanitarian & disaster relief -related activities. However, this dimension is the topmost disclosed information among the sample banks. Education is the most revealed information among the sample banks. In Table 5, 8, 8 and 7 banks (31, 31 and 27 %) give detailed information about their corporate social activities practices related in education sectors, while 16, 17 and 13 banks (62, 65 and 50 %) outlined their information for the said periods. Besides, 2, 1 and 6 banks (8, 4 and 19 %) disclosed nothing about education information in their annual reports for the sample period respectively under review. Nevertheless, some banks evidenced that CSR practices relating to education had a positive effect on the choice of banks by customers. Based on our findings, Health dimension is the second most disclosed information among the sample banks. From total of 26 sample banks, 8, 8 and 7 banks representing (31, 31 and 27 %) from 2014 to 2016 extensively disclosed information relating to health dimensions. On the other hand, 14, 14 and 13 banks (54, 54 and 50 %) disclosed summarized information. Only, 4, 4 and 6 banks (15, 15 and 23 %) banks from 2014 to 2016 respectively, did not disclose information about health dimensions. On cultural welfare -related CSR dimensions, about 7, 7 and 6 banks (27, 27 and 23 %) in 2014, 2015 and 2016 extensively disclosed information relating to cultural welfare dimensions in their annual reports. Between 2014 and 2016, comparatively few banks representing (8, 19 and 23 %) did not disclose any information concerning cultural welfare initiatives. However, a good number of banks constituting (65, 54 and 54 %) from 2014, 2015 and 2016, respectively, disclosed summarized (less than100 words) information on their cultural welfare -related activities.
- Akter , Siddik & Mondal : Corporate Social Responsibility Disclosure Practices 13 Based on the analyses of the nature and trend, only Humanitarian & Disaster relief (summarized information) augmented on yearly basis. Examine at other categories, there is an existence of variations in the trend of extensively disclosures between the years. This difference may be due to some banks-specific aspects, chiefly firm size as well as banks profitability. Regression Analysis: Model summary 1 (Appendix-1) indicates that there is a strong correlation between independent variables of corporate social responsibility practices (cultural welfare, environment, humanitarian & disaster relief, education and health) and dependent variable (Return on Asset). At 5% significance level the correlation is 87.1%. The value of R Square is .759 that means 79.5% of dependent variable can be explained by the independent variables. From ANOVA test, it can be remarked that there is a statistically significant effect of humanitarian & disaster relief on ROA because the significance level of these variables are less than 5% but there is no statistically significant effect of education, health, environment and cultural welfare because the significance levels of these variables are greater than 5%. The regressions equation will be: Return on Asset (ROA) = -4.802 + Education (.023) + Health (-.047) + Humanitarian & Disaster relief (.619) + Environment (-.025) + Cultural Welfare (-.005). The model summary 2 (Appendix 1) indicates that there remains a correlation between independent variables of corporate social responsibility practices (cultural welfare, environment, humanitarian & disaster relief, education and health) and dependent variable (ROE). At 5% significance level the correlation is 51.7%. The value of R Square is .268 that means 26.8% of dependent variable can be explained by the independent variables. From ANOVA test, it can be remarked that there is no statistically significant effect of education, health, humanitarian & disaster relief, environment and cultural welfare because the significance levels of these variables are greater than 5%. The regressions equation will be: Return on Equity (ROE) = 15.489 + Education (.450) + Health (-.335) + Humanitarian & Disaster relief (.421) + Environment (-.286) + Cultural Welfare (-.779).
- 14 Journal of Business and Technology (Dhaka) The model summary 3 (Appendix 1) indicates that there remains a correlation between independent variables of corporate social responsibility practices (cultural welfare, environment, humanitarian & disaster relief, education and health) and dependent variable (Earning per Share). At 5% significance level the correlation is 50.5%. The value of R Square is .255 that means 25.5% of dependent variable can be explained by the independent variables. From ANOVA test, it can be remarked that there is a statistically significant effect of humanitarian & disaster relief on EPS because the significance level of these variables are less than 5% but there is no statistically significant effect of education, health, environment and cultural welfare because the significance levels of these variables are greater than 5%. The regressions equation will be: Earnings per Share (EPS) = 4.533+ Education (.061) + Health (.425) + Humanitarian & Disaster relief (-1.71) + Environment (-.186) + Cultural Welfare (.488). TABLE 6 GROSS MODEL SUMMARY OF THE CSR DISCLOSURE PRACTICES AND BANKS FINANCIAL PERFORMANCE OF THE LISTED PRIVATE COMMERCIAL BANKS IN BANGLADESH R Adjusted Std. Error of Square R Square the Estimate Model R 1 .871a .759 .698 2 .517a .268 .085 3 a .505 .255 .069 F Significance Results .371 12.567 .000a Accepted 2.693 1.462 .246a Rejected 1.368 a Rejected 1.100 .278 Note: Acceptation/Rejection (at 5% level of significance) We displayed the findings employing the multiple regression analysis in Table VI. According to the (Pallant, 2007), the multiple regression technique was adopted due to the fact that it is a superior reckoning technique and efficiently grants authors to force for extra variables. The findings of the study indicate that, model 2 and model 3 were not supported. Seeing the negative relationship with the two variables (ROE & EPS) of banks financial performance, the results could not justify our estimated hypotheses. Findings of the multiple regression analysis also disclosed a positive relationship between CSR disclosure practice and
- Akter , Siddik & Mondal : Corporate Social Responsibility Disclosure Practices 15 Return on Asset (ROA) of the sample banks. This indicates that CSR disclosures practice in annual reports leads to enhance the banks financial performance. VI. CONCLUSION AND POLICY RECOMMENDATIONS The aim of this study was to identify the nature and extensiveness of CSR disclosure practice in Bangladesh banking sector and to examine the relationship between CSR disclosures practice and financial performance of banks. Findings from this study implies that the highest CSR expenditure occurred in 2015 and it was BDT 2306.84 million and the lowest CSR expenditure happened in 2014 and it was BDT 1403.93 among the sample banks during the study periods (2014-2016). Other findings of the study indicates that, only humanitarian & disaster relief (summarized information) increased on yearly basis. Looking at other categories, there is an existence of variations in the trend of extensively disclosures between the years. This discrepancy may be due to some banks-specific characteristics, mostly firm size as well as banks profitability. The study results confirmed the positive relationship between CSR disclosures practice and financial performance of banks. We also established the proof of significant negative relationship between CSR disclosure and banks financial performance (ROE & EPS). Beside these, Islamic banking practices are the major practitioner of environmental expenditure disclosure of CSR in Bangladesh. Accordingly, results from this article attempt a recent and fresh intuitiveness on the relationship between CSR disclosures practice and banks financial performance in Bangladesh. These results have pragmatic suggestions on the administration of Bangladeshi banking sector to re-strategize and re-think their corporate social responsibility guidelines that include education, health, and humanitarian and disaster relief, environmental and cultural CSR disclosures practices to increase their financial performance. Notwithstanding, to increase CSR disclosure practices in Bangladesh, the authors endorse that the Government in association with public and private organizations should think about the necessities for corporate social responsibility outline and catalogue to guide social, economic and environmental reporting in the nation. Furthermore, imposition of practicing Islamic banking may be the additional way to disclose environmental disclosure under the shade of CSR. Thus, the main constraint of this study is the sample size. Furthermore, catastrophe of banks to reveal CSR in the annual reports will have a measurable consequence on these findings.
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