THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY DISCLOSURE ON THE RELEVANCE OF ACCOUNTING INFORMATION FOR COMPANIES LISTED ON THE PALESTINE EXCHANGE
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Date
2023-11-29
Authors
Deema Khalil Shamali
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Abstract
Abstract
The aim of the study is to identify the association between the corporate social responsibility disclosures (CSRD) of the companies listed on the Palestine Exchange (PEX) and the relevance of accounting information. Moreover, it seeks to clarify if this relationship is moderated by corporate governance (CG) practices. The study uses data from the financial reports and disclosures of 44 companies listed at the PEX for the 2010–2019 period. A multiple linear regression is used to test the study hypotheses. Information relevance is measured by the Ohlson model as a correlation coefficient by using three variables including earnings per share (EPS), book value per share (BV), and operating cash flow per share (OCF). CSRD, on the other hand, is measured using a disclosure index consisting of 28items, while CG is measured using four board-related characteristics as CG practices, including CEO duality, board independence, board qualification, and board size. The study revealed that 44% of companies disclose social responsibility in their annual reports, with 57% focusing on product development and customer service. 48% of them are interested in community involvement, participating in charitable activities and supporting educational institutions. 40% of them disclose human resources, as employees are considered essential to the production process and bring benefits and profit. 32% of companies call for environmental protection, with some believing it is the state's duty, the regression analysis reveals mixed results on the impact of CSRD on accounting information relevance. Three measurements, EPS, BV, and OCF, are significantly impacted by CSRD. There is a significant and positive impact of corporate governance on the relationship between CSRD and the relevance of accounting information represented by three measurement EPS, BV, and OCF. The interaction terms (CSRD*DUL) have a significant relationship with BV and OCF but are insignificant with EPS. The interaction terms (CSRD*BIND) have an insignificant relationship with both EPS and BV but a significant relationship with OCF. The interaction terms (CSRD*BQUL) have a significant relationship with EPS and OCF but an insignificant relationship with BV. The regression also shows an insignificant and positive link between CSRD*BSIZE and EPS, BV, and OCF. In light of these results, the study presented several recommendations most notably: the requirement for companies to commit to disclosing all of their efforts to promote social responsibility in their annual reports, particularly those related to the environment.
Keywords: Relevance of Accounting Information, Corporate Social Responsibility Disclosure, Corporate Governance, Palestine Exchange