The Research of Corporate Social Responsibility Disclosures in Annual Reports

Abstract

The aspects of disclosure of information on corporate social responsibility (CSR) in the annual reports are analyzed in the article. Although the importance of CSR is rather widely discussed in scientific literature there is lack of empirical research on basic CSR disclosure situation, especially in developing countries. Thus, the main goal of this article is to investigate the level of social information disclosure in the annual reports of Lithuanian companies after the execution of analysis of the factors of social responsibility disclosure distinguished in scientific literature. Profit pursuit has been one of the most important company goals for a long time, first and foremost because revenue earning is an essential condition for activity succession. However, spreading CSR conception impels to ensure the implementation of needs and goals of all groups concerned. Thus, responsible company has to solve many important problems such as: how to maintain natural resources and produce goods, how to keep environment unpolluted and preserve human health, how to ensure safe, acceptable and healthy work environment. Implementation of responsible business practice may help company in creating competitive advantage, may have positive influence on its reputation, employee loyalty and employment, activity efficiency and sales volumes. Based on the analysis of scientific literature, there are four main activities distinguished that raise interest of various groups concerned: human resources’ activity, product design and development activities, community activity and environmental activity. According to the annual activity report of the Lithuanian National Responsible Business Network for the year 2008, this Network had united 57 Lithuanian companies and organizations on 31st of December, 2008. However, only 11 Lithuanian companies have presented social progress reports for 2008. This shows that major part of Lithuanian companies is oriented towards compulsory presentation of financial reports and financial information disclosure on requisition. Thus, while investigating the level of social information disclosure, compulsory reports – annual reports have been used where companies may voluntary disclose more social information on their activity. Content analysis as one of the most common methods for social information analysis was used for research. Full sentences on company social responsibility and page ratio to full volume of annual report in percents were used as a measurement unit for content analysis. There were annual reports for the years 2007 - 2008 of four companies from diary industry that had been quoted in the stock exchange used, aiming to ensure data comparability and logical conclusions. The results of research have revealed that the content of disclosure in Lithuanian companies is not comprehensive and is highly various, even in the same branch of industry. Investigated companies use written narrative but not quantifiable methods to disclose CSR in their reports. None of companies have disclosed information on community activity. Only one of surveyed companies has presented information on environment protection. Information on human resources has been presented mainly in digital form and in tables. Information on product quality and safety has been presented in the annual reports of all companies, as well as green (environmentally-friendly) products have been distinguished.