Accounting Department Research Seminar - Professor Chris Van Staden

The influence of civil liberty and external assurance on corporate social and environmental transparency: a study of financial institutions

This paper examines corporate social and environmental transparency within the global financial services sector. Using the notion of civil liberty from social movement theory, we evaluate if the influence of civil liberty at the country level and external Corporate Social Responsibility (CSR) assurance at the company level, have an impact on corporate social and environmental transparency. Transparency is an important quality of social and environmental information that allows stakeholders to make informed decisions on their interactions with an organisation and therefore enhance the relationship between the organisation and its stakeholders.

We use a sample of 448 observations representing 122 financial institutions from 32 countries to investigate the influence on corporate social and environmental transparency. We find that financial companies from countries with higher levels of civil liberty as well as those with external CSR assurance have higher corporate social and environmental transparency. Based on social movement theory, we conclude that higher levels of civil liberty encourages social movement and stakeholder activism related to concerns about companies’ social and environmental impacts, leading to higher levels of social and environmental transparency. External CSR assurance also leads to improved transparency. Our findings contribute to the literature by providing systematic evidence on how social movement factors and independent CSR assurance influence social and environmental transparency across the countries.