Alharbi, Khalid Mujahid S (2021) The impact of the 2030 Vision and firm characteristics on corporate social responsibility disclosure in Saudi Arabia. PhD thesis, Victoria University.

Abstract

The Saudi 2030 Vision and the revised corporate governance regulations (CGR) represent significant institutional developments related to corporate social responsibility (CSR) in Saudi Arabia. Such institutional changes are expected to affect CSR disclosure (CSRD) in Saudi Arabia. Therefore, this thesis aims to theoretically and empirically investigate how Saudi’s political, social, and economic factors and firm-specific characteristics influence CSRD in the context of the changing Saudi institutional environment. This thesis develops a comprehensive CSRD instrument containing 33 items that (i) incorporates international and Saudi-specific issues of CSRD, (ii) considers qualitative and quantitative CSRD items, and (iii) is based on the Saudi 2030 Vision’s objectives and the 2017 CGR articles related to CSRD. This instrument is used to measure CSRD in Saudi firms’ websites, standalone CSR reports, and annual reports of 117 listed companies, with a total of 359 observations between 2015 and 2018. This period is significant because 2015 was the year before the introduction of the institutional changes related to CSRD; 2018 was the year after the implementation of these changes (i.e., the release of the 2030 Vision, in 2016, and the implementation of the revised CGR in 2017). This thesis draws on institutional theory to develop the theoretical framework (the extended model), construct the CSRD instrument, and analyze the findings. Institutional theory enables examination of the influence of the country’s social, political, and economic factors (which reflects the country’s specific contexts) and micro firm-level characteristics on CSRD. Informed by institutional theory, this thesis examines the impact of pressures resulting from institutional changes and company characteristics on CSRD. The theoretical framework developed in this thesis is empirically tested by examining the relationships between CSRD (i.e., overall, categories, and individual items of CSRD) and explanatory variables. Logistic and multivariate regressions are used for the analysis. The results show a significant improvement in CSRD (from 2015 to 2018 by 30%) by Saudi companies. Findings support that institutional changes motivated Saudi companies to increase and diversify CSRD. The findings reveal that institutional changes (INST CHGS), board size (BSIZE), female employment (FEMP), government representatives on board (GOVRB), royal family members on board (RFMB), CSR awards (CSR AWD), risk management committee size (RMC SIZE), females on board (FOB), regulatory penalties (PEN), industry sectors (IND), and firm size (FSIZE) are strong drivers for CSRD in Saudi Arabia. These findings remain consistent when using alternative measures for board independent non-executive directors (BIND), FOB, GOVRB, RFMB, international operations (INTL OPS), FSIZE, and profitability (PROF). This thesis makes theoretical, empirical, and practical contributions to CSRD and extends the application of institutional theory to explain country contextual factors and firm- specific factors that influence CSRD. The thesis analyses several CSRD mediums (i.e., firms’ annual reports, standalone CSR reports, and websites) in Saudi Arabia, which offers more current evidence of the change in CSRD over time. It also examines a wider range of industry sectors based on the Global Industry Classification Standard (GICS), which Saudi Arabia implemented in 2017. This thesis introduces new Saudi-specific explanatory variables (i.e., drivers) related to CSRD (e.g., FEMP, GOVRB, PEN, and RMC SIZE). The findings have practical implications for a range of stakeholders (e.g., regulators, investors, accounting professionals, and other institutions) of CSRD in Saudi Arabia.

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