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CEO power
CEO power and corporate social
responsibility (CSR) disclosure:
does stakeholder
influence matter? 1279
Afzalur Rashid Received 4 November 2019
Revised 17 April 2020
School of Commerce, University of Southern Queensland, Toowoomba, Australia 19 July 2020
Accepted 10 August 2020
Syed Shams
School of Commerce, University of Southern Queensland, Springfield, Australia
Sudipta Bose
Discipline of Accounting and Finance, Newcastle Business School,
University of Newcastle, Sydney, Australia, and
Habib Khan
Discipline of Accounting and Finance, Canberra Business School,
University of Canberra, Australian Capital Territory, Australia

Abstract
Purpose – This study examines the association between Chief Executive Officer (CEO) power and the level
of corporate social responsibility (CSR) disclosure, as well as the moderating role of stakeholder influence on
this association.
Design/methodology/approach – Using a sample of 986 Bangladeshi firm-year observations, this
study uses a content analysis technique to develop a 24-item CSR disclosure index. The ordinary least squares
regression method is used to estimate the research models, controlling for firm-specific factors that potentially
affect the levels of CSR disclosure.
Findings – The study findings indicate that CEO power is negatively associated with the level of CSR
disclosure, and that the negative effects of CEO power on the level of CSR disclosure are attenuated by
stakeholder influence. CEO power is documented as reducing the positive impact of CSR disclosure on a firm’s
financial performance, with this negative impact attenuated if stakeholders have greater influence on the firm.
Practical implications – This study suggests that CEO power and stakeholder influence are important
factors in determining firms’ incentives to disclose CSR information. Both CEO power and stakeholder influence
need to be considered in the CSR – firm performance nexus, given the mixed findings documented in the literature.
Originality/value – This study makes a significant contribution to the literature on CSR practices by
documenting that firms with a powerful CEO have lower levels of CSR disclosure, and that stakeholder
influence affects CSR disclosure in the emerging economy context.
Keywords Emerging economy, Corporate social responsibility (CSR), Stakeholder theory, CEO power
Paper type Research paper

1. Introduction Managerial Auditing Journal

A firm’s disclosure of its corporate social responsibility (CSR) information shows its Vol. 35 No. 9, 2020
pp. 1279-1312
accountability to a more diverse range of stakeholders than its shareholders alone © Emerald Publishing Limited
0268-6902
(Gao et al., 2016). These disclosures inform stakeholders that firms not only operate on DOI 10.1108/MAJ-11-2019-2463
MAJ economic grounds but also take care of society and the environment (Clarkson et al., 2008;
35,9 Gao et al., 2016). With the recent impetus toward CSR disclosure, researchers have sought to
investigate the factors influencing these disclosures (Haniffa and Cooke, 2005; Clarkson
et al., 2008; Gao et al., 2016). Prior studies in the CSR disclosure literature have documented
many factors that may positively or negatively influence firms’ disclosure of their CSR
information (Haniffa and Cooke, 2005; Clarkson et al., 2008; Haji, 2013; Dhaliwal et al., 2014;
1280 Gao et al., 2016).
As the most powerful person in any organization, the Chief Executive Officer (CEO)
makes strategic decisions and policy choices (Li et al., 2016; Li et al., 2018). Being the
company’s most powerful internal actor, the CEO has a role to play in improving the
company’s CSR disclosure. Accordingly, Li et al. (2018) argue that more studies need to be
attempted to evaluate the role played by the CEO in CSR disclosure. Although several
studies have explored the CEO’s role in CSR disclosure in developed markets, for example,
in the context of the USA (Jiraporn and Chintrakarn, 2013; Sheikh, 2019; Harper and Sun,
2019) and the UK (Li et al., 2018), more empirical research is required to understand the role
of powerful CEOs in emerging markets in the disclosure of CSR information. Given the
differences between emerging and developed markets in their institutional and governance
rules and structures, it is important to explore the impact of CEO power on CSR disclosure in
an emerging economy setting. In this regard, we argue that incentive mechanisms and the
contexts of CSR disclosure by powerful CEOs are not the same in developed and emerging
economies. For example, in developed economies, powerful CEOs are incentivized to disclose
more CSR-related information for various opportunistic reasons, such as maximizing their
personal gain (Wang et al., 2008), building their own image (Li et al., 2016; Li et al., 2018) and
improving their reputation as a good global citizen (Barnea and Rubin, 2010). As CEOs in
these countries have invested their undiversified human capital in a single firm, undertaking
CSR disclosure forms part of their empire building and makes them highly visible in
their society. Furthermore, as the nature of stock ownership in developed economies is
diffuse, leading to a high level of information asymmetry between shareholders and
management, CEOs tend to reduce this level of information asymmetry by disclosing
their firms’ CSR information (Cho et al., 2013). Conversely, the motivation for CEOs may
be the opposite in an emerging economy setting. Specifically, powerful CEOs in
emerging economies may tend to invest less in CSR-related disclosures due to their high
ownership stake in firms, as they may consider that excessive CSR disclosure will
reduce shareholder (or their own) returns, at least in the short term (Barnea and Rubin,
2010). Therefore, using an emerging economy setting, we examine the impact of CEO
power on the level of CSR disclosure.
Furthermore, while CEOs, by dint of their power, may impact on the level of CSR
disclosure, when they are in the presence of powerful stakeholders, they may need to adjust
and disclose CSR activities according to stakeholders’ demands. Specifically, the sole
opportunistic stance of CEOs on CSR activities and the related disclosure will be reduced
when experiencing a higher level of stakeholder influence. Arguably, the prominence of
stakeholder power can moderate the association between CEO power and CSR disclosure.
Prior studies have argued that groups of stakeholders, specifically, primary stakeholders
(e.g. consumers, suppliers, financiers, governments and employees) and secondary
stakeholders (e.g. the media, the community and non-governmental organizations [NGOs]),
influence the level of firms’ CSR disclosure (Kassinis and Vafeas, 2006; Barnett, 2007;
Bhattacharya et al., 2009; Bose et al., 2018). The various stakeholders’ degrees of influence
and the extent of their strategic pressure on executive management vary between emerging
and developed economies. For example, in developed economies, the presence of an active
diversified group of secondary stakeholders directly and indirectly forces powerful CEOs to CEO power
undertake CSR disclosure. On the other hand, groups of secondary stakeholders in emerging
economies may be neither as active nor able to exert enough pressure on powerful CEOs for
CSR-related disclosure, due to not only the substantial power imbalance but also the point
that shareholders are the key stakeholders in these economies. Thus, unlike their
counterparts in developed economies, firms in emerging economies do not feel sufficient
pressure from groups of secondary stakeholders to increase their level of CSR disclosure [1].
However, groups of primary stakeholders in emerging economies can be more active and
1281
effective than those in developed economies in influencing powerful CEOs to be involved in
the disclosure of more CSR-related information, as emerging economy firms rely heavily on
primary stakeholders (e.g. external finance providers, a strong buyers’ group, regulators,
etc.). Surprisingly, empirical investigation, to date, on the impact of powerful CEOs on CSR-
related disclosure in the presence of influential stakeholders has been somewhat overlooked
in the CSR disclosure literature. The current study aims to fill the extant gap by seeking
answers to the following research questions (RQs):

RQ1. Does CEO power influence the CSR disclosure of firms in emerging economies?
RQ2. Does stakeholder influence moderate the relationship between CEO power and
CSR disclosure?
To investigate the above-mentioned RQs, we have chosen Bangladesh as the emerging
economy context, with this choice notable for several reasons. Emerging economies
worldwide are noted to be experiencing significant growth. As reported by Lagarde (2016),
emerging and developing economies, as a group, now account for almost 60% of global
gross domestic product (GDP). Lagarde (2016) maintained that, in contributing more than
80% of global growth since the 2008 global financial crisis (GFC), these countries have
helped to save many jobs in advanced economies and have been the main drivers behind the
significant reduction in global poverty. As an emerging economy, Bangladesh has
continued its GDP growth rate ranging between 6% and 7% per annum for the past
10 years (World Bank, 2017). According to a recent report by PricewaterhouseCoopers (PwC)
(2017), the Bangladesh economy is continuing to rise, with this rise positioning the country’s
economy to become larger than some developed economies, such as The Netherlands and
Australia, by 2030. Bangladesh ready-made garments have taken second place globally
after China [2]. For leather and leather goods, the country’s contribution is over 10% of
global needs [3]. Similarly, Building Resources Across Communities, the largest NGO in the
world, continues to work to combat global poverty and to achieve economic empowerment
of disadvantaged women in Bangladesh [4].
Bangladesh is also an important setting in which to examine the role played by
stakeholders in the CEO power–CSR disclosure association. One notable feature of the
Bangladesh economy is the presence of international buyers as one important stakeholder
group. Prior studies have documented the importance of these international stakeholders as
a pressure group in relation to CSR disclosure in Bangladesh (Belal and Owen, 2007; Islam
and Deegan, 2008). For the above reasons, our study is motivated to examine the influence of
these important stakeholder groups on the CEO power–CSR disclosure association.
Furthermore, the recent literature (Li et al., 2018) has provided evidence that CEO power
positively moderates the association between CSR disclosure and financial performance in
the developed country context. In our study’s additional analysis, we examine the role
played by CEO power in the CSR disclosure–financial performance association and whether
this association is moderated by stakeholder influence. Our study’s findings may shed some
MAJ light on reconciling the mixed results documented in the CSR literature on the CSR
35,9 disclosure–financial performance association.
Using a sample of 986 firm-year observations from 2002–2012, we show that firms with a
higher level of CEO power are negatively associated with CSR disclosure. However, this
negative association between CEO power and the level of CSR disclosure is positively
moderated by the degree of stakeholder influence. Specifically, this finding suggests that
1282 while CEO power reduces the level of CSR disclosure for firms in Bangladesh, stakeholder
influence attenuates the negative effect of CEO power on the level of CSR disclosure. Our
further analysis shows that firms with higher levels of CSR disclosure increase their
financial performance, with this positive relationship attenuated by CEO power. However, in
the presence of stakeholder influence, the negative effect of CEO power on the CSR
disclosure–financial performance association is reduced. Our results are robust to several
statistical tests that address endogeneity using a quasi-experimental setting, two-stage
instrumental variables and generalized method of moments (GMM) analysis, as well as
alternate proxies for CSR disclosure and CEO power.
Our study contributes to the existing literature by, firstly, establishing the influence
of CEO power on CSR disclosure in the emerging economy context. Unlike companies in
some developed countries, most companies in Bangladesh are run by a dominant
shareholder group, comprising members of the founding family (Sobhan, 2016; Sobhan
and Bose, 2019), with the company’s CEO selected and appointed by this dominant
shareholder group. Moreover, companies operating in Bangladesh are notable for their
different types of ownership, and for the predominance of insider ownership (Rashid,
2016; Sobhan, 2016; Sobhan and Bose, 2019). This unique governance setting provides
the context for examining the influence of powerful CEOs on the level of CSR disclosure.
Second, our study provides evidence that stakeholder groups in emerging markets
attenuate the effect of powerful CEOs on the level of CSR disclosure. Third, our study
contributes to the CSR disclosure and firm performance literature by documenting the
negative influence of CEO power on the positive association between CSR disclosure
and firm performance. Although this finding contrasts to that of Li et al. (2018) in
the UK context, it is not surprising given that incentive mechanisms and corporate
governance practices are not the same when comparing developed and emerging
economies. Furthermore, in our study, stakeholder influence is found to play a vital role
in reducing the negative effect of CEO power on CSR disclosure, with this consequently
contributing to a firm’s financial performance. Fourth, these findings have key
implications for policymakers and other stakeholders in emerging markets in their
understanding of the nexus between CEO power, stakeholder influence and CSR
disclosure. Further implications arise from their increased understanding of the extent
to which stakeholders can influence CEOs to comply with the contractual agreements
between themselves and their corporations. Finally, while stakeholder influence and the
collective voices of stakeholders are emphasized in contemporary CSR literature, our
study adds the new insight that the presence of stakeholders plays a key monitoring
role in emerging markets to resolve conflicts between CEOs and firms’ key stakeholders
with their demands for CSR-related disclosure.
The remainder of the study is organized as follows: Section 2 presents the discussion on
the corporate governance and CSR practices in Bangladesh; Section 3 provides the theory,
literature review and hypotheses development; Section 4 presents the research design;
Section 5 presents the empirical results; while Section 6 discusses the sensitivity analyzes;
and Section 7 concludes the paper.
2. Corporate governance and corporate social responsibility practices in CEO power
Bangladesh
As an emerging economy in South Asia, Bangladesh has unique institutional and regulatory
features. The main difference in corporate governance practices between Bangladesh and
developed economies is that these practices in Bangladesh are mainly underpinned by a
weak rule of law (Khan, 2003). Prior studies have documented that differences in corporate
governance practices, such as ownership structure and board and management practices, 1283
may impact on firms’ CSR disclosure and their CSR value implications (Aguilera et al., 2006),
a situation found in Bangladesh.

2.1 Corporate governance practices in Bangladesh

Bangladesh has a mix of similar and dissimilar corporate governance practices with some
other countries around the world. For example, unlike companies in some developed
countries, the shares of public limited companies in Bangladesh are not widely held, with the
control of these companies remaining in the hands of dominant shareholder groups, even
though these companies are listed on stock exchanges. Furthermore, as is the case in some
developed countries, corporate boards in Bangladesh are one-tier or management boards,
where the executive and non-executive directors perform their duties together in one
organizational layer (Rashid, 2015a). In early 2006, the regulatory body, Bangladesh
Securities and Exchange Commission (BSEC), promulgated the corporate governance
notification on a “comply or explain” [5] basis (this notification was revised in 2012). The
notification provided detailed guidelines on corporate governance practices, including the
board structure of listed companies. Unlike companies in many developed countries,
companies in Bangladesh do not appoint professional managers. Many dominant
shareholders, with a large stake of ownership control, appoint themselves as managers.
With their ownership right, they can exercise significant control over the board.
Furthermore, as a result of the one-tier board culture and the absence of a supervisory board,
a high incidence of CEO duality is found, with CEOs having enormous powers in the context
of Bangladesh (Rashid, 2015a).

2.2 Corporate social responsibility practices in Bangladesh

Earlier studies have documented that the CSR disclosure by companies in Bangladesh tends
to be low, with these disclosures being descriptive in nature and reporting mostly positive
news (Imam, 2000). However, the government of Bangladesh is undertaking many
initiatives to improve corporate actions and firms’ involvement in social activities, with the
aim of meeting the United Nations sustainable development goals (Bose et al., 2017a). For
example, in 2007, Bangladesh Bank (the central bank of Bangladesh and regulator of the
Bangladeshi banking industry) initiated a regulatory directive to all banks operating in
Bangladesh to spend money on CSR activities, including the fulfilment of poverty reduction
goals (Bose et al., 2017a; Bose et al., 2017b).
Despite many recent developments, the lack of CSR practices is a major concern in
Bangladesh. For example, child labor in Bangladesh has attracted significant international
attention (The Economist, 2013). Despite the shockingly large number of children in
Bangladesh’s labor force (Margolis and Walsh, 2003), until very recently, this situation had
not notably changed. Furthermore, due to the absence of workplace safety measures,
occupational hazards claim many lives every year. In 2012, a single fire incident in a
garment factory on the outskirts of Dhaka claimed 112 lives. The working conditions were
alleged to have been so dangerous that no one had a chance to escape. It was noted that
MAJ management had instructed security to lock emergency evacuation doors so workers could
35,9 not easily leave their work.
The export-oriented industries in Bangladesh face pressure from international buyers to
comply with practices that address different social issues, such as child labor, employee
health and safety. For example, Bangladesh is currently the second-largest textile product-
exporting country in the world [6]. This industry accounts for more than 80% of
1284 Bangladesh’s export earnings [7]. A study by Grossi et al. (2019), directed by the London
School of Economics and Oxford University and funded by UKAid, reported that more than
1,500 active international buyers were available from 2005–2012 in the textile product
industry in Bangladesh, with the top 100 buyers holding 66% of market share [8]. Led by the
International Labor Organization, unions and other activist groups, international buyers
have signed an accord on fire and building safety in Bangladeshi textile product-exporting
firms (MacDonald, 2013) [9]. In its 2012 Global Responsibility Report, the giant US retailer,
Walmart, announced that, in 2011, it had ceased doing business with 49 factories in
Bangladesh, owing to fire safety issues. Walmart added that it was working with other
supplier factories to phase out production from buildings deemed to be high risk [10]. This
type of pressure from international buyers was not a new development. Using interviews
with officials from the Bangladesh Garment Manufacturers and Exporters Association
(BGMEA), Islam and Deegan (2008) found that multinational buying companies and various
international government agencies, as well as Western consumer and human rights
organizations, were exerting pressure on the BGMEA for compliance by textile product
exporters to address different social issues, such as child labor; if they did not comply, they
would lose their supply contracts. Furthermore, Islam and Deegan (2008) documented that
international buyers were reading BGMEA’s annual reports to discover, which CSR
compliances had been imposed by the BGMEA, as the controlling body of export-oriented
textile product businesses, on Bangladeshi textile product producers.
Although international buyers are concerned about the social responsibility practices of
companies in Bangladesh to the point that they are willing to avoid those that do not have
sound policies, due to the availability of cheap labor, Bangladesh remains an attractive
destination for several global corporations (and their investors) (Belal and Owen, 2007; Islam
and Deegan, 2008). Although only a very limited number of local stakeholder groups [11]
can exert pressure on firms to develop better CSR practices, international buyers form an
important group of stakeholders in Bangladesh’s corporate sector. In fact, the international
buyer presence in Bangladesh provides our study with the opportunity to explore the role of
these important stakeholders in CSR disclosure.

3. Theory, literature review and hypotheses development

Stakeholder theory suggests that a firm’s managers will be involved in CSR reporting to
satisfy a wider range of stakeholders, such as the community, society and environmentalist
groups, thus integrating social demands into the firm’s business model (Freeman, 2010).
Harjoto and Jo (2011) argued that managers are engaged in CSR activities to resolve conflicts
between various stakeholders. The ongoing debate between scholars and practitioners
regarding the main motive of CSR disclosure becomes more complex to understand when
CEOs are powerful. In addition, managerial perceptions about key stakeholder attributes
(power, legitimacy and urgency) influence how managers, when making decisions, assign
priority to a specific stakeholder’s claims (Kirkman and Rosen, 1999).
We argue that CEOs are involved in CSR disclosure as part of the discharge of their
accountability to all stakeholders. To maintain their network and connections, powerful
CEOs in emerging economies may want to build their rapport and connections with various
stakeholder groups. In this way, they would seek to obtain support from political and CEO power
environmentalist groups to further strengthen their power and, to satisfy these groups,
would increase their level of CSR disclosure. One prior study, for example, shows that in the
USA, an increase in CEO power is associated with more CSR engagement (Jiraporn and
Chintrakarn, 2013). However, these authors noted that this tendency is reversed when CEOs
are substantially powerful (Jiraporn and Chintrakarn, 2013). Other studies in the literature in
the context of the US and the UK have provided evidence that when CEOs are powerful, this
influences CSR disclosure (Sheikh, 2019; Li et al., 2018; Harper and Sun, 2019). 1285
Despite the above evidence, little is known about CEO power and CSR disclosure in the
context of an emerging economy. In contrast to the above argument, CEOs in an emerging
economy, such as Bangladesh, where they have a higher ownership stake in firms [12], may
not have a similar predisposition to CSR disclosure. Given that shareholder returns are
reduced (at least in the short term) due to high levels of CSR disclosure, top executives
essentially undertake trade-offs between shareholder and stakeholder returns. Powerful
CEOs may not over-emphasize CSR-related disclosure as they rule out their dependency on
other stakeholders and may consider CSR-related disclosure to be an additional cost to their
firms (Barnea and Rubin, 2010). In our study, we expect that powerful CEOs in emerging
markets are less likely to make higher levels of CSR disclosure due to their discretionary
power in decision-making. As a result, these CEOs may be able to bypass the claims of
many stakeholders. In addition, in the corporate environment in emerging economies,
evaluation of executives’ performance in relation to their bonuses and other benefits by
considering non-financial disclosure indicators, such as the level of CSR disclosure, is not an
established social norm. However, this practice is common in the case of developed
economies.
In the specific context of Bangladesh, CEOs are often appointed from members of the
family of the founding sponsored directors of firms. In this case, CEOs would not be more
interested in making a higher level of CSR disclosure; rather, they would be interested in
saving shareholders’ funds by reducing these discretionary activities to ensure the level of
shareholders’ returns [13]. In addition, in the case of Bangladesh, CEOs’ performance is
evaluated-based purely on accounting profit. Performance bonuses are given based on the
extent to which they exceeded the previous year’s accounting profit performance target.
Therefore, CEOs in Bangladesh may play an opportunistic role in the case of CSR disclosure.
Specifically, they would be meticulous in the case of CSR disclosure. In fact, they would use
their power to reduce the level of CSR disclosure on the grounds of financial turmoil and
financial distress. Based on the above-mentioned discussion, we have an a priori expectation
that CEO power will reduce the level of CSR disclosure. Formally stated:

H1. CEO power is negatively associated with the level of CSR disclosure.
Furthermore, stakeholder theory suggests that firms’ level of CSR disclosure is directly
influenced by pressures from different stakeholder groups. Stakeholder influence is defined
as the ability and capacity of stakeholders to influence organizational practices through
exerting pressure on organizations (Kassinis and Vafeas, 2006; Fassin, 2009). However, the
ability of stakeholders to influence a firm’s decisions depends on their power, legitimacy and
urgency (Mitchell et al., 1997; Agle et al., 1999). Pérez-Batres et al. (2012) provided evidence
that the choice and adoption of CSR disclosure depend on the intensity of pressure and the
number of different stakeholder groups. From a strategic point of view, a firm must
maintain stakeholder relationships, as well as its financial performance (Berman et al., 1999).
By addressing and balancing the claims of multiple stakeholders, CEOs can increase the
efficiency of their organizations’ adaptation to external stakeholders’ demands
MAJ (Orlitzky et al., 2003). Empirical evidence has shown that firms prepare CSR reports to
35,9 satisfy the information needs of powerful stakeholders (Bose et al., 2017b; Bose et al., 2018),
and to resolve the conflict between managers of these firms and stakeholders (Jensen, 2001;
Calton and Payne, 2003). Responding to the demands of powerful stakeholders by disclosing
CSR information may result in access to external resources, which may also improve the
firm’s value (Ntim et al., 2012).
1286 In the context of Bangladesh, a recent study by Bose et al. (2018) has provided evidence
that powerful stakeholders, such as Bangladesh Bank (the regulator of Bangladesh’s
banking industry), seek regular reports on the green and CSR disclosures of banking firms.
However, the influence of regulators on CSR disclosure is not apparent in non-financial
industries in Bangladesh. Therefore, in this study, we have focused on a specific type of
stakeholder group – the presence of international buyers. Given that the Bangladesh
economy is heavily dependent on export-oriented industries, the role played by international
buyers in the disclosure of CSR information is noteworthy (Belal and Owen, 2007; Islam and
Deegan, 2008). The reason is that firms operating in export-oriented industries depend on
international buyers for their long-term survival and business growth. Furthermore, export-
oriented industries in Bangladesh are facing continuous pressure from the international
community, due to recent environmental and safety-related corporate disasters (Belal and
Owen, 2007; Islam and Deegan, 2008).
As previously discussed, due to the lack of pressure from secondary stakeholder groups,
powerful CEOs undertake a lower level of CSR disclosure in the emerging economy context.
However, we argue that, in Bangladesh, the negative influence of powerful CEOs on the level
of CSR disclosure might be improved by the presence of international buyers. As powerful
stakeholders control resources, firms tend to maintain good relationships with them as part
of their stakeholder management, and, thus, disclose more CSR information. Based on the
above discussion, we posit the following hypothesis:

H2. Stakeholder influence positively moderates the negative relationship between CEO
power and CSR disclosure.

4. Research design
4.1 Sample and data
The selection of our sample begins with all 155 non-financial firms listed on the Dhaka stock
exchange in Bangladesh from 2001–2012. We exclude 776 firm-year observations from the
total 1,860 firm-year observations due to insufficient financial and share price data, as well
as 98 firm-year observations because of lead–lag analysis, yielding a sample of 98 unique
firms with 986 firm-year observations from 2002–2012. The annual reports of these firms
are used for the collection of CSR data [14]. We also use annual reports to collect firm-
specific financial data, data relating to CEO characteristics and other corporate governance
data. To collect share price data, we use the Thomson Reuters DataStream database. Table 1
shows the sample selection process and the distribution of sample observations by industry.
Our sample is dominated by firms from the textile industry (19.17%), followed by the
engineering industry (18.96%), whereas the lowest number of observations are from the
service and real estate industry (1.12%).

4.2 Baseline regression model

We use the following baseline regression model to test our hypotheses:
Panel A: sample size Observations
CEO power
Number of firm-year observations 1,860
Less: firms excluded if missing financial and share market data (776)
Less: firms excluded due to lead–lag analysis (98)
Total 986
Panel B: industry distribution Observations (%)
Cement 44 4.46 1287
Ceramics 33 3.35
Engineering 187 18.96
Food and allied 170 17.24
Fuel and power 22 2.23
Information technology 33 3.35
Jute 33 3.35
Miscellaneous 48 4.87
Paper and printing 33 3.35
Pharmaceuticals 139 14.09
Service and real estate 11 1.12
Tannery 44 4.46 Table 1.
Textile 189 19.17 Sample size and
Total 986 100 industry distribution

CSRi;tþ1 ¼ b0 þ b1 CEO_POWERi;t þ b2 SIZEi;t þ b3 LEVi;t þ b4 ROAi;t

þ b5 TOBINQi;t þ b6 FAGEi;t þ b7 RISKi;t þ b8 GROWTHi;t
þ b9 CASHi;t þ b10 ADINTi;t þ b11 CAPINi;t þ b12 LIQUIDITYi;t

þ b13 BSIZEi;t þ b14 BINDi;t þ b15 DIROWNi;t þ b16 INSTOWNi;t

X X
þ YEARi;t þ INDUSTRYi;t þ « i;t (1)

CSRi;tþ1 ¼ b0 þ b1 CEO_POWERi;t þ b2 CEO_POWERi;t  STAKEi;t þ b3 STAKEi;t

þ b4 SIZEi;t þ b5 LEVi;t þ b6 ROAi;t þ b7 TOBINQi;t þ b8 FAGEi;t

þ b9 RISKi;t þ b10 GROWTHi;t þ b11 CASHi;t þ b12 ADINTi;t

þ b13 CAPINi;t þ b14 LIQUIDITYi;t þ b15 BSIZEi;t þ b16 BINDi;t
X
þ b17 DIROWNi;t þ b18 INSTOWNi;t þ YEARi;t
X
þ INDUSTRYi;t þ « i;t (2)

where CSR represents the CSR disclosure index; and CEO_POWER is our research variable
measured by the CEO power index, which is computed based on certain attributes of CEOs
that is CEO duality (CEO_DUAL), the CEO as a member of other committees
(CEO_MEMBER), CEO tenure (CEO_TENURE) and CEO shareholding of at least 10% of
shares (CEO_SHARE), following Daily and Johnson (1997) and Combs et al. (2007) [15]. We
then add all four CEO attributes and create a composite index of CEO power by converting
the natural logarithm of the total score received by each firm.
MAJ We use the presence of international buyers as a proxy for stakeholder influence
35,9 (STAKE). Firms with an export orientation rely heavily on international buyers for their
long-term survival; therefore, they are motivated to provide a higher level of CSR disclosure
(Belal and Owen, 2007; Islam and Deegan, 2008). We measure stakeholder influence
(STAKE) based on the presence of international buyers in a firm. Specifically, we measure
STAKE as a dummy variable with a value of 1 if the firm has foreign sales, and 0 otherwise.
1288 All variables are defined in Appendix 2.
We include several variables to control for firm characteristics and corporate governance
characteristics. We control for firm size as larger firms have more financial resources with
which to engage in CSR activities and disclosures, and these firms also attract public
pressure to become socially responsible (Dhaliwal et al., 2014). Dhaliwal et al. (2014) argued
that debtholders are more interested in a firm’s CSR disclosure as this disclosure reveals the
firm’s downside risk. We thus, control for a firm’s leverage. Profitable firms have more
resources to perform CSR activities and disclosures (Amran and Devi, 2008). Therefore, we
control for profitability (ROA). Firms with higher market-based performance engage in a
higher level of CSR disclosure (Bose et al., 2017b). Hence, we control for a firm’s market-
based performance (TOBINQ). Furthermore, firms of long standing in the market have a
competitive advantage that influences them to engage in more CSR activities and disclosure
(Bose et al., 2017b). Hence, we control for firm age (FAGE). We control for risk (RISK) as
firms with a higher level of risk are more likely to engage in CSR activities and disclosures.
Firms with a higher level of growth are more likely to invest in CSR activities and
disclosures to accelerate their growth (Bose et al., 2017b). Therefore, we control for a firm’s
growth (GROWTH). As documented by Cheung (2016), CSR activities are associated with
the value of cash holdings. Hence, we control for cash holdings (CASH). We also control for
advertising intensity (ADINT) and capital intensity (CAPIN), as prior studies have
documented that these two variables influence the level of firms’ CSR disclosure
(McWilliams and Siegel, 2000; Clarkson et al., 2008). Furthermore, firms with a higher level
of liquidity are more likely to want to ensure transparency; thus, they feel encouraged to
engage in different types of CSR activities (Bose et al., 2017a). Therefore, following Rashid
(2015b), we control for liquidity (LIQUIDITY). Furthermore, we control for several corporate
governance characteristics, in line with prior studies (Saleh et al., 2010; Bose et al., 2016; Bose
et al., 2018; Ali et al., 2019). These characteristics are expressed as the following variables:
board size (BSIZE); board independence (BIND); director ownership (DIROWN); and
institutional investors’ ownership (INSTOWN).
We apply the ordinary least squares regression method to estimate our research models.
We use robust standard errors clustered at the firm level to address heteroskedasticity and
autocorrelation. Furthermore, we use the variance inflation factor (VIF) values for assessing
potential multi-collinearity issues. We also control for industry and year in our regression
models.

4.3 Corporate social responsibility disclosure index measure

The dependent variable in this study is the CSR disclosure index (CSR). Developed in our
research, this index comprises 24 items of information for quantifying CSR disclosure, with
this list of items provided in Appendix 1. It also covers social issues mentioned in the Global
Reporting Initiative (GRI) (2006), such as “labor practices and decent work;” “occupational
health and safety;” “employee education and training;” “diversity and equity/opportunity;”
human rights, including “freedom of association and collective bargaining” and “child labor
and indigenous rights;” and product responsibility, including “customer health and safety.”
 To quantify CSR disclosure practices from firms’ annual reports, a content analysis CEO power
technique was used with this technique having been widely used in the disclosure literature
(Clarkson et al., 2008; Bose et al., 2017b). The extant disclosure studies suggest that
disclosure can be quantified by using either a weighted or an unweighted approach (Bose
et al., 2018). In the current study, we use an unweighted approach in which each item of
disclosure is considered equally as important as the other items, and no greater importance
is given to any specific user group. We adopt a binary variable to measure CSR disclosure: a
firm is awarded a score of 1 if an item is reported in the annual report, and a score of 0 if it is 1289
not reported. The CSR disclosure index is then captured for each sample firm as a ratio of
the total disclosure score, scaled by the maximum possible disclosure for the firm. A higher
score for the CSR disclosure index (CSR) implies a higher level of disclosure of CSR activities
as it captures multiple occurrences of information relating to CSR activities.
In addition, we use Cronbach’s alpha coefficient to assess the internal consistency of our
CSR disclosure index, following prior disclosure index studies (Bose et al., 2017a). The alpha
coefficient value for our CSR disclosure index is 0.809, suggesting that the items in this
index capture the same underlying construct [16]. Furthermore, to ensure reliability in our
study’s data coding, two coders, including one of the authors, independently completed the
content analysis of the annual reports. The first coder performed the coding process for the
entire sample, and the second coder compared the coded data. Any disagreements between
the coders were solved through re-analyzing the annual reports.

5. Empirical results
5.1 Descriptive statistics and correlations
Table 2 reports the descriptive statistics. The mean (median) CSR disclosure score is 0.147
(0.118), indicating that, on average, firms in our sample disclose 14.70% of the items listed in
our CSR disclosure index. The average (median) CEO power measured by the CEO power
index (CEO_POWER) is 2.429 (2.565). About 37% of firms in our sample experience
stakeholder influence (STAKE). The average firm size (SIZE) is 6.188, with this measured
as the natural logarithm of total assets. The average profitability is 7.60%, whereas the

Variable(s) Observations Mean SD. Median First quartile Third quartile

CSRtþ1 986 0.147 0.109 0.118 0.059 0.206

CEO_POWERt 986 2.429 0.659 2.565 2.079 2.944
STAKEt 986 0.370 0.483 0.000 0.000 1.000
SIZEt 986 6.188 1.469 6.298 5.326 7.023
LEVt 986 0.655 0.469 0.585 0.411 0.783
ROAt 986 0.076 0.089 0.072 0.037 0.115
TOBINQt 986 1.569 1.367 1.141 0.863 1.701
FAGEt 986 0.929 0.235 0.996 0.834 1.097
RISKt 986 2.669 1.852 2.511 1.330 4.013
GROWTHt 986 0.156 0.512 0.094 0.032 0.243
CASHt 986 0.056 0.140 0.014 0.005 0.042
ADINTt 986 0.060 0.095 0.036 0.012 0.077
CAPINt 986 0.008 0.034 0.000 0.000 0.000
LIQUIDITYt 986 1.583 1.777 1.147 0.890 1.579
BSIZEt 986 1.844 0.311 1.792 1.609 2.079
BINDt 986 0.069 0.082 0.000 0.000 0.143
DIROWNt 986 0.421 0.182 0.483 0.316 0.504 Table 2.
INSTOWNt 986 0.183 0.156 0.160 0.050 0.280 Descriptive statistics
MAJ average leverage (LEV) is 0.655. The average (median) director ownership is 42.10%
35,9 (48.30%). The natural logarithm of the average board size (BSIZE) is 1.844, implying that
the average number of board members is 6.54. The average (median) institutional investors’
ownership (INSTOWN) at 18.30% is higher than the figure of 13.20% reported by Bose
et al. (2017b) for the banking industry, indicating industry differences in institutional
ownership.
1290 Table 3 presents the correlation matrix between the variables. Gujarati and Porter (2009)
argue that a correlation coefficient below 0.80 does not create a multi-collinearity problem.
The correlation matrix in our study shows that all coefficients are less than 0.80. In addition,
we use VIF to assess the multicollinearity problem, with a VIF of less than 10 showing that
no multi collinearity problem exists between the variables (Gujarati and Porter, 2009). the
average VIF is 3.68, with the lowest VIF being 1.17 and the highest VIF being 2.61,
indicating that multicollinearity problems are unlikely in our regression models

5.2 Regression analysis results

We report the regression results of equation (1) in Table 4. Models (1) and (2) report the
regression results using CEO power (CEO_POWER), while Model (3) reports the regression
results of the interaction variable CEO_POWER  STAKE. Furthermore, Model (1) reports
the regression results without any firm-level control variables, with Models (2) and (3)
reporting the regression results with firm-level control variables. The adjusted R-squared
(R2) values range from 35.20%–54.10%, indicating that our dependent variable effectively
captures the independent variables. The coefficient of CEO_POWER is negative and
statistically significant in Models (1) and (2), supporting a negative relationship between
CEO power and the level of CSR disclosure. The result suggests that firms with a powerful
CEO have a lower level of CSR disclosure, thus supporting H1 (H1). In terms of economic
significance, based on the coefficients in Model (2), we infer that if CEO power increases by
one standard deviation, the CSR disclosure level decreases by 6.70% ((–0.015  0.659)/0.147),
relative to the sample mean.
Furthermore, Table 4, Model (3) reports the regression results of the interaction variable
CEO_POWER  STAKE. The coefficient of CEO_POWER in Model (3) is negative and
statistically significant ( b = –0.026, p < 0.01), thus indicating that for firms without
stakeholder influence, an increase in their CEOs’ power leads to a lower level of CSR
disclosure. On the other hand, the coefficient of CEO_POWER  STAKE in Model (3) is
positive and statistically significant ( b = 0.038, p < 0.01), suggesting that for firms with
stakeholder influence, higher CEO power increases the level of CSR disclosure. Furthermore,
the sum of the coefficients of CEO_POWER and the interaction term, CEO_POWER 
STAKE, in Model (3) is positive, while a test of the linear combination of the coefficients of
CEO_POWER and CEO_POWER  STAKE shows significant results for firms with
stakeholder influence (STAKE) (F = 22.04, p < 0.01). Hence, the negative impact of CEO
power on the level of CSR disclosure is attenuated by stakeholder influence (STAKE). In
terms of economic significance, based on the coefficients in Model (3), we infer that a one
standard deviation increase in CEO power leads to a 5.38% ((0.038 – 0.026)  0.659)/0.147)
increase in CSR disclosure, relative to the sample mean, for firms with higher stakeholder
influence.
Regarding the control variables, as shown in Table 4, we find that CSR disclosure is
positively associated with firm size (SIZE); profitability (ROA); firm age (FAGE); risk
(RISK); board size (BSIZE); and board independence (BIND) and negatively associated with
cash holdings (CASH) and advertising intensity (ADINT), with these findings consistent
with our expectations. Our finding that growth (GROWTH) is negatively associated with
 [1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12] [13] [14] [15] [16]

CSRtþ1 [1] 1.000

CEO_POWERt [2] 0.081** 1.000
STAKEt [3] 0.184*** 0.059* 1.000
SIZEt [4] 0.518*** 0.140*** 0.120*** 1.000
LEVt [5] 0.134*** 0.019 0.088*** 0.178*** 1.000
ROAt [6] 0.343*** 0.096*** 0.024 0.235*** 0.305*** 1.000
TOBINQt [7] 0.129*** 0.034 0.016 0.019 0.229*** 0.119*** 1.000
FAGEt [8] 0.219*** 0.233*** 0.002 0.082*** 0.166*** 0.061* 0.186*** 1.000
RISKt [9] 0.327*** 0.002 0.000 0.254*** 0.106*** 0.261*** 0.200*** 0.409*** 1.000
GROWTHt [10] 0.055* 0.010 0.009 0.071** 0.051 0.172*** 0.107*** 0.020 0.067** 1.000
CASHt [11] 0.096*** 0.106*** 0.025 0.036 0.118*** 0.312*** 0.162*** 0.181*** 0.140*** 0.024 1.000
LIQUIDITYt [12] 0.024 0.066** 0.123*** 0.014 0.328*** 0.136*** 0.013 0.031 0.015 0.013 0.113*** 1.000
BSIZEt [13] 0.254*** 0.114*** 0.017 0.296*** 0.042 0.182*** 0.204*** 0.091*** 0.117*** 0.012 0.118*** 0.046 1.000
BINDt [14] 0.287*** 0.032 0.016 0.148*** 0.047 0.130*** 0.207*** 0.351*** 0.386*** 0.100*** 0.155*** 0.007 0.203*** 1.000
DIROWNt [15] 0.013 0.091*** 0.196*** 0.072** 0.044 0.145*** 0.115*** 0.041 0.062** 0.017 0.087*** 0.042 0.042 0.031 1.000
INSTOWNt [16] 0.042 0.061* 0.034 0.020 0.021 0.025 0.056* 0.036 0.072** 0.034 0.073** 0.025 0.078** 0.006 0.235*** 1.000

Note: Superscript asterisks are as follows: ***significance at the 1% level; **significance at the 5% level; *significance at the 10% level

Correlation matrix
Table 3.
1291
CEO power
MAJ Dependent variable = CSRtþ1
35,9 Model (1) Model (2) Model (3)

CEO_POWERt 0.030*** (5.661) 0.015*** (3.365) 0.026*** (5.829)

CEO_POWERt  STAKEt 0.038*** (4.709)
STAKEt 0.044* (1.843)
SIZEt 0.027*** (17.016) 0.029*** (17.393)
1292 LEVt 0.004 (0.711) 0.004 (0.895)
ROAt 0.094*** (3.459) 0.089*** (3.321)
TOBINQt 0.002 (1.069) 0.003 (1.445)
FAGEt 0.023* (1.771) 0.017 (1.317)
RISKt 0.004*** (2.627) 0.004** (2.516)
GROWTHt 0.007* (1.789) 0.006* (1.769)
CASHt 0.065*** (3.360) 0.061*** (3.265)
ADINTt 0.056** (2.465) 0.043* (1.960)
CAPINt 0.126 (1.065) 0.000 (0.206)
LIQUIDITYt 0.000 (0.184) 0.124 (1.072)
BSIZEt 0.014* (1.708) 0.018** (2.225)
BINDt 0.137*** (3.247) 0.158*** (3.792)
DIROWNt 0.012 (0.863) 0.009 (0.619)
INSTOWNt 0.021 (1.444) 0.006 (0.419)
Intercept 0.238*** (14.518) 0.064** (2.231) 0.049* (1.728)
Year fixed effects Yes Yes Yes
Industry fixed effects Yes Yes Yes
Observations 986 986 986
Adjusted R2 0.352 0.530 0.541
Table 4.
F-statistic 42.255*** 53.609*** 48.758***
Regression results on
CEO power and CSR Notes: Superscript asterisks are as follows: *, ** and *** represent significance at 10, 5 and 1% levels,
disclosures respectively. All variables are defined in Appendix 2. The numbers in parentheses are t-statistics

the level of CSR disclosure is contrary to our expectations. However, the finding suggests
that firms at a stage of higher growth are constrained by financial resources, with this
constraint motivating them to spend less of their firms’ resources on CSR disclosure.
In summary, our findings present evidence consistent with H1 that CEO power is
negatively associated with the extent of CSR disclosure, as well as being consistent with H2
that the negative association between CEO power and CSR disclosure is attenuated by
stakeholder influence.

5.3 Endogeneity analysis

A potential endogenous relationship between CEO power and CSR disclosure could be a
concern in our regression models. For example, the association between CSR disclosure and
CEO power may be affected by reverse causality. It is reasonable to argue that powerful
CEOs influence their firms’ level of CSR disclosure, with the opposite effect possibly also
occurring. Firms with higher levels of CSR disclosure may attract powerful CEOs because of
the benefits enjoyed by these firms. Powerful CEOs could use CSR disclosure as a shield to
expropriate private benefits with the support of stakeholders. Therefore, we address the
endogeneity issues by applying: a quasi-experimental setting; an instrumental variables
approach and GMM analysis.
5.3.1 Quasi-experimental setting: the impact of corporate governance reform. In 2006,
the BSEC issued the Bangladesh Corporate Governance Guidelines (BCGG) [17], with the
aim of reforming corporate governance practices in Bangladesh. As the regulatory CEO power
requirement to comply with these corporate governance guidelines presented an exogenous
shock to companies in Bangladesh, these companies offer a quasi-experimental setting,
which is important for addressing any potential endogeneity bias. More specifically, in our
study, the firms in our sample are split between pre-2006 and post-2006, based on the BCGG
issuance in 2006 and our research models are re-run. Table 5 presents the regression results,
which show that the coefficient of CEO_POWER is negative and statistically significant
both before and after the 2006 BCGG issuance as shown in Models (1) and (2). However, after 1293
the issuance of the guidelines (post-2006), the negative association between CEO power and
CSR disclosure becomes stronger. Furthermore, the coefficient of CEO_POWER  STAKE
is positive and statistically significant in both periods, as shown in Models (3) and (4). We
test the equality of the coefficients of CEO_POWER between Models (1) and (2) and the
equality of the coefficients of CEO_POWER  STAKE between Models (3) and (4), with the
results showing that the difference between these coefficients is statistically significant.
Taken together, these findings suggest that the 2006 BCGG issuance and subsequent
implementation have not eliminated the influence of CEO power given the poor nature of
governance, the weak rule of law and the low quality of public governance in Bangladesh
(Khan, 2003). However, stakeholder influence has increased after the implementation of
these guidelines. This is not surprising given the recent progress of Bangladesh’s economy,

Dependent variable = CSRtþ1

After CG reform Before CG reform After CG reform Before CG reform
Model (1) Model (2) Model (3) Model (4)

CEO_POWERt 0.024*** (2.913) 0.013* (1.651) 0.039*** (5.226) 0.028*** (3.781)

CEO_POWERt  STAKEt 0.069*** (4.884) 0.041*** (3.281)
STAKEt 0.082* (1.889) 0.066* (1.914)
SIZEt 0.036*** (13.991) 0.027*** (9.603) 0.040*** (14.821) 0.027*** (9.631)
LEVt 0.012 (1.528) 0.009 (0.787) 0.011 (1.475) 0.014 (1.148)
ROAt 0.137*** (3.226) 0.070 (1.176) 0.135*** (3.199) 0.062 (1.066)
TOBINQt 0.001 (0.337) 0.018*** (4.225) 0.000 (0.085) 0.019*** (4.190)
FAGEt 0.112*** (4.109) 0.002 (0.090) 0.096*** (3.480) 0.001 (0.038)
RISKt 0.003 (1.123) 0.009*** (2.727) 0.001 (0.670) 0.009*** (2.779)
GROWTHt 0.010* (1.697) 0.004 (0.628) 0.010* (1.781) 0.003 (0.606)
CASHt 0.120*** (4.447) 0.028 (0.825) 0.110*** (4.407) 0.031 (0.996)
ADINTt 0.051* (1.777) 0.076 (1.300) 0.035 (1.345) 0.048 (0.844)
CAPINt 0.003 (1.643) 0.003* (1.832) 0.002 (1.394) 0.002 (1.213)
LIQUIDITYt 0.024 (1.491) 0.006 (0.426) 0.036** (2.214) 0.010 (0.745)
BSIZEt 0.158** (2.316) 0.115 (0.946) 0.198*** (2.936) 0.153 (1.283)
BINDt 0.026 (1.133) 0.020 (0.778) 0.030 (1.391) 0.003 (0.129)
DIROWNt 0.022 (0.768) 0.069*** (2.801) 0.003 (0.103) 0.048** (2.048)
INSTOWNt 0.222 (1.362) 0.254 (0.923) 0.215 (1.325) 0.212 (0.815)
Intercept 0.167*** (2.770) 0.012 (0.304) 0.165*** (2.775) 0.010 (0.237)
Year fixed effects Yes Yes Yes Yes
Industry fixed effects Yes Yes Yes Yes Table 5.
Observations 537 449 537 449 Regression results on
2
Adjusted R 0.546 0.424 0.566 0.435
CEO power and CSR
F-statistic 58.065*** 25.680*** 49.894*** 27.572***
disclosures: impact of
Notes: Superscript asterisks are as follows: *, ** and *** represent significance at 10, 5 and 1% levels, corporate governance
respectively. All variables are defined in Appendix 2. The numbers in parentheses are t-statistics reform
MAJ as shown by the GDP and other indicators, compared to that of other emerging economies
35,9 (Goldman Sachs, 2007, 2011).
5.3.2 Instrumental variables and generalized method of moments analysis. To mitigate
the potential endogeneity problem arising from reverse causality, we use two instruments
for our CEO power measure, namely, industry-average CEO power (CPOWER_IND) and
CEO power in the earliest year (CPOWER_FIRST). We compute the industry average CEO
1294 power (CPOWER_IND) as the average of CEO power for each industry–year pair, excluding
the contribution of the focal firm. The rationale behind this instrument is that the CSR
engagement of a firm may influence the power of its CEO; however, it is very unlikely that
industry-average CEO power will influence CSR engagement, given that the industry
comprises several firms. We exclude the focal firm for the computation of the instrument
(CPOWER_IND) so that the instrument varies across the industry–year pairs, given that the
level of CEO power of the focal firm may be influenced by the power of CEOs in other firms
in the same industry. For the second instrument, we identify the initial CEO power score for
each firm when the firm enters the sample. We then replace CEO power in any given year
with the identified initial CEO power score. We argue that CEO power in the earliest year
can affect the current year’s CEO power, but it is very unlikely that the earliest year’s CEO
power will affect the level of CSR disclosure in any subsequent years. Therefore, we believe
that these two variables can be used as instrumental variables. We only report the first-
stage regression results for equation (1) for the sake of brevity in this paper. Table 6, Model
(1) presents the first-stage regression results, showing that the coefficients of the
instrumental variables, CPOWER_IND ( b = 0.572, p < 0.01) and CPOWER_FIRST ( b =
0.684, p < 0.01), are significant. The coefficients of other control variables are significant as
per our expectations. The Wald F-statistic (unreported) for the CEO power measure is
significant at the 1% level. The results for the second-stage regression are presented in
Table 6, Models (2) and (3). Model (2) shows that the coefficient of CEO_POWER is negative
and statistically significant (b = –0.018, p < 0.01), whereas the coefficient of CEO_POWER 
STAKE in Model (3) is positive and statistically significant (b = 0.049, p < 0.01). We also
assess the validity and strength of both instrumental variables. The Durbin–Wu–Hausman
test is statistically significant in Model (2) ( x 2 = 11.413, p < 0.01), but not in Model (1) ( x 2 =
0.445, p > 0.10), thus suggesting that CEO power has an endogenous relationship with CSR
disclosure. Therefore, the use of instrumental variables is supported. Furthermore, the under-
identification test (Kleibergen–Paap rk LM statistic) is statistically significant for both models,
suggesting that our models are satisfactorily identified. The Kleibergen–Paap rk Wald F
statistic (weak identification test) is at least 20, suggesting that our instruments are relevant
and strong. Finally, the over-identification test (the Hansen J statistic) is statistically
insignificant for both Model (1) ( x 2 = 0.038, p > 0.10) and Model (2) ( x 2 = 2.097, p > 0.10),
suggesting that our instruments are valid. Overall, these test statistics suggest that our
instruments fulfill the conditions of exogeneity and relevance. Therefore, these two instruments
can be considered valid.
Furthermore, to mitigate the concerns surrounding reverse causality (i.e. CSR disclosure
can affect CEO power as firms with higher levels of CSR disclosure may attract powerful
CEOs because of the benefits enjoyed by these firms) [18], we include lagged CSR disclosure
as an independent variable in our baseline regression model, in line with El Ghoul et al.
(2011). We estimate this dynamic panel data model using the GMM system. Table 6, Models
(4) and (5) present the GMM regression results, showing that our study’s main findings
remain the same after considering the reverse causality relationship between a firm’s CEO’s
power and CSR disclosure. Moreover, the Sargan over-identification test is statistically
insignificant, indicating the validity of the over-identification restriction. In addition, the
 Dependent variable = CEO_POWERt Dependent variable = CSRtþ1
Two-stage least squares (2SLS) GMM
First stage Second stage
Model (1) Model (2) Model (3) Model (4) Model (5)

CEO_POWERt 0.018*** (2.604) 0.006 (0.800) 0.009*** (9.266) 0.013*** (8.236)

CEO_POWERt  STAKEt 0.049*** (3.440) 0.010*** (5.049)
STAKEt 0.038* (1.748) 0.017*** (3.703)
SIZEt 0.004 (0.280) 0.032*** (16.666) 0.032*** (16.189) 0.001 (1.226) 0.002** (2.476)
LEVt 0.181*** (3.535) 0.006 (0.811) 0.003 (0.432) 0.003*** (2.835) 0.003** (2.262)
ROAt 0.013 (0.038) 0.078** (2.307) 0.060* (1.797) 0.017*** (2.995) 0.016*** (2.821)
TOBINQt 0.003 (0.183) 0.006*** (2.599) 0.006*** (2.670) 0.000 (0.637) 0.000 (0.842)
FAGEt 0.040 (0.451) 0.016 (0.834) 0.025 (1.442) 0.014*** (4.349) 0.019*** (4.476)
RISKt 0.021* (1.696) 0.003* (1.848) 0.003 (1.506) 0.000 (1.013) 0.000 (0.581)
GROWTHt 0.019 (1.028) 0.009** (1.971) 0.008* (1.951) 0.000 (0.475) 0.000 (0.202)
CASHt 0.892*** (3.253) 0.003 (0.065) 0.025 (0.558) 0.004* (1.741) 0.001 (0.265)
ADINTt 0.236* (1.834) 0.062** (2.385) 0.058** (2.259) 0.001 (0.115) 0.001 (0.149)
CAPINt 0.347 (0.976) 0.168 (1.052) 0.166 (1.072) 0.001 (0.199) 0.001 (0.087)
LIQUIDITYt 0.016** (2.084) 0.001 (0.542) 0.001 (0.917) 0.001** (2.220) 0.000* (1.680)
BSIZEt 0.266*** (5.167) 0.003 (0.280) 0.011 (1.051) 0.009*** (3.621) 0.008*** (2.880)
BINDt 0.232 (0.964) 0.225*** (4.208) 0.203*** (3.679) 0.048*** (5.193) 0.046*** (4.223)
DIROWNt 0.210** (2.043) 0.012 (0.714) 0.017 (0.988) 0.014*** (4.912) 0.009** (2.024)
INSTOWNt 0.070 (0.778) 0.018 (1.012) 0.023 (1.262) 0.000 (0.069) 0.006 (0.938)
CSRt 0.049 (1.452) 0.092*** (3.245) 1.001*** (107.082) 0.986*** (87.658)
CPOWER_INDt 0.572*** (6.898)
CPOWER_FIRSTt 0.684*** (20.795)
Intercept 0.052 (0.228) 0.049 (1.292) 0.092*** (3.425) 0.013** (1.965) 0.010 (1.304)
Year fixed effects Yes Yes Yes Yes Yes
Industry fixed effects Yes Yes Yes No No
Observations 924 924 924 905 905
Adjusted R2 0.546 0.541 – –
Instrument diagnostics tests:
Durbin–Wu–Hausman stats (test of
endogeneity) 0.445 11.413***
(continued)

Endogeneity tests
Table 6.
1295
CEO power
 35,9
MAJ

1296

Table 6.
Dependent variable = CEO_POWERt Dependent variable = CSRtþ1
Two-stage least squares (2SLS) GMM
First stage Second stage
Model (1) Model (2) Model (3) Model (4) Model (5)

Kleibergen–Paap rk LM statistic
(under-identification test) 119.508*** 138.229***
Kleibergen–Paap rk Wald F statistic (weak identification test) 392.168 470.040
Hansen J statistic (over-
identification test) 0.038 (p = 0.846) 2.097 (p = 0.148)
AR(1) (first-order autocorrelation) – – 5.795*** 5.721***
AR(2) (second-order autocorrelation) – – 0.758 0.838
Sargan test – – 62.584(p = 0.455) 59.272(p = 0.539)
Notes: Superscript asterisks are as follows: *, ** and *** represent significance at 10%, 5% and 1% levels, respectively. All variables are defined in Appendix 2.
The numbers in parentheses are z/t-statistics
serial correlation tests for first-order autocorrelation (AR1) and second-order autocorrelation CEO power
(AR2) indicate that serial correlation does not affect our results. Therefore, based on all the
specification tests, it can be concluded that our study’s estimations are unbiased and
consistent.

5.4 Additional analysis: chief executive officer power, stakeholder influence and firm
performance 1297
Our findings indicate that CEO power negatively influences the extent of CSR disclosure
and that stakeholder influence positively moderates this negative association. In the CSR
literature, it is documented that the association between CSR disclosure and financial
performance is inconclusive (Margolis et al., 2009). Therefore, our study adds an additional
RQ as to whether CSR disclosure affects a firm’s financial performance and if this
relationship is moderated by CEO power. We then examine the moderating role of CEO
power on the association between CSR disclosure and a firm’s financial performance in the
presence of stakeholder influence. We develop the following model to test this conjecture:

FINPERFi;tþ1 ¼ b 0 þ b 1 CSRi;t þ b 2 CSRi;t  CEO_POWERi;t þ b 3 CEO_POWERi;t

þ b 4 SIZEi;t þ b 5 LEVi;t þ b 6 FAGEi;t þ b 7 RISKi;t þ b 8 GROWTHi;t

þ b 9 CASHi;t þ b 10 ADINTi;t þ b 11 CAPINi;t þ b 12 LIQUIDITYi;t

þ b 13 BSIZEi;t þ b 14 BINDi;t þ b 15 DIROWNi;t þ b 16 INSTOWNi;t

X X
þ YEARi;t þ INDUSTRYi;t þ « i;t (3)

where FINPERF is financial performance, which is proxied by Tobin’s Q. The measurement

of the other variables in equation (3) is discussed in Section 4.2. Table 7, Model (1) shows the
regression results for the impact of CSR disclosure on a firm’s financial performance. The
coefficient of CSR is positive and statistically significant ( b = 1.391, p < 0.01). This finding
suggests that firms’ disclosure of CSR information improves their financial performance.
This can be interpreted as follows: if the CSR disclosure score increases by one standard
deviation, financial performance (TOBINQ) increases by 10.00% relative to the sample
mean [19]; therefore, these results are economically significant [20].
In Table 7, Model (2), we report the regression results for the moderating role of CEO
power in the association between CSR disclosure and a firm’s financial performance. The
coefficient of CSR is positive and statistically significant ( b = 4.143, p < 0.01), suggesting
that firms with a less powerful CEO have a higher level of financial performance. On the
other hand, the coefficient of the interaction term, CSR  CEO_POWER, is negative and
statistically significant ( b = –1.147, p < 0.05), indicating that firms with a powerful CEO
have a lower level of financial performance. Taken together, these results suggest that firms
with higher levels of CSR disclosure enjoy higher levels of financial performance, but only
when their CEO is less powerful. This is in line with our finding that powerful CEOs
encourage lower levels of CSR disclosure, and that this negatively affects their firms’
financial performance.
Furthermore, in Table 7, Models (3) and (4) report the moderating role of CEO power in
the association between CSR disclosure and financial performance in the presence of
stakeholder influence. In Model (3), the coefficient of the interaction term, CSR 
CEO_POWER, is statistically insignificant while it is negatively significant in Model (4).
MAJ Dependent variable = financial performance (TOBINQ)tþ1
35,9 WITH_STAKE WITHOUT_STAKE
Model (1) Model (2) Model (3) Model (4)

CSRt 1.391*** (3.631) 4.143** (2.542) 1.043 (0.408) 6.750*** (2.892)

CSRt  CEO_POWERt 1.147** (1.982) 0.272 (0.276) 1.576** (2.038)
CEO_POWERt 0.171 (1.086) 0.347 (1.086) 0.459** (1.991)
1298 SIZEt 0.060* (1.915) 0.063** (2.012) 0.040 (0.888) 0.150*** (2.648)
LEVt 0.192 (1.378) 0.185 (1.301) 0.108 (0.612) 0.220 (1.066)
FAGEt 0.437** (2.109) 0.516* (1.769) 0.150 (0.445) 0.954** (2.137)
RISKt 0.069** (2.509) 0.072*** (2.665) 0.114*** (2.901) 0.040 (1.088)
GROWTHt 0.091 (1.601) 0.091 (1.595) 0.010 (0.096) 0.129* (1.805)
CASHt 1.194*** (3.377) 1.222*** (3.292) 0.863** (2.040) 1.329** (2.542)
ADINTt 0.341 (1.001) 0.325 (0.951) 0.113 (0.205) 0.301 (0.706)
CAPINt 1.145 (1.221) 0.934 (0.981) 1.005 (0.783) 1.038 (0.815)
LIQUIDITYt 0.003 (0.181) 0.005 (0.239) 0.011 (0.451) 0.010 (0.352)
BSIZEt 0.314*** (2.989) 0.306*** (2.989) 0.305** (2.388) 0.331** (2.079)
BINDt 0.220 (0.394) 0.235 (0.425) 0.444 (0.532) 0.091 (0.122)
DIROWNt 0.056 (0.219 0.002 (0.009) 0.332 (0.655) 0.298 (0.892)
INSTOWNt 0.639** (2.263) 0.600** (2.004) 0.614* (1.842) 0.799* (1.710)
Intercept 0.894** (2.104) 0.605 (1.410) 1.278 (1.522) 0.813 (1.577)
Table 7. Year fixed effects Yes Yes Yes Yes
Regression results of Industry fixed effects Yes Yes Yes Yes
CSR disclosure and Observations 907 907 350 557
2
Adjusted R 0.391 0.395 0.464 0.405
firm performance:
F-statistic 0.359*** 0.362*** 0.419*** 0.352***
moderating role of
CEO power and Notes: Superscript asterisks are as follows: *, ** and *** represent significance at 10, 5 and 1% levels,
stakeholder influence respectively. All variables are defined in the Appendix 2. The numbers in parentheses are t-statistics

Taken together, these findings can be interpreted in the following way: in the presence of
stakeholder influence, the negative impact of CEO power on CSR disclosure has disappeared
while, in the absence of stakeholder influence, the negative impact of CEO power on CSR
disclosure reduces the firm’s financial performance. This finding suggests that CEO power
negatively moderates the association between CSR disclosure and a firm’s financial
performance if the level of stakeholder influence is low [21].

6. Sensitivity analysis
We next undertake several analyzes to assess the robustness of our findings. First, we
construct an alternate measure of CEO power to capture the effects of high CEO power
(HIGH_CEO_POWER) and low CEO power (LOW_CEO_POWER), based on the industry–
year adjusted median value of CEO power. To be specific, we construct a dummy variable
with a value of 1 if the CEO power index score is above the median CEO power index score,
labeling this as HIGH_CEO_POWER: if below the median score, it takes a value of 0, with
the label LOW_CEO_POWER. Using this alternate proxy, we document qualitatively
similar results to those shown in Table 4; however, we do not show the results in this paper
for reasons of brevity. Second, we use the natural logarithm of CSR disclosure as a proxy for
CSR disclosure, instead of the ratio of CSR disclosures to the total number of CSR
disclosures. These unreported results reveal that we find qualitatively similar results to
those shown in Table 4.
 Third, we construct our CSR disclosure index using seven types of CSR-related CEO power
information, namely, community, the environment, human resources, products, strategic
information, customer and value addition. We re-estimate the main regression models using
individual components, as mentioned in the CSR disclosure index. We document
quantitatively similar results across almost all individual components of the CSR disclosure
index, the exceptions being the products and strategic information components. Appendix 3
reports these regression results. Fourth, our CEO power index comprises four components:
CEO duality, the CEO as a member of other committees, CEO tenure and CEO shareholding 1299
of at least 10% of shares. We also re-estimate our regression models using the individual
components of the CEO power index. We document quantitatively similar results across
almost all individual components of the CEO power index, the exception being the direct
association between CSR disclosure and the CEO as a member of other committees. These
regression results are reported in Appendix 4.
Fifth, we perform a sub-sample analysis of firms operating in export-oriented industries.
As we are measuring stakeholder influence based on the presence of foreign sales, we re-
estimate the model excluding those firms in industries that do not make any foreign sales.
Not all firms in a specific industry are making foreign sales. We apply two approaches,
namely, running the baseline regression model, excluding those industries that do not have
any foreign sales; and running the regression by the industry for those firms for which
foreign sales data are available. We do not report the results in this paper for reasons of
brevity. However, the unreported results show that the coefficient of CEO_POWER is
positive and statistically significant for firms with foreign sales, as well as for firms in the
textile, tannery and pharmaceuticals industries [22]. Sixth, we re-estimate the
baseline regression models based on the quintile of the foreign sales amount to examine
the robustness of our findings. The results, reported in Appendix 5 [23], indicate that the
positive effect of CEO power on the level of CSR disclosure only holds for the fourth and fifth
quintiles of the foreign sales amount.
Seventh, our sample covers the time period from 2002–2012, which includes the GFC. To
remove the effect of the GFC from our findings, we separate the firms in our sample into two
groups, namely, 2002–2007 and 2010–2012. We then re-run all our regression models. The
unreported results show that our findings remain qualitatively similar. Finally, we estimate
our regression models using Fama and MacBeth’s (1973) method to mitigate statistical
concerns about the serial dependence of regression errors. In this regression, we drop all
year dummies from our regression models and estimate the revised regression models by
year. We then test the statistical significance of the average coefficients based on their t-test
statistics. The unreported regression results using Fama and MacBeth’s (1973) method
show that the current study’s findings remain qualitatively similar.

7. Conclusion
In this paper, we examine the association between CEO power and the level of CSR
disclosure. We also examine the moderating role of stakeholder influence in the association
between CEO power and CSR disclosure, as stakeholders have more incentives to introduce
a CSR culture at the firm level. We provide evidence of the negative association of powerful
CEOs with the level of CSR disclosure. We interpret this finding to mean that powerful
CEOs are not interested in the disclosure of CSR information; instead, they prefer to invest in
other activities that are profit making. Furthermore, we find that stakeholder influence
positively moderates the negative association between CEO power and CSR disclosure. This
finding is interpreted to mean that if a firm has powerful stakeholder groups, the CEO
cannot ignore the need for CSR disclosure. We also find evidence that CSR disclosure is
MAJ positively associated with a firm’s financial performance. However, CEO power negatively
35,9 moderates this association, whereas stakeholder influence reduces the negative moderating
role of CEO power on the impact of CSR disclosure on a firm’s financial performance. While
prior studies in the US context report that CEO power is positively associated (Jiraporn and
Chintrakarn, 2013) and negatively associated (Sheikh, 2019; Harper and Sun, 2019) with
CSR, we provide evidence that CEO power is negatively associated with CSR disclosure in
1300 the emerging economy context, using Bangladesh as the context for the current research.
These findings reflect the view that incentive mechanisms and the contexts of CSR
disclosure by powerful CEOs are not the same between developed and emerging economies.
Furthermore, while Li et al. (2018) documented that a higher level of CEO power enhances
the CSR disclosure effect on a firm’s financial performance in the UK context, our evidence
shows that a higher level of CEO power reduces the CSR disclosure effect on a firm’s
financial performance in the emerging economy context. While these prior studies reported
results in the context of a developed economy where the capital market is well-organized,
our study differs as we document the negative effect of CEO power on the level of CSR
disclosure in a more volatile and unstructured capital market within an emerging economy,
specifically, in Bangladesh.
The study findings have practical implications for regulators and other stakeholders.
Our study’s H1 result carries the implication that regulators, specifically stock exchange
regulators, should develop guidelines to curb CEOs’ power (specifically, CEO duality and
the CEO as a member of other committees) over the disclosure of CSR information, as their
power is detrimental to overall CSR disclosure. These guidelines may reinforce the need for
CSR disclosure in listed firms in Bangladesh. Furthermore, our study conveys the message
to regulators and other stakeholders that stakeholder influence plays a key role in curbing
any opportunistic stance taken by firms’ CEOs relating to CSR disclosure. In such cases, the
study emphasizes increasing the level of stakeholder influence, which will be of benefit in
diminishing the undue influence of powerful CEOs over the disclosure of CSR activities. In
addition to the powerful role played by international buyers (as considered in the current
study), it can be added that when stakeholders’ groups work collectively and demonstrate
their influence in the context of an emerging economy, any opportunistic stance of key
executives (CEOs in particular) becomes difficult to establish and implement.
Our findings on CSR disclosure can be generalized to any listed firm in Bangladesh,
given the underlying factors that influence CSR disclosure. Despite the above-mentioned
implications, we acknowledge the following limitations of our study. First, our sample
excludes the banking industry, given that firms operating in this industry have a different
asset and liability structure. However, in the past 10 years, the central bank of Bangladesh
(Bangladesh Bank) has enacted rules for CSR and green banking disclosures for banking
firms operating in Bangladesh (Bose et al., 2018; Khan et al., 2019). The role of CEO power on
the level of CSR disclosure and the role of powerful stakeholders in this industry would be
areas of interest for further research. Furthermore, we do not control for CSR performance in
our research models, due to the non-availability of CSR performance data in the Bangladeshi
context, with this an area that could be addressed in future research. Given that no
regulatory guidelines or mechanisms are in place to monitor CSR disclosure practices for
listed non-financial firms in Bangladesh, we are unable to say whether CSR disclosure
represents the actual commitment of firms to CSR performance. Thus, we acknowledge that
listed non-financial firms in Bangladesh may opportunistically use CSR disclosure to create
a good image to present to stakeholders while concealing their actual overall CSR
performance. Future research should explore the quality of CSR disclosure and the relevant
initiatives for quality improvement undertaken by listed firms in Bangladesh. Nevertheless,
our current study opens avenues for future research, with this study able to be extended by CEO power
focusing on cross-country analysis covering both developed and emerging economies.

Notes
1. It can be argued that this situation is gradually changing in some emerging economies where
CSR is becoming mandatory. For example, Section 135 of the Indian Companies Act, 2013
prescribes that Indian companies are to spend 2% of their pre-tax profit on CSR activities. 1301
Likewise, Section 50 of the amended Income Tax Act 1995 of Mauritius (amended in 2012)
requires that all profitable firms spend 2% of their funds on CSR activities.
2. www.wto.org/english/res_e/statis_e/wts2019_e/wts2019_e.pdf (accessed July 18, 2020).
3. www.textiletoday.com.bd/overview-bangladesh-leather-industry/ (accessed July 18, 2020).
4. www.brac.net/sites/default/files/Tackling%20extreme%20poverty.pdf (accessed July 18, 2020).
5. This is different from simply ticking boxes. A company that is unable to comply with a guideline
is required to provide an explanation.
6. www.wto.org/english/res_e/statis_e/wts2019_e/wts2019_e.pdf (accessed July 15, 2020).
7. For details, see www.cia.gov/library/publications/resources/the-world-factbook/ (accessed July
20, 2020).
8. After interviewing the leading international retailers in Europe and the USA, McKinsey and
Company (2011) reported that 72% directly sourced their ready-made garment activities in
Bangladesh. Furthermore, McKinsey and Company (2011) reported that 69% of surveyed
suppliers in Bangladesh confirmed that they worked directly with international buyers.
9. The international buyers that signed up included: H&M, Inditex (Zara), Primark, C&A, Tommy
Hilfiger, PVH (Calvin Klein), Tesco, Benetton, Marks & Spencer and Carrefour. The accord
commits retailers to rigorous, independent inspections of their suppliers’ factories. For details,
see: www.csmonitor.com/Business/2013/0527/Is-it-ethical-to-keep-buying-clothes-from-Bangladesh
(accessed July 17, 2020).
10. www.corporate.walmart.com/global-responsibility/global-responsibility-report-archive (accessed
July 18, 2020).
11. Banks are among the most powerful local stakeholder groups as they can exert pressure on firms
by controlling resources, such as finance. However, banks in Bangladesh maintain an arm’s
length relationship with corporate clients and are not involved in monitoring activities (Rashid,
2015b).
12. We find that CEOs in Bangladesh hold, on average, 9.96% of firm ownership.
13. The role of family firms in CSR disclosure can be argued both ways. While some studies have
argued that family firms are actively engaged in CSR activities to preserve and enhance their
socio-emotional wealth, several studies have also argued that family firms may not be more
socially responsible than non-family firms (Cruz et al., 2014). Family firms have more concern
with their own interests compared to non-family firms, because of amoral familism, distrust of
outsiders and the “dark” side of socio-emotional wealth (Cruz et al., 2014) that negatively affect
the CSR activities of family firms (Morck and Yeung, 2004).
14. In Bangladesh, firms do not produce separate CSR reports; instead, firms disclose their CSR
activities through annual reports.
15. CEO duality (CEO_DUAL) is measured as an indicator variable of 1 if the CEO serves as the
chairperson of the board, and 0 otherwise. CEO membership (CEO_MEMBER) is measured as an
indicator variable of 1 if the CEO sits on other committees as a member. CEO tenure
MAJ (CEO_TENURE) is measured as the number of years for which the CEO holds the executive
position. CEO shareholding (CEO_SHARE) is measured as an indicator variable of 1 if the CEO
35,9 has a shareholding of at least 10%, and 0 otherwise.
16. Bose et al. (2018) documented an alpha coefficient value of 0.78 for their green banking disclosure index.
17. This is the corporate governance notification mentioned in Section 2.1.

1302 18. Prior studies have shown that firms with a higher level of CSR disclosure are more likely to have
lower cost of equity and cost of debt, lower financial constraints and less stock price crash risk
and a higher social image.
19. The standard deviation of CSRi,t is 0.106 and TOBINQi,tþ1 is 1.473 for the financial performance
model. The economic significance of 10.00% is computed as: ((1.391  0.106)/1.473).
20. We also re-run equation (3) using return on assets (ROA) as an alternate proxy for financial
performance. We do not report the results in this paper for reasons of brevity. However, the
unreported results show qualitatively similar results.
21. We document that firms with higher CSR disclosure levels have higher levels of financial
performance. Furthermore, firms with higher levels of financial performance may be able to
afford or support high CSR disclosure levels. This may raise endogeneity bias stemming from
reverse causality. We address reverse causality using an instrumental variable approach. We use
two instruments, namely, first, industry average CSR disclosure as the average of CSR disclosure
for each industry–year pair excluding the contribution of the focal firm and, second, the use of
CSR disclosure in the earliest year. We do not report the results in this paper for reasons of
brevity. However, the unreported results show that the tenor of our findings show no change
after addressing reverse causality.
22. Due to the lack of sufficient observations in each industry, when we run the regression model by
industry, we find that the regression outputs only survive for textiles, pharmaceuticals and
tannery industries.
23. We thank an anonymous reviewer for suggesting this analysis.

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Corresponding author
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Appendix 1 CEO power

Broad category CSR disclosure items

Community (maximum score 3) (1) Community involvement (such as “recognizing the importance of
community”)
Charitable donations (involvement in community welfare programs, such 1307
as aid to schools, colleges and education and religious institutions)
Health, education and training (such as a blood donation program,
adopting an adult literacy program)
Environment (maximum (1) Environmental protection (such as lower carbon emissions and reduced
score 2) levels of air and water pollution)
(2) Energy savings (such as the use of energy-efficient machinery and
equipment) leading to less pollution
Human resources (maximum (1) Number of employees (helping society by reducing unemployment)
score 10) (2) Employee relations (maintaining a good understanding among
employees)
(3) Employee welfare (welfare of the employee and/or family members)
(4) Employee benefits (as per international accounting standard [IAS] 19)
(5) Employee education (recognizing the importance of employee
education and providing support for education)
(6) Employee training (such as employment-specific training)
(7) Employee profit sharing (such as a profit bonus)
(8) Occupational health and safety (OHS) (such as precautionary measures
in the workplace; providing OHS training in the workplace; and having
measures available to cope with an accident)
(9) Freedom of association (such as trade unions)
(10) Diversity and equal opportunity (such as employment irrespective of
disability, race, gender or ethnic group)
Products (maximum score 4) (1) Types of products (fulfilling consumer needs)
(2) Product quality and improvements (recognizing product quality and
initiatives undertaken for improvements)
(3) Product safety/customer health and safety
(4) Product sustainability performance and the addressing of child labor
(such as measures taken to contribute to the non-use or elimination of
child labor)
Strategic information (1) Discussion of marketing network (availability of products on time)
(maximum score 1)
Customer (maximum score 2) (1) Focus on customer service
(2) Customer award/ratings received Table A1.
Value addition (maximum (1) Value-added statement CSR disclosure index
score 2) (2) Value-added data/ratio items
MAJ Appendix 2
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Notation Explanation Description

CSR CSR disclosure index tde ratio of tde total CSR disclosure score scaled by tde
1308 maximum possible disclosure score for tde firm
CEO_POWER CEO power index The CEO Power index is computed based on CEO duality
(CEO_DUAL), the CEO as a member of other committees
(CEO_MEMBER), CEO tenure (CEO_TENURE) and CEO
shareholding of at least 10% of shares (CEO_SHARE). CEO
duality (CEO_DUAL) is measured as an indicator variable of
1 if the CEO serves as the chairperson of the board, and 0
otherwise. CEO membership (CEO_MEMBER) is measured
as an indicator variable of 1 if the CEO sits on other
committees as a member. CEO tenure (CEO_TENURE) is
measured as the number of years for which the CEO holds
the executive position. CEO shareholding (CEO_SHARE) is
measured as an indicator variable of 1 if the CEO has a
shareholding of at least 10%, and 0 otherwise. We then add
all four of these variables and create a composite index of
CEO power by converting the natural logarithm of the total
score received by each firm
STAKE Stakeholder influence An indicator variable that takes a value of 1 if a firm has
foreign sales, and 0 otherwise
SIZE Firm size The natural logarithm of the total assets at the beginning of
the year
LEV Leverage The ratio of total debt to total assets
ROA Profitability The ratio of net profits before extraordinary items to total
assets
TOBINQ Tobin’s Q The sum of total assets plus the market value of equity
minus the book value of equity divided by total assets
FAGE Firm age The natural logarithm of the number of years, as the
inception of the firm
RISK Firm risk The standard deviation of daily share return over the fiscal
year
GROWTH Sales growth The percentage changes in sales revenues
CASH Cash holdings The ratio of cash to total assets (excluding cash)
ADINT Advertising intensity The ratio of total advertisement expenditure to total sales
CAPIN Capital intensity The ratio of capital spending to total sales
LIQUIDITY Liquidity The proportion of current assets to current liabilities
BSIZE Board size The natural logarithm of the size of the board
BIND Board independence The proportion of independent members relative to the total
number of members on the board
Table A2. DIROWN Director ownership The percentage of total ownership held by the board of
Description of directors
variables INSTOWN Institutional owners The percentage of ownership held by institutional investors
 Appendix 3

Community Environment Human resources Products

Model (1) Model (2) Model (3) Model (4) Model (5) Model (6) Model (7) Model (8)

CEO_POWERt 0.029** (2.415) 0.052*** (4.157) 0.032* (1.912) 0.054*** (2.825) 0.029*** (4.412) 0.045*** (7.268) 0.009 (1.199) 0.008 (0.971)
CEO_POWERt  STAKEt 0.077*** (4.140) 0.074*** (3.032) 0.054*** (6.052) 0.003 (0.259)
STAKEt 0.306*** (5.901) 0.149** (1.969) 0.038 (1.124) 0.163*** (3.987)
Intercept 0.095 (1.459) 0.052 (0.789) 0.151** (2.036) 0.109 (1.483) 0.024 (0.540) 0.007 (0.151) 0.193*** (3.187) 0.195*** (3.180)
Control variables Yes Yes Yes Yes Yes Yes Yes Yes
Year fixed effects Yes Yes Yes Yes Yes Yes Yes Yes
Industry fixed effects Yes Yes Yes Yes Yes Yes Yes Yes
Observations 986 986 986 986 986 986 986 986
Adjusted R2/Pseudo R2 0.375 0.391 0.268 0.287 0.464 0.482 0.447 0.446
F-statistic/Wald Chi2 19.577*** 21.534*** 8.199*** 8.283*** 47.145*** 43.287*** 51.150*** 49.972***

Notes: Superscript asterisks are as follows: *, ** and *** represent significance at 10, 5 and 1% levels, respectively. All variables are defined in Appendix 2. The numbers in parentheses are t/z-statistics
(continued)

Regression results of
1309
CEO power

Table A3.

disclosure index
components of CSR
disclosure: individual
CEO power and CSR
 35,9
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1310

Table A3.
Strategic information Customer Value addition
Model (9) Model (10) Model (11) Model (12) Model (13) Model (14)

CEO_POWERt 0.034** (2.145) 0.032* (1.853) 0.038*** (2.828) 0.053*** (3.680) 0.029* (1.777) 0.046** (2.393)
CEO_POWERt  STAKEt 0.008 (0.344) 0.049** (2.524) 0.056** (2.490)
STAKEt 0.052 (0.500) 0.015 (0.230) 0.061 (0.856)
Intercept 0.105 (0.879) 0.100 (0.845) 0.527*** (5.904) 0.554*** (6.219) 0.587*** (5.997) 0.556*** (5.475)
Control variables Yes Yes Yes Yes Yes Yes
Year fixed effects Yes Yes Yes Yes Yes Yes
Industry fixed effects Yes Yes Yes Yes Yes Yes
Observations 986 986 986 986 986 986
Adjusted R2/Pseudo R2 0.320 0.326 0.235 0.240 0.310 0.314
F-statistic/Wald Chi2 278.78*** 278.51*** 39.351*** 42.100*** 36.076*** 28.158***
 Appendix 4

CEO duality CEO member CEO share CEO tenure

Model (1) Model (2) Model (3) Model (4) Model (5) Model (6) Model (7) Model (8)

CEO_POWERt 0.009* (1.675) 0.038*** (6.058) 0.014 (1.584) 0.052*** (4.168) 0.017*** (3.570) 0.041*** (6.122) 0.002*** (3.519) 0.002*** (4.858)
CEO_POWERt  STAKEt 0.072*** (7.109) 0.072*** (4.684) 0.051*** (4.557) 0.002*** (3.267)
STAKEt 0.015 (1.012) 0.057*** (4.204) 0.053*** (3.840) 0.024 (1.622)
Intercept 0.088*** (3.301) 0.075*** (2.741) 0.110*** (3.972) 0.107*** (3.946) 0.100*** (3.689) 0.122*** (4.707) 0.091*** (3.378) 0.091*** (3.407)
Control variables Yes Yes Yes Yes Yes Yes Yes Yes
Year fixed effects Yes Yes Yes Yes Yes Yes Yes Yes
Industry fixed effects Yes Yes Yes Yes Yes Yes Yes Yes
Observations 986 986 986 986 986 986 986 986
2
Adjusted R 0.524 0.555 0.524 0.538 0.528 0.543 0.530 0.534
F-statistic 53.525*** 55.675*** 54.656*** 54.299*** 53.903*** 60.073*** 55.043*** 52.380***

Notes: Superscript asterisks are as follows: *, ** and *** represent significance at 10, 5 and 1% levels, respectively. All variables are defined in Appendix 2. The numbers in
parentheses are t-statistics

components of CEO
Regression results of
1311
CEO power

power index
disclosure: individual
CEO power and CSR
Table A4.
 35,9
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1312

Table A5.

of foreign sales
disclosure: quintiles
Regression results of
CEO power and CSR
Appendix 5

Dependent variable = CSRtþ1

Q1 Q2 Q3 Q4 Q5
Model (1) Model (2) Model (3) Model (4) Model (5)

CEO_POWERt 0.030* (1.788) 0.047*** (3.635) 0.065** (2.145) 0.085*** (3.310) 0.813** (2.056)
Intercept 0.315 (1.201) 0.090 (0.888) 0.700*** (3.312) 0.127 (0.437) 0.553 (0.276)
Control variables Yes Yes Yes Yes Yes
Year fixed effects Yes Yes Yes Yes Yes
Industry fixed effects Yes Yes Yes Yes Yes
Observations 73 73 73 73 73
Adjusted R2 0.816 0.935 0.681 0.609 0.545
F-statistic 10.41*** 32.57*** 5.26*** 4.20*** 3.79***

Notes: Superscript asterisks are as follows: *, ** and *** represent significance at 10, 5 and 1% levels, respectively. All variables are defined in
the Appendix 2. The numbers in parentheses are t-statistics