The relationship between corporate social responsibility disclosure and corporate governance characteristics evidence from VN100

The Relationship between Corporate Social Responsibility
Disclosure and Corporate Governance Characteristics:
Evidence from VN100.
Le Hoang Nguyen Phuong
Linh Nguyen
International University, Vietnam National University-HCMC, Vietnam
Abstra
ct
Due to the increasing importance of Corporate Social Responsibility (CSR) practice especially
in developing countries where there is a lack of research about CSR and factors affecting it,
this study aims to provide a better understanding of CSR disclosure and it relationship with
firm corporate governance characteristics in Vietnam. Using a sample of 100 biggest market
capitalization firms (VN100) from 2014 to 2016, our study reveals a moderate extent of CSR
disclosures. Board of director size and audit type are found to have a positive significant link
with CSR reporting while the meetings by board of director and number of outside directors
demonstrate a negative connection with CSR disclosure. However, the CEO duality and
presence of women directors in the board show no relationship with CSR disclosure. Findings
from this research are expected to extend the current literature regarding CSR disclosure in
Vietnam. They can also be helpful for investors in making decisions to invest in corporate
citizens as well as policy makers in considering regulations to improve

CSR practices in

Vietnam.
Keywords: Corporate Social Responsibility, Corporate Citizenship, Corporate Governance,
Vietnam Stock Market
1.Introduction
Business and the public raise more awareness about corporate social responsibility (CSR)
or corporate citizenship because of the collapse of numerous corporations such as Enron,
WorldCom, and Global last twenty years ago and the application of the corporate social
responsibility to analyze the equity of firms (Holder -Webb, Cohen, Nath & Wood, 2009).

Although CSR is important, CSR disclosure is still optional in many countries including
Vietnam. On publishing such information, firms want to reduce the information asymmetry
issue. Moreover, they also would like to commit society to social, ethical, and environmental
problems for gaining a good reputation. However, there existed little research on the link
between the corporate social responsibility (CSR) practice and the governance structure
(Akhtaruddin et al., 2009, p.1). Consequently, there is a strong desire to analyze the impact of
the governance mechanism on firm’s corporate social responsibility (Rao & Tilt, 2016).
This research can be helpful to markets where the knowledge of CSR is still poor because of
the perception that such practices are considered being as philanthropic activities. Bui (2010)
also showed that in the past, Vietnamese firms paid little attention to corporate ethics for
three main reasons: the firms do not understand the disclosure impacts on society, lack both
financial resources, and an enforcing legal framework. These factors have prevented firms
from adopting corporate social responsibility in their policies. In Vietnam, most studies about

1


the corporate social responsibility practices are qualitative. To the best knowledge of the
authors, there existed no extensive studies on CSR reporting and the governance structure of
listed firms on Vietnam stock market. Prior studies in Vietnam (e.g., Vu, 2012) mainly
focused on institutional, firm or individual

2


determinants of CSR disclosure. Thus, there is a scarcity of research on the association between
CSR disclosure and corporate governance.
Thus, by employing a combined method of qualitative and quantitative analysis to
understand the extent to which firms disclosure CSR and the relationship between CSR
disclosure and firm governance structure, our paper hopes to address the gap in the

literature. Particularly, our paper aims to examine the following research questions:
RQ1. To what extent do listed firms in Vietnam disclose corporate social responsibility?
RQ2. How do corporate governance characteristics influence corporate social responsibility
disclosure of listed firms in Vietnam?
The paper is structured as follows: Section 2 reviews relevant literature. Hypotheses are also
presented in Section 2. Section 3 presents data and methodology. Section 4 discusses the
results and Section 5 concludes the study.
2.Literature Review
In the early stage, corporate social responsibility is first known as an obligation of
businessmen to follow their policies, their decision-making, and desirable actions in favor of
the objectives and values of our society by Bowen (1953). Later, Friedman (2007) established
the concept based on two main question: for what are corporations responsible for? and to
whom are they responsible? Overall, disclosing corporate citizenship provides companies
with financial and strategic gains. Money & Schepers (2007) suggested that through social
activities and its reporting, firms can gain the trust and goodwill from stakeholders to obtain the
competitive benefits; promote their image and their name (Li et al., 2010). Corporate
citizenship participation with reporting practice is able to lower the risk that labor quarrels,
product safety disgrace, and frauds can affect the firm’ performance and reputation (Waddock
& Graves,1997).
2.1. Relationship between the Corporate Social Responsibility and the Corporate
Governance Characteristics
There are various theories that can be applied to explain why corporations are willing to
disclose their activities relating to community. In this study, the authors would like to discuss
four main theories that are relevant to the association between the corporate social
responsibility disclosure and corporate governance.
First, the agency theory indicates a conflict of interest between managers and
shareholders. The agency relationship was considered as a contract in which the principal
assigned the work to the agent, but they are unable to examine how the agents behave
(Jensen and Meckling, 1976) causing an agency problem as there existed the contradiction
between the goal and the interest among them (Eisenhardt,1989). This indicated that the agent could

perform in the best interest of them instead of amplifying the shareholders’ wealth. Therefore, there existed three
forms of costs involving agency problems. Firstly, there is monitoring cost that the owners used to mitigate the conflict
of interest with the agencies due to different goals (Hill & Jones, 1992). Secondly, bonding cost is the cost utilized by
managers to make sure that his actions benefit the owner’s wealth. Thirdly, the residual loss leads to the reduction
of the principals’ advantage because of different pursued objectives and attitude toward bearing risk. Thus, it
cannot be denied that adopting the corporate social responsibility reporting is the main
way to reduce information asymmetry, mitigate the agency problem and reduce the cost as
well.
Second, stakeholder theory (Freeman, 1984) indicates that firms operate ethically and
responsibly to satisfy the expectation of the public and the stakeholders have right to be
updated information through the sustainability performance about how the firm affects the
surrounding environment (Freeman, 2010). Moreover, the reputation and the image of the corporation can


be improved by both the corporate ethics and the structure of governance together. Therefore, it can sharpen the
relations with main financial stockholders and cool down the conflict of interest among stakeholders named as agency
theory. By this way, Aguilera, Williams, Conley, & Rupp (2006) found


that participating in the corporate social responsibility reporting would have a positive relation to an efficient
mechanism for corporate governance. Moreover, according to Barako & Brown (2008), the theory of stakeholder
posited that an entity attempts to harmonize its activities with expectations of stakeholders through the social
responsibility. Stakeholder theory thus introduced the link between corporate governance and the corporate social
responsibility practice (Driver & Thompson, 2002; Michelon & Parbonetti, 2012).
Third, legitimacy theory (Suchman, 1995) expands the function of corporate governance by
adding more different stakeholders to the principle-agent relationship. Moreover, this theory
based on the contract between corporations and society. Specificly, corporations bear
responsibility for the quantity and quality of social resouces and generate the benefits from
economic activities for the society because the community provided firms with natural and
human resources and permission as well to produce goods. Therefore, managers are likely to

release their corporate social responsibility activities and other related information to present
and sustain the legitimacy of the firms or as a remedial strategy of the firm (Hooghiemstra,
2000).
Fourth, stewardship (Donaldson & Davis, 1991) is one of many theories that can enlighten the relationship between
shareholders and managers. Pursuant to Davis (1997), the agency theory assumes the discrepancy of interest between
the principals and the agents, while the stewardship assumes the agreement of interest between the principals and
the managers. Despite starting from the different assumption, both theories concentrated on the goal alignments and
the rationality of the two parties (Davis, 1997). Stewardship theory suggested that steward managers concentrated on
the collective benefit because, in their belief, their personal success is minor to the success of the corporation.
Moreover, due to the rationality of steward managers, they identified greater utility in the behavior of cooperation
rather than the self- serving behavior. Donaldson and Davis (1991) claimed that managers are believed to manage the
resources of business effectively by using their intelligence and experiences, so managers are stewards and
trustworthy to take actions for protecting the owners’ wealth (Donaldson & Davis, 1991; McWilliams, Siegel, &
Wright, 2006). One of these actions was the participation in the corporate social responsibility activities and disclosure,
as it is preferred by societies to have long-term benefit on the financial performance (McWilliams et al., 2006) and
promotes the position of the organization as well based on the notion of “doing well by doing good” (McWilliams et
al., 2006).
2.1.1.

Board of Director Size

From the agency perspective, the board of director size was one of the most vital
components of corporate governance in supervising the management of the company by the
agents, impacting the transparency as well as the performance of firms (Fama & Jensen, 1983).
Members on board of directors represent shareholders and protect shareholders’ wealth by
encouraging the commitment to the corporate social responsibility initiatives as strategic
business activities and promoting a higher level of reporting. McWilliams et al. (2006); Ahmed
Haji (2013); Kathy Rao, Tilt, & Lester (2012b) suggested that the number of members on
board decided the effectiveness and efficiency of such mechanism.
Board of director size has been found to positively affect the corporate social responsibility

reporting in many different nations (e.g., Kathy Rao et al. 2012a; Esa & Anum Mohd Ghazali
2012; De Villiers et al. 2011 and Jizi et al. 2014a). For example, Kathy Rao et al. (2012a) found
that the extent of environmental information and the board of director size were positively
conjoined basing on data collected for the largest 100 firms on Australia stock exchange in
2008. Given the support from prior papers, the following hypothesis is proposed:
H1: There is a positive relationship between the board of director size and corporate social
responsibility disclosure.
2.1.2.

Board of Director Meetings

According to Laksmana, (2008), the number of meetings per year is one of the indicators of
the governance structure. Laksmana (2008) argued that regular meetings gave directors
chances to discuss more information, improve decision-making process, and increase firm
value, deter firm growth, consequently promoting the corporate ethics practices (Ahmed Haji,


2013). Previous empirical studies suggested a positive link between the board of director
meeting and the corporate citizenship practices (e.g., O’Sullivan et al. 2008; Allegrini & Greco
2013a; Chen et al. 2010). For example, Allegrini & Greco (2013a) supported a positive influence
of board


of director meetings on the degree of the voluntary social responsibility release with the
sample size of 177 non-financial Italian listed firms in 2007. Following that, H2 is posited as
below:
H2: There is a positive relationship between the number of board meetings and
corporate social responsibility disclosure.
2.1.3.

Audit Type

As argued by agency theory, many companies would like to disclose and become more
transparent about their financial reporting and the corporate enterprise performance as well
to attract more customers and investors. They can obtain their desire to ensure their
existence and success (Brown & Deegan 1998; Deegan 2002) by hiring a good auditor (AlGamrh et al., 2015) because the large and international audit firms require their client to
provide more main information in the reports and websites. A review of literature shows
evidence of the positive association between audit type and corporate social responsibility
reporting (e.g., Raffournier, 1995; Xiao et al., 2004). Take the research of Raffournier in 1995
as an example, he collected data from 161 firms on researching the component of voluntary
financial reporting in Switzerland and concluded that audit type linked positively to the
corporate citizenship disclosure. Given the support from prior papers, this study develops
hypothesis
H3: There is a positive relationship between audit type and corporate social responsibility
disclosure.
2.1.4.

Women Directors

The percentage of women directors plays an important role in the corporate governance
literature (Carter, Simkins, & Simpson, 2003). Female directors might constrain the board to
satisfy the stakeholders’ requirements, thus, the execution of the corporate social
responsibility and its performance were more practicable (Zhang, 2012). Moreover, with
more female directors, the board can make the most of multiple stakeholders to increase
level of the corporate social responsibility. Furthermore, women directors can associate
their interests with other stakeholders and higher demand from foreign shareholders for
the corporate social responsibility disclosure. The female directors might constrain the
board to satisfy the stakeholders’ requirements thus the execution of the social enterprise
and its performance were more practicable (Zhang, 2012). The presence of women
directors has been found to positively associate firm corporate social responsibility practice

(e.g., Webb, 2004; Mallin & Michelon, 2011; Liao et al, 2015; Krüger, 2009). For instance,
Webb (2004) reported a positive link between the percentage of women directors and the
corporate social responsibility practice by investigating the structure of board of 394 social
firms in the US. Hence, this study expects that
H4: There is a positive relationship between the proportion of women directors in the
board and corporate social responsibility disclosure.
2.1.5.

CEO Duality

Agency theory argued that CEO duality concentrates all the authority of the managers and
the chairperson in the same person leading to the interest dispute between individual and
firm (Haniffa & Hudaib, 2006). Stewardship theory suggested that duality provides merged
command structure boosting the making decision procedure, fasten the enactment of
corporate social responsibility performance (Vo, 2010). Webb (2004) investigated the
structure of board in 394 social firms in the U.S. and found a negative link between the CEO
duality and corporate social responsibility reporting. Mallin & Michelon (2011) reported that
CEO duality is negatively associated with the social performance of 176 corporations.
Following these papers, this study expects:

32


H5: There is a negative relationship between CEO duality and corporate social responsibility
disclosure.
2.1.6.

Outside Directors (Independent non-executive directors)

32

Agency theory claimed that the presence of outside directors is considered being crucial in
the corporate governance for efficient management and inspection of the board (Rozaini
Mohd Haniffa & Cooke, 2002; Michelon & Parbonetti, 2012) due to their authority and
dominance to take the gauge of management performance more fairly than executive
directors and take action to reduce the egocentricity behavior (Post, Rahman, & Rubow,
2011). Furthermore, based on the stewardship and the stakeholder theories, independent
nonexecutive board members ensure protections for not only the shareholders’ wealth and
other stakeholders’ interest as well by pursuing the corporate social responsibility activities to
reply to social concerns and meet social obligations (Haniffa & Cooke, 2005a; Ntim &
Soobaroyen, 2013).
Webb (2004) investigated the structure of board in 394 social firms in the U.S. and reported
a positive link between outside directors and the corporate citizenship reporting. Similarly,
in another context, Ntim & Soobaroyen (2013) examined 75 firms on the stock exchange of
Africa and reported a consistent finding. Given the support from prior papers, our study
proposes the following hypothesis:
H6: There is a positive relationship between the number of outside directors and
corporate social responsibility disclosure.
2.2. The Relationship between Corporate Social Responsibility Disclosure and
Control Variables
As informed from the literature, out study also control for the impact of firm size, listing
duration, and profitability on the CSR disclosure. There is consistent evidence for the
significant positive link between the firm size and the corporate social responsibility disclosure
(e.g., Muttakin et al. 2015; Reverte, 2009; Mahadeo et al., 2011). For example, Muttakin et al.
(2015) examined 116 non-financial corporations on Bangladesh Stock exchange and found a
positive link between the firm size and CSR disclosure. Similarly, Owusu-Ansah (1998)
investigated 49 corporations listed in Zimbabwe and documented a positive association
between the listing duration and CSR. Most prior empirical studies regarding the link between
profitability and the corporate citizenship disclosure report a positive result (e.g., Ntim &

Soobaroyen, 2013; Jizi et al., 2014a; Khan, Muttakin,
& Siddiqui, 2013b; Gamerschlag et al., 2011). For example, Gamerschlag et al. (2011)
comprising 470 observations from selected corporations in Germany found that profitability
was significantly and positively associated with CSR reporting.
3.Methodology
3.1.

Data

The sample include non-financial listed firms in VN100 in the period of 2014-2016
excluding insurance companies and financial institutions due to different regulations, firms
that have limit/ no relevant information; delisted firms during 2014-2016; listed firms after
January 1 2014. Data are collected from firm annual reports and official websites and carefully
examined before conducting analysis.
3.2Model Specification
3.2.1.
The relationship between Corporate Social Responsibility Disclosure and
Corporate Governance Characteristics
Panel data regression analysis was employed to analyze the data. Specification tests (F-Test,
Hausman test, and Breusch-Pagan LM test) are used to determine which model (Pooled
OLS, REM, FEM) is the most appropriate. Breusch-Pagan test and Breusch-Godfrey LM test are


employed to check the heteroscedasticity and autocorrelation problems. The following
regression model is used to test the association between Corporate Social Responsibility
Disclosure and Corporate Governance Characteristics.


Model 1: CSRD it = β0 + β1 Dual it + β2 BS it + β3 IND it + β4 AT it + β5 BM it + β6 WD it + β7
LNTA it + β8 LD

it

+ β3 PROF

it

+

ε it.

Where:
CSRD it = Corporate Social Responsibility Disclosure for ith firm at the
time t. Dual it = CEO Duality for ith firm at time t.
BS it = Size of Board of Directors of ith firm at time t.
IND it = Independent non-executive directors for ith firm at
time t. AT it = Audit Type for ith firm at time t.
BM it = Board Meetings for ith firms at
time t. LNTA it = Company Size of ith
firm at time t LD it = Listing Duration for
ith firm at time t PROF it = Profitability
for ith firm at time t
WD it = Proportion of Women Directors on Board for ith firm at
time t Beta = the regression coefficient
ε it = Error term
3.2.1.
The Relationship between Each Theme of Corporate Social Responsibility
Disclosure and Corporate Governance Characteristics
To provide further insights into the link between CSR disclosure and firm corporate
governance, corporate governance characteristics are regressed on each CSR theme as below:
Model2: General CSRD it = β0 + β1 Dual it + β2 BS it + β3 IND it + β4 AT it + β5 BM it + β6 WD it

+ β7 LNTA it
+ β8 LD it + β3 PROF

it

+

ε it.

Model 3: Community CSRD
β6 WD

it

+ β7 LNTA

it

+ β8 LD it + β3 PROF

Model 4: Environment CSRD
β6 WD it + β7 LNTA

it

it

+ β7 LNTA

it

it

it

+ β7 LNTA

it

it

+

it

+

= β0 + β1 Dual

it

it

it

+

it

+

it

+ β3 IND

it

+ β4 AT

+ β5 BM

it

+

it

it

+ β2 BS

it

+ β3 IND

it

+ β4 AT it + β5 BM it +

ε it.

it

+ β2 BS

it

+ β3 IND

it

+ β4 AT

it

+ β5 BM

it

+

ε it.

= β0 + β1 Dual

+ β8 LD it + β3 PROF

+ β2 BS

ε it.

= β0 + β1 Dual

+ β8 LD it + β3 PROF

Model 6: Marketplace CSRD
β6 WD

it

+ β8 LD it + β3 PROF

Model 5: Workplace CSRD
β6 WD

= β0 + β1 Dual

it

it

+ β2 BS

it

+ β3 IND

it

+ β4 AT

it

+ β5 BM

it

+

ε it.

3.2.2.
The Relationship between Total Corporate Social Responsibility Disclosure
(Lagged) and Corporate Governance Characteristics:
To investigate if there is any relationship between corporate governance characteristics and
lagged CSR disclosure, the following model is examined:
Model 7: CSRD it = β0 + β1 ������−1+ β2 ����−1 + β3 �����−1 + β4 ����−1 +
β5 ����−1 + β6 ����−1+ β7
������−1+ β8 ����−1+ β9 ������−1+ ε .
where
CSRD it = Corporate Social Responsibility Disclosure for ith firm at the time t.
������−1= CEO Duality for ith firm at time t-1.
����−1= Size of Board of Directors of ith firm at time t-1.
�����−1= Independent Non-executive directors for ith firm at time t-1.
����−1 = Audit Size for ith firm at time t-1.


����−1= Board Meetings for ith firms at time t-1.
����−1= Proportion of Women Directors on Board for ith firm at time t-1.

LNTA
= Company
Size of ith firm at
time it−1
t. LD
it−1 = Listing Duration for ith
firm at time
t. PROFit−1 = Protitability for
ith firm at time t.
Beta = the regression coefficient
ε it = Error term
3.3. Measurement of Variables
Our study adopts a comprehensive 51-item checklist by Ahmad, Rashid, and Gow (2017) to
measure CSR disclosure. Almad et al. (2017) developed the check-list to be applied in
Malaysia, a neighbor market of Vietnam. Thus, we believe that the check-list is also highly
applicable in Vietnam context. Content analysis has been commonly utilized to investigate
CSR reporting (Chan et al., 2014; Abudulah et al., 2011). Annual reports and company
websites are read carefully and one (1) point is given for firm that discloses ith item within
the checklist and zero (0) otherwise. Following Ahmad et al. (2017), CSR index is calculated as
below:
��

∑�=1
����

Wher
e

�

��

��

=

CSRI= Corporate Social Responsibility Index
nj= Quantity of items expected for jth company
Xij= 1 if firm disclosed ith item; 0 if the firm did not disclose
ith item The measurement of other variables is presented in
Table 1:
Table 5: Measurement of variables
Variables

Denotation

Measurement/Description

References

CSR Disclosure

CSRD

Ahmad, Rashid & Gow (2017)

Independent
Non- executive
directors

IND

Scoring of CSR Disclosure
index
Percentage of outside
directors to total directors

Board Size

BS

Ln (Total quantity of directors) Jizi et al. (2014)

CEO Duality

DUAL

1: CEO Duality
0: Others

Jizi et al. (2014)

Women Directors WD

Number of Female
directors / Board size

H. Khan (2010)

Audit Type

1 if big 4
0 otherwise

Uwuigbe & Egbide (2012)

Board of
BM
director Meetings

The quantity of meetings
per financial year.

Prado-

Firms Size

ln (total asset).

AT

LNTA

Haniffa & Cooke (2002)

Lorenzo &
Garcia- Sanchez
(2010) and
Barnea & Rubin (2010)

Listing duration

LD

Ln (years listed)

Bernard S. Black, Hasung
Jang & Woochan Kim (2004)

Profitability

PROF

ROA= Profit after tax
Total Asset

Ho and Yekini (2014)


4.Results
4.1.

Corporate Social Responsibility Disclosure

As shown in Figure 1, the extent of CSR reporting of firms in Vietnam is moderate with a
mean ranging from 0.46 to 0.49 from 2014 to 2016. This level is higher than that of Malaysian
firms (M=0.22) (Ahmad et al., 2017). Importantly, CSR index has increased from year to year,
suggesting the tendency to disclosure more CSR information by Vietnamese firms. The level
of CSR reporting in Vietnam may be due to the lack of standards or guidelines. In practice,

many companies have acknowledged the importance of disclosing CSR and followed
international financial reporting standards. According to Thompson & Zakaria (2004), firms
decide not to report their CSR due to the scarcity of insights on the merits of sustainability
reporting and the cost of releasing as well.
Corporate Social Responsibility Disclosure in Vietnam 2014-2016
80%73%74%75%
70%
60%53%56%53%56%57%53%56%58%59%
50%46%47%49%
40%36%33%38%39%35%
33%
30%
20%
10%
0%

Figure 2: Corporate Social Responsibility Reporting in Vietnam 2014-2016
Overall, among five main themes, workplace related disclosure has the highest score
(M=0.57) on average (Table 2). A potential explanation is the firms’ concern over the welfare of
employees, and the good working environment would boost the efficiency, morale, loyalty
of current employees and attract high quality candidates. Hence, disclosing such
information is important and vital to the growth and operation of firms. Conversely,
environment related information accounts for a small proportion (M=0.34) and appears to be
less accessible in the annual reports. Information regarding marketplace is ranked second
(M=0.55) and then followed by the general dimension (M=0.54).
Table 6: Descriptive statistics for firm CSR Reporting

Mean
Median
Std. Deviation

Minimum
Maximum

Total
CSDI
0.47
0.55
0.24
0.00
0.92

General Community Environment Workplace Market place Others
0.54
0.43
0.34
0.00
1.00

0.38
0.44
0.21
0.00
0.67

0.34
0.36
0.23
0.00
1.00

0.57
0.64
0.27
0.00
0.93

0.55
0.60
0.35
0.00
1.00

0.74
1.00
0.42
0.00
1.00


4.2.

Descriptive Analysis

Table 3 displays mean, standard deviation, Pearson's correlations for the variables. The
correlation coefficients among the variables ranged from r=0.10, p<0.1 to r=0.34, p<0.01 in
their absolute values, which does not indicate any collinearity problem. Tolerance statistics
and variance inflation factors also refuted the problem.
Table 7: Mean, Standard deviation, Min, Max, and
Pearson’s correlation
Mean

CSRDI

Std.
Deviatio
n
0.24

BS

0.22
1.83

BM
AT

WD
DUAL

IND

Min

Max

CSRDI

0.47

0

0.92

1.8

1.39

2.39

0.22***

0.10
0.21**
0.34*** * 0.06

5.77

2

13

0

1

0

0.8

0.25***

Duality (1) :
28.7%
Separation(0):71.
3%1.35
28.84

0

1

-0.03

25.4
30

32.8
31.86

0

2.77

0.22

0.21

LD

0.41

1.92

RPO

0.08

0.08

-0.39 0.38

BM

AT

WD

DUAL

IND

LNTA

LD

PRO

1

Big4 (1): 63.7%

Non-Big4(0):
36.3%
0.17
0.17

LNTA

BS

1
1
-0.15**

1

-0.03

-0.03

0.05

-0.04

-0.10*

0.01

0.17***

1

0.15***

0.11*

-0.01

0.02

0.07

-0.14**

1

0.23**

0.15**

-0.1

0.2*** 0.12**

-0.08

0.06

0.14**

0.02

0.03

0.13**

0.15*

0.06

-0.13** -0.00

1

1

-0.07 0.11* 0.02
1
0.24*** 0.17***
-0.03
-0.00 -0.06 -0.07

1

*, **, *** Correlation is significant at the 0.1, 0.05, 0.01 level. BS= Board Size. BM= Board Meeting. AT=
Audit Type. WD= Women Directors on board. IND= independent non-executive directors on board. LNTA=
Company Size. LD= Listing Duration.
PRO=Profitability4.3. Regression Results

4.3.1.

The Relationship between Total CSR Disclosure and Corporate Governance (Model

1)
Detailed results are shown in Table 4. Both
Model (FEM) as the most appropriate
heteroskedasticity and serial correlation are
both autocorrelation and heteroskedasticity.
standard error.

F-test and Hausman test confirm the Fixed-Effect
model for the data. Additional tests for
also conducted. Results show data suffers from
Thus, the model is corrected by Driscoll-Kraay

Table 8: The relationship between total CSR disclosure and corporate governance
(Model 1)
Fixed effect regression

Coefficient

Board of Director Size
Board Meeting
Audit Type
Women Directors
CEO Duality
Outside directors
Companies Size
Listing Duration
Profitability
Constant

0.01**
-0.001**
0.03**
0.03
0.01
-0.01*
0.01*
0.08*
-0.10
0.05

DriscollKraay
Standard
0.003
0.0001
0.01
0.02
0.0044
0.0049
0.0022
0.02
0.05
0.06

P> |t|
0.05
0.03
0.03
0.29

0.15
0.01
0.07
0.05
0.17
0.50


R-squared (within)
F (9,2)

0.17
95.16


Probability
Breusch-Pagan/Cook-Weisberg
for heteroskedasticity
Breusch-Godfrey LM for
autocorrelation
F-test
Breusch and Pagan LM for
random effects
Hausman
Pesaran CD

0.01
Chi2 (1) =5.8
p-value = 0.02
Chi2 (1) =110.95

P-value = 0.02
F (92, 177) = 85.23
P-value = 0.00
Chibar2(01) = 240.13
P-value = 0.00
Chi2(9) = 40.00
P-value = 0.00
Probability= 0.00

*, **, *** significance of correlation at the level of 0.1, 0.05, 0.01

Our results reveal that board of director size is in a significant positive association with CSR
reporting (ß= 0.01, p-value = 0.05), which is consistent with Esa & Anum Mohd Ghazali (2012);
Jizi et al. (2014a); Kathy Rao et al. (2012a) who reported that firms having more board
members do engage to the greater extent in the corporate social responsibility activities and
the corporate social responsibility reporting practice. Moreover, number of board of director
meetings are negatively related to CSR disclosure (ß=-0.001, p-value=0.03). This finding in
line with Alhazaimeh et al. (2014) who confirmed that the more frequently the meetings are
held, the less the sustainability information is disclosed. Audit type is also found to positively
associated with CSR reporting (ß =0.03 and p-value=0.03), suggesting that firms audited by
big4 companies are willing to boost their level of corporate social responsibility practice as
argued by the agency theory (Raffournier, 1995; Xiao et al. , 2004). With ß= -0.01 and p-value
= 0.01, although the finding does not support our hypothesis, it agrees with Eng & Mak
(2003b); Haniffa & Cooke (2005b) who documented a negative relationship between CSR and
outside directors. Hence, with more outside directors in board, corporations tend to experience
a decrease in the extent of CSR disclosure.
However, there is no evidence of the relationship between the proportion of women
directors and CSR disclosure. Although the finding does not support our hypothesis, it is in
line with the prior studies by Giannarakis (2014); H. Khan (2010). One potential explanation
is differences in Vietnam cultures. Similarly, CEO duality and CSR disclosure shows

insignificant relationship which is in line with Cheng & Courtenay (2006); Giannarakis (2014);
Said et al. (2009). It can possibly be explained that the existence but low rate of CEO duality in
the corporate board is unable to boost the better perspective to ethical and environmental
concerns. Hence, the CEO duality does not have any significant impact effect on the
corporate social responsibility reporting.
As for control variables, the listing duration (ß= 0.08, p-value =0.05 < 0.1) and firm size (ß=
0.01, p-value
=0.07) are positively associated with the corporate social responsibility reporting. Hence, large
firms and firms with long listing duration on Vietnam Stock Exchange are likely to improve and
upgrade their level of CSR reporting as claimed by agency theory. However, there is not a
significant link between the firm profitability and the corporate social responsibility practice.
4.3.2.
The Relationship between each Component of CSR Reporting and Corporate
Governance Structure (Model 2 To Model 6)
The study considers not only the total score of CSR disclosure but also the score of each
component: the general, the community, the environment, the workplace, the marketplace to
provide further insights to the association between CSR reporting and the corporate
governance structure. Table 5 presents that FEM is the most proper model to be employed in
model 2: General and model 5: Workplace while REM is suitable for model 3: Community,


model 4: Environment, model 6: Workplace. Moreover, this table also presents the statistical
tests of six models. Particularly, model 3, model 5, model 6 suffer from both heteroskedasticity
and


serial correlation because the p-value of Breusch-Pagan/Cook-Weisberg and Breusch-Godfrey
LM in these models are smaller than 5%. Conversely, only the heteroskedasticity problem is
detected in model 2 and model 4 since the p-value of Breusch- Pagan/Cook-Weisberg in these
models are larger than 5%. Cluster standard errors is employed to remove such issues in all

models from model 2 to model 6. Table 5 present detailed results for these models.
Table 9: Results for Model 2, Model 3, Model 4, Model 5, Model 6
Model
2
Robust
ß Gener
SE
0.03
0.03

BS

Model 3
Model 4
Model 5
Communit
Environment
Workplace
yß
Robust
Robust
Robust
ß
ß
SE
SE
SE
0.06*
0.03
0.06**

0.03
-0.11
0.07

Model 6
Marketplac
eß
Robus
t SE
0.18*** 0.06

BM
AT

-0.005
0.01

0.004
0.02

-0.005
0.08**

0.01
0.03

-0.05
0.04

0.003

0.04

-0.001
0.004

0.003
0.02

0.01
0.23***

0.01
0.07

WD
DUAL
IND

0.05
0.03
-0.03

0.05
0.03
0.04

0.08
-0.02
0.04

0.06
0.05
0.06

0.11**
0.01
0.04

0.06
0.02
0.04

0.13
0.02
-0.19

0.14
0.02
0.12

0.17
-0.03
0.07

0.10
0.05
0.08

LNTA
LD

0.02
0.12*

0.02
0.06

0.02**
0.05

0.01
0.04

0.01**
0.05**

0.005
0.02

0.004
0.07*

0.005
0.04

0.003
0.18***

0.01
0.05

PRO
R
-squared
F
Prob>F
Wald
chi2
Prob>chi2
Heteroskedastici
ty

-0.18

0.17

0.13

0.14

-0.12

0.11

-0.05

0.09

-0.25

0.23

Autocorrelation
Ftest
Breusch and
Pagan
Lagrangian
multiplier test
for REM

0.09

0.04

0.10

3.76
0.0005

0.09

0.11

1.99
0.05
25.92

Chi2(1) =0.4
Probability
=0.53

Chi2(1) =98
Probability=
0.00
F (90,173)
=34.77
Probability=

0.00
Chi2(1) =11.4
Probability
= 0.0007
Chi2(1) =90.6
Probability=0.0
0
F (90,173)
=20.68
Probability =

Chibar2(01)
= 209.23
P-value =0.00

Chibar2(01)
=193.46
p-value=0.00

35.35

47.68

0.00
Chi2(1)
Chi2(1) = 3.19
=0.02
Probability
= 0.07
Probability
Chi2(1) =100.78 Chi2(1) =12.8
Probability=0.00 Probability=0.
00
F (90,173)
F (90, 173)
= 56.75
= 39.32
Probability =
Probability =

0.00
Chi2(1) = 6.68
Probability
= 0.01
Chi2(1)
=95.5
Probability=0.0
F (90, 173)
= 18.15
Probability=

Chibar2(01)
=238.48

p-value=0.00

Chibar2(01)
=214.69
p-value=0.00

Chibar2(01)
=188.63
pvalue=0.00

Chi2(9) = 9.36
p-value=0.40

Chi2(9) =35.77
p-value=0.00

Chi2(9)
=11.91
p-value=0.22

Hausman test

Pesaran CD
Test

Chi2(9) =
123.94
p-value= 0.00
H0: Errors are
not correlated

across entities
Probability =
0.00

Chi2(9) =16.1
p-value= 0.07

H0: Errors are
not correlated
across entities
Probability =
0.00

*, **, *** significance of correlation at the level of 0.1, 0.05, 0.01. BS= Board of Director Size. BM= Board
Meeting. AT= Audit Type. WD= Women Directors. IND= outside directors. LNTA=Firm Size. LD= Listing
Duration. PRO= Profitability.


As can be seen from Table 5, board of director size has a significant positive link with
community (ß=0.06, p-value<10%), environment (ß=0.06, p-value < 5%) and marketplace
dimension (ß=0.18, p-value < 1%), indicating that firms having more directors on board are
willing to reveal more information related to the community, environment and marketplace
dimension. Audit type is found to have a significant positive relationship with community
(ß=0.08, p-value<5%), and marketplace dimension (ß= 0.23, p-value <1%). Consequently,
firms audited by Big4 are willing to report more information relating to the community and
marketplace dimension. The proportion of women directors is also shown to have a significant
positive link with the environment dimension (ß=0.11, p-value<5%), suggesting that firms
having more women directors on board are likely to release more information relating to the
environment dimension.
As for control variables, the significant relationship between firm size and environment (ß=

0.01 and p- value < 5%) and community dimension (ß= 0.02 and p-value < 5%) is found. This
indicates that big firms are willing to reveal more information in terms of the environment
and community dimension. A significant positive link between the listing duration and the
environment, the general, the workplace, the marketplace dimension suggests that firms listed
on the stock market for a long time are likely to release more corporate citizenship information
in favor of the environment, the general, the workplace, the marketplace dimension.
4.3.3.
The Relationship between Corporate Citizenship Reporting and Corporate
Governance Structure with Time Lagged Effect (Model 7)
As shown in Table 6, both F-test and Hausman choose FEM as the most proper model. Tests
also indicate that data suffers from both autocorrelation and heteroskedasticity. Thus, the fixed
effect estimation is corrected by Cluster standard errors. Results reveal that there exists no
significant evidence to support the association between CSR reporting and the governance
characteristic when considering a time-lagged effect due to all p- values >10%.
Table 6: Results for Model 7
Fixed effect regression
Coefficient
Robust SE
Board of Director Size
0.01
0.03
Board of Director Meetings
0.001
0.001
Audit Type
0.003
0.01
Women Directors
-0.11
0.08

CEO Duality
0.0003
0.01
Outside directors
0.007
0.02
Firm Size
-0.0003
0.005
Listing Duration
0.06**
0.02
Profitability
0.01
0.06
Constant
0.35**
0.14
R-squared
0.12
F(9,90)
2.2
Probability
0.03
Breusch-Pagan/Cook-Weisberg for �0: �������� ��������
heteroskedasticity
�ℎ�2(1) = 10.77
Probability= 0.001
Breusch-Godfrey
autocorrelation

F-test

LM

for �0: �� ������ �����������
�ℎ�2(1) = 116.83
Probability= 0.00
F (90,173) = 79.68
Probability= 0.00

Probability
0.66
0.51
0.69
0.16
0.96
0.71
0.95
0.002
0.85
0.02


Breusch and Pagan Lagrangian
multiplier
test
for
random
effects estimation

Test: Var(u) = 0
Chibar2(01) =
223.69
Probability= 0.00


Hausman

Ho: difference in coefficients not
systematic Chi2(9) = 104.31
Probability = 0.00

Pesaran CD

�0: ������ ��� ��� ���������� ������
��������

*, **, *** significance of correlation at the level of 0.1, 0.05, 0.01


5.Conclusion
Our study shows that firms listed in VN100 have a moderate level of CSR disclosure. The
paper also reveals significant relationships between CSR reporting and firm corporate
governance characteristics. Particularly, our study finds support for a positive relationship
between the board of director size, auditor type, firm size, listing duration and CSR disclosure
and a negative influence of frequency of board meetings, and number of outside directors on
CSR reporting. Results from this research are expected to benefit both academics and
practitioners in a number of ways. Theoretically, this study enriches the relevant literature in
terms of CSR reporting and the link with corporate governance in Vietnam. These findings
would promote the knowledge of the corporate social responsibility practice in Vietnam and

the developing nations as well by demonstrating how the corporate governance structure has
an impact on the level of the corporate social responsibility practice. Practically, firm
managers can find the study helpful influencing CSR reporting in their firms. Investors can
look at firm corporate governance characteristics to identify firms with high corporate social
responsibility disclosure. Additionally, the results can be utilized when regulation makers
consider a new regulation to improve the corporate social responsibility disciplines and
practices, which is believed to foster the firm sustainable development.
Despite the above contributions, our study also has some limitations which can be further
examined in future research. First, as the study only focuses on firms listed in VN100 within 3
years, the results may not be representative for the whole market. Future research can
examine all listed firms on both Hochiminh city stock exchange and Hanoi stock exchange for
a longer period of time. Second, other CSR measurements such as through interviews or
questionnaires and an inclusion of other corporate governance proxies can provide further
insights into the relationship between CSR reporting and corporate governance structure.
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