Corporate Social Responsibility and firm value in Sri Lanka: Disclosures in action

Abstract

The purpose of this study is to expand the understanding of Corporate Social Responsibility
(CSR)/Sustainability disclosures in Sri Lanka while ascertaining the relationship between CSR disclosures and firm value. Although a few studies have been undertaken in Sri Lanka, this study provides new insights about voluntary reporting of CSR/Sustainability practices there. Sixty non-financial companies were selected based on market capitalization for study purposes. Company annual reports from 2013 to 2018 were scrutinized to ascertain voluntary CSR disclosures. Market-related information was gathered from the data library of Colombo Stock Exchange. Panel regression was utilized due to the nature of time series and cross sectional data. This study provides evidence that CSR disclosures are significant in determining firm value in Sri Lanka. Leverage is positively influenced for the firm value of Sri Lankan listed companies. Firm size has a positive insignificant impact for firm value. The outcome of this study encourages developing standards and practices for disclosing information in annual reports and persuading corporate managers to reform disclosure practices. The results may interest to regulators, investment analysts and market participants. The cumulative effect of the major conclusions at the end of this study will help future policy and procedure formulation in order to increase the quality and quantity of CSR disclosures in Sri Lanka.
Keywords: Corporate social responsibility, sustainability, voluntary disclosures, firm value, leverage, firm size, Sri Lanka