eCite Digital Repository

Factors determining social and environmental reporting by Indian textile and apparel firms: a test of legitimacy theory

Citation

Nurhayati, R and Taylor, G and Rusmin, R and Tower, G and Chatterjee, B, Factors determining social and environmental reporting by Indian textile and apparel firms: a test of legitimacy theory, Social Responsibility Journal, 12, (1) pp. 167-189. ISSN 1747-1117 (2016) [Refereed Article]

DOI: doi:10.1108/SRJ-06-2013-0074

Abstract

Purpose The purpose of this research is to investigate the factors determining the social and environmental reporting (SER) of Indian textile and apparel (TA) firms.

Design/methodology/approach The 2010 annual reports of a sample of top 100 Indian TA firms listed on the Bombay Stock Exchange were examined to assess the extent of SER. SER was assessed based on the Global Reporting Initiative index applicable to the TA industry. Multiple regression analysis was conducted to investigate the determinants of SER.

Findings This study reports a low extent of SER in the annual reports of Indian listed TA firms, with a mean disclosure of 14 per cent. On average, firms reported more extensive environmental information, with a mean disclosure of 18.4 per cent, compared to social information, with a mean disclosure of 10.7 per cent. Most firms reported social information relating to "labour practices and decent work", while the reporting of information relating to "human rights" was sparse. Overall, the SER patterns provide support for legitimacy theory. Consistent with legitimacy theory expectations, corporate size, brand development and audit committee size are significant factors determining the variation in SER. No significant relationship was found between board independence, level of ownership and SER.

Originality/value There is no existing study specifically on SER by TA firms in India. In fact, there is surprisingly little research on SER in the Indian context in general. Given the dearth in research on corporate social reporting in the Indian context, the study extends prior literature on corporate SER by concentrating on SER of TA firms in an emerging economy. The theoretical contribution of this study is the testing of legitimacy theory in the context of an emerging economy. This study contributes towards practice by delineating the relationship between governance structure and SER, particularly with regard to issues such as child labour. These findings have implications for the future development of reporting standards and regulations in regard to corporate governance in India. The dearth of social reporting by Indian TA firms has implications for foreign purchasers of branded products, as international companies have been implicated in sub-optimal social or environmental practices or incidents.

Item Details

Item Type:Refereed Article
Keywords:India, disclosure, governance, environmental, social
Research Division:Commerce, Management, Tourism and Services
Research Group:Accounting, auditing and accountability
Research Field:Accounting theory and standards
Objective Division:Commercial Services and Tourism
Objective Group:Environmentally sustainable commercial services and tourism
Objective Field:Environmentally sustainable commercial services and tourism not elsewhere classified
UTAS Author:Chatterjee, B (Dr Bikram Chatterjee)
ID Code:135641
Year Published:2016
Web of Science® Times Cited:19
Deposited By:TSBE
Deposited On:2019-11-06
Last Modified:2021-07-06
Downloads:0

Repository Staff Only: item control page