Determinants of corporate philanthropy disclosure by Malaysian public-listed companies: a resource-based view perspective / Nurul Rafeah Mohamed Yusuf

The occurrences of corporate governance breakdowns, which have affected well-known multinational corporations such as WorldCom, Enron, and Satyam Computer Services, as well as local companies in Malaysia like Megan Media Holdings Berhad, 1 Malaysia Development Berhad, and Transmile Group Bhd, have significantly undermined the confidence of stakeholders in corporate reporting. As a result, companies in Malaysia were obligated to evaluate and adjust their business plans by including the disclosure of corporate philanthropy in their annual reports, with the aim of establishing a sustainable competitive edge. This study examines the extent of corporate philanthropy disclosure by Malaysian public companies from 2018 to 2020. Specifically, the objective of this study is to identify the factors that influence the extent of corporate philanthropy disclosures in the annual reports of Malaysian publicly listed companies by employing the resource based-view theory. The final sample comprises of 80 public companies listed on Bursa Malaysia for three consecutive years (2018-2020). This study developed the Modified Corporate Philanthropy Disclosure Index to measure the extent of corporate philanthropy disclosures in the annual reports of Malaysian publicly listed companies. In this study, hierarchical regression is used to examine the relationship between internal company factors from the resource based-view theory perspective, such as cash holding (tangible resources), managerial ownership (intangible resources), firm reputation (intangible resources), corporate-elite network (intangible resources), and board independence (organisational capabilities) with the corporate philanthropy disclosure. The obtained results indicate a significant rise in the extent of corporate philanthropy disclosure within the specified period. In addition, the extent of corporate philanthropy disclosure was influenced by different factors over the three years. The extent of corporate philanthropy disclosures in 2018 is influenced by the cash holding, corporate elite network and board independence. In 2019, the extent of corporate philanthropy disclosures was explained by cash holding, managerial ownership, corporate elite network as well as board independence. In 2020, business industry, profitability, cash holding, managerial ownership and board independence have a significant relationship with the extent of corporate philanthropy disclosures. This study contributes to the existing body of knowledge by demonstrating that the two characteristics of resource based-view theory known as valuable and rare are essential in the process of developing a competitive advantage for businesses that use corporate philanthropy disclosure as a business strategy. The findings of this study have beneficial implications for the Malaysian government and policymakers, providing them with an opportunity to produce standards or guidelines regarding corporate philanthropy disclosure by companies in Malaysia. This study indicates that Malaysian companies may increase their advantages by increasing the extent of corporate philanthropy information they provide to various stakeholders.