Aspects Of CSR Disclosure In UAE Accounting Essay

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Introduction

The purpose of this chapter is to discuss the findings of Chapters Six and Seven with respect to the research objectives stated in Chapter One. To achieve research objectives, the study utilized two main instruments (the content analysis of annual reports and the questionnaire surveys) to work together as complementary research endeavours. In section (8.1), the findings of the present research are summarized and discussed. These findings are then used to make recommendations about the possible future development of corporate social reporting in UAE (section 8.2). The limitations of the study (section 8.3) and suggestions for further research (section 8.4) in relation to CSR disclosures are discussed at the end of this chapter.

8.1 Discussion of Results

This study targets to examine the various aspects of CSR disclosure in UAE. It does not confine itself only to the content analysis measuring the extent and determinants of such disclosure, but also takes into account stakeholders' attitudes to ascertain their views about the current state of CSR in UAE and possible future developments and compare those views with companies' actions. The main findings from the two main data collection methods (the content analysis and the questionnaire survey) will be discussed in this section using the research questions addressed in Chapter One to organize the discussion.

8.1.1 First Question:

In chapter one, the first research question addressed was:

What are the perceptions of different stakeholder groups of corporate information in UAE regarding the main purpose(s) of corporate reporting?

Based on the questionnaire survey, the views of the questionnaire respondents (financial managers, external auditors, academics, bank loan officers, and stock brokers) on the purposes of current corporate disclosure in UAE, the following major conclusions resulted:.

The majority of respondents agreed with the suggestion that most Emirati companies prepare their annual reports for the purpose of providing information to the stakeholders with purely financial interests, namely potential investors , owners, and financial institutions. This massive support reflects the emphasis placed on decision usefulness by the IFRSs usually applied by Emirati companies from one hand, and the 'stewardship' function for corporate reporting by UAE Company Law from the other hand.

The importance of provision information for managers to help them run their businesses was given a considerable importance by the respondents, although financial managers gave a relatively lower support for this proposal. . Financial managers who are responsible for the preparation of annual reports may consider annual reports as being only one amongst other important sources of other information assisting in managerial decisions especially that most of the companies listed in UAE have management information systems other than annual reports.

The respondents saw these companies as paying less attention to the provision of information in their current annual reports employees, suppliers, and society at large. These parties may be considered by respondents as having indirect interests in the Emirati companies rather than direct financial interests. However, financial managers showed even less support for the provision of information to each of these three parties than other groups. This may indicate that financial managers who are responsible of preparing annual reports still unaware or undervalue the moral and social role that company should play toward these audiences.

Although various groups surveyed showed different views on the disclosure of some of the purposes of provision of Emirati companies' annual reports, no significant differences in perceptions between the five stakeholders' groups toward these purposes was found.

8.1.2 Second Question:

The second research question addressed was outlined as follows:

What are the perceptions of preparers and different stakeholder groups of corporate information in UAE about corporate social responsibility?

The perceptions amongst the respondents toward the different aspects of corporate social practices in UAE may be summarized as follows:

In terms of the respondents' perceptions of the desirability and feasibility of providing information about social activities in UAE, the objective was to provide an insight into whether a "demand for" or, at least, a "recognition and acceptance of" social information and that Emirati companies should disclose this kind of information. The responses indicate an acceptance of wider disclosure in terms of corporate social information. They, therefore, agree that Emirati companies should pay more attention and take into account social and environmental issues, wherever possible, so that some beneficial socio-economic effects may emerge.

The respondents believed that the most important reasons that explain why Emirati companies still have little CSR disclosure include the companies' emphasis in their economic more rather than social objectives, insufficient or absence of legal requirements, the lack in public's and management's knowledge of the importance of social responsibility information, the insufficient demand on CSR disclosure, and that management does not appreciate its social responsibility. The majority of the respondents also believed that the sensitivity of CSR information to disclose and the cost of CSR disclosure outweighs benefit do not comprise serious impediments to the implementation of CSR reporting.

The majority of respondents believed that Emirati listed companies are motivated to be involved in CSR activities mainly to justify their existence within the society. In addition, they thought that a tax-free business environment motivates these companies to develop CSR policies.

As to the perceptions on the benefits to disclosing social information, the vast majority of respondents consider that disclosing CSR information will benefit the society at large, improve companies' images, attract human resources, retain human resources, and ensure customer loyalty.

The vast majority of the respondents agreed that the stakeholders (Including owners, potential investors, financial institutions, corporate employees, corporate suppliers, government and its agencies, and society at large) have the right to information about the actions for which Emirati companies are held responsible.

The respondents considered that themes related to products and consumers, community involvement, environment, and energy were the most popular social items that should be disclosed.

As to the perceptions on the approach(s) for establishing responsibilities of Emirati companies, the majority of respondents shared the believe that Emirati companies are unwilling to disclose such information without legal and professional pressure , and thus, they gave the strongest support for the law as the best approach that may be used to promote CSR disclosure among those companies.

The suggestion that corporate social disclosure in annual reports be a separate section entitled 'social responsibility' or the equivalent was found to be the most acceptable location amongst the five respondents groups. All other suggested forms and locations (e.g. in a separate booklet accompanying the annual report, within the directors' report) received some support from the respondents as possible locations for disclosing corporate social information.

It would appear that the majority of respondents would like to see the suggested CSR disclosure for UAE as being expressed in a combination of all three suggested forms, i.e. descriptive, statistical, and monetary terms.

Third Question:

In chapter one, the third research question addressed in chapter one was outlined as follows:

Are there any gaps between perceptions of different groups of corporate information in United Arab Emirates toward the concept of the corporate social disclosure?

Fourth and Fifth Questions:

In chapter one, the fourth and fifth research questions were:

Question Four: What is the extent of social disclosure in corporate annual reports of companies listed in the stock markets of the UAE?

Question Five: To what extent do listed companies in UAE provide different disclosure levels in their annual reports pertaining to different themes of corporate social responsibility?

From the findings that emerged from the content analysis of Emirati companies' annual reports for year 2009, it can be noticed that:

All companies from different sectors (100%) undertake at least one type of social disclosure in their 2009 annual reports. This is because they all disseminate some employee-related information. However, although social disclosure has been done by all Emirati companies, the quality of this disclosure is still very low as the overall average of social disclosure score is only 27.65%.

The most common theme in Emirati companies' annual reports is human resources theme which was disclosed by all the companies (100%). The dominance of disclosure of information classified under the employee theme has been reported and corroborated in various studies conducted in the area of corporate social disclosure (e.g. Andrew et al., 1989; Belal, 2001; Gray et al., 1995a; Guthrie & Parker, 1990; Hackston & Milne, 1996; Imam, 2000; Thompson & Zakaria, 2004). In addition, the human resources category was scored highly in relation to the disclosure index indicating that this theme is also the most important category from the perspective of quality of social disclosure measured by average social disclosure (49.26%). The results show that the most important space allocation for social disclosure in general and employee disclosure in particular is for the three items which are required under the UAE's Company Law to be disclosed by listed companies, namely, employees' remuneration, expatriate employees' end of service benefits, and national employees' pension and national insurance contributions categories.

Product related information was the second social theme in terms of both the number of companies (77, or 74%) disclosed in their annual reports, and the average social disclosure score (36.45%). From the findings it can be noticed that the companies.

While community involvement theme was came in third place in terms of number of companies (39 or 37.50%) disclosed it, it

Emirati companies disclosed only a small amount of environmental information in their annual reports; only 24 companies (23%) seemed to be interested in disclosing any environmentally-related information. Moreover, the CSR quality was also very low as the average score for this item was only 12.20%. From the findings it is obvious that only 8 out of 26 industrial companies appeared to be interested in disclosing any information in these categories; this seems to be strange because these companies are probably more responsible for damaging the environment than other companies, and industrial companies around the world tend to be highly visible, with relatively high disclosure.

Most companies appeared to be not interested in disclosing energy-related information.

The disclosure by Emirati companies to communicate their corporate social responsibility information was mainly a combination of the three main methods in their social reporting monetary, quantified but non-monetary, and declarative.

The location of CSR disclosure in other sections of the annual report (in the audited financial statements) was frequently used by Emirati companies (100% of the annual reports). The popularity of this location social can be explained in the context that information pertains to the provisions for Employee's remuneration (salaries, bonuses, performance schemes), expatriate employees' end of service benefits, and national employees' pension and national insurance contributions are required to be disclosed in the companies' accounts by Company Law in UAE. The board of directors' report was also popular location of CSR information in UAE. However, management review section, CSR separate section, and separate booklet accompanying annual report were the least favored locations by UAE's companies to disclose their social activities.

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