The Impact of CSR Disclosure on Financial Performance Under Conventional and Islamic Perceptions

Abstract

Corporate social responsibility (CSR) has increased in importance during the last decade and this fact has impacted a wide variety of stakeholder groups, including investors, corporate management, and society. CSR strategies and disclosure are affected by numerous different factors and are rather debatable in terms of effect on organisational performance. This argument is further complicated when different CSR values and frameworks are used as a foundation of developing corporate strategies and reporting practices. Existing knowledge in the area is featured by varying views of scholars and empirical evidence and significant gaps exists. The current study was developed and designed with the aim of addressing these gaps and partially fulfilling them through contributing to better understanding of the topic and its perspectives. The study focuses on analysing the similarities and differences of conventional and Islamic CSR concepts, as well as the link between CSR disclosure and organisational performance, focusing on profitability ratios. The research is based on secondary research examining 120 public companies listed on London Stock Exchange and Tadawul (Saudi Arabian Stock Exchange). The results of the study reveal that there is evident but rather insignificant positive relationship between CSR disclosure and profitability of examined companies. Analysis also shows that CSR disclosure has a greater impact on profitability in the short run and on companies adopting Islamic perceptions of CSR.