CORPORATE SOCIAL RESPONSIBILITY (CSR): THE PATTERN OF CORPORATE PHILANTHROPY SHOWN BY SELECTED PUBLICLY LISTED COMPANIES IN MALAYSIA By Heljony Bin Morudin An Independent Study Submitted in Partial Fulfilment of the Requirement for the Degree of Master of Business Administration (Accounting Emphasis) Faculty of Business Administration Asia-Pacific International University May 2023
i Research Project Title: Corporate Social Responsibility (CSR): The pattern of Corporate Philanthropy Shown by Various Company in Malaysia. Author: Heljony Bin Morudin Research Advisor: Dr. Henry Foster Program: Master of Business Administration (Accounting) Academic Year: 2022-2023
ii ABSTRACT This study aimed to seek for patterns in corporate philanthropy activities by publicly listed companies in Malaysia. This study determined whether there were seasonal trends in these activities such as conducting philanthropy contribution and volunteerism only during festival seasons or not. Data was collected and analyzed from 51 survey respondents and 142 annual reports selected from the Bursa Malaysia main market. The primary data collected from the survey questionnaires were tabulated in a spreadsheet and all data collected from the companies’ annual reports were transformed into numerical data before analysis. The means and standard deviationsfor the variables from the observed data were analyzed descriptively. Chi-square tests were used to test the validity of the hypothesis where the p-values show whether the observed results were statistically significant or not. The results revealed that there were no statistically significant seasonal trends in corporate philanthropy activities. While seasonal trends in philanthropy had been previously reported, these findings may show that recently adopted corporate responsibility reporting standards are starting to change corporate philanthropy patterns in Malaysia. This study was conducted during the COVID-19 pandemic and was thus limited to online methodology, as travelling and visits to libraries or firms to enhance study findings were not allowed. In the future, further studies are recommended that focus not only on publicly listed companies, but on other types of businesses.
iii ACKNOWLEDGEMENTS I would like to thank Dr Henry Foster and Dr Wayne Hamra who supported and actively helped me to complete this research. I also appreciate the Faculty of Business Administration which assisted and helped me to complete my Masters of Business Administration (Accounting) at Asia-Pacific International University. I would like to extend my gratitude to Mrs Henocy Morudin and Mrs Eldrina Jafarin for helping me gather data by calling and emailing the Publicly Listed Companies. I would also like to thank my family members who became my backbone and provided a comfort zone during the time that this research was conducted. Lastly, I thank GOD for the wisdom and strength He has given me to complete this research. Heljony Bin Morudin
iv TABLE OF CONTENTS ABSTRACT...................................................................................................................ii ACKNOWLEDGEMENTS......................................................................................... iii TABLE OF CONTENTS..............................................................................................iv LIST OF FIGURES ................................................................................................... viii LIST OF TABLES..................................................................................................... viii CHAPTER 1 INTRODUCTION ...................................................................................1 1.1 Introductory Comments.....................................................................................1 1.2 Background of Study .........................................................................................3 1.3 Research Objectives ..........................................................................................4 1.4 Scope and Delimitations of Research ................................................................4 1.5 Research Question(s) .........................................................................................5 1.6 Benefits of Research ..........................................................................................6 1.7 Operational Definitions......................................................................................6 1.8 Summary............................................................................................................7 CHAPTER 2 LITERATURE REVIEW ........................................................................8 2.1 Introduction........................................................................................................8 2.2 Concepts and Related Theories..........................................................................9
v 2.2.1 Corporate Social Responsibility in Malaysia............................................9 2.2.2 Corporate Philanthropy...........................................................................10 2.2.3 Corporate Philanthropy in Malaysia .......................................................11 2.2.4 Bursa Malaysia and Corporate Social Responsibility.............................12 2.3 Hypotheses of the Research .............................................................................13 2.4 Model Research and Conceptual Framework ..................................................14 2.5 Summary..........................................................................................................14 CHAPTER 3 METHODOLOGY ................................................................................15 3.1 Introduction......................................................................................................15 3.2 Research Design...............................................................................................15 3.3 Population and Sampling Frame .....................................................................15 3.4 Data Collection Method...................................................................................17 3.5 Research Instrument and Measurements .........................................................18 3.6 Data Analysis Technique .................................................................................20 3.7 Ethical Consideration.......................................................................................20 3.8 Summary..........................................................................................................21 CHAPTER 4 RESULTS OF STUDY..........................................................................22 4.1 Introduction......................................................................................................22
vi 4.2 Qualitative Study .............................................................................................22 4.2.1 Sustainability Statement..........................................................................22 4.3 Descriptive Analysis........................................................................................22 4.3.1 Demographic Information for Primary Data...........................................23 4.3.2 The Importance of Corporate Philanthropy Programs............................24 4.3.3 The Pattern of Corporate Philanthropy Engagement..............................24 4.3.4 Type of Corporate Philanthropy in which the Company is Engaged .....25 4.3.5 Frequencies and Levels of Corporate Philanthropy Activities...............26 4.3.6 Demographic Information for Secondary Data.......................................28 4.4 Hypothesis Testing...........................................................................................30 4.4.1 Descriptive Statistic Analysis of the Corporate Philanthropy Trend......30 4.5 Summary of the Hypothesis Testing................................................................33 4.6 Summary..........................................................................................................33 CHAPTER 5 DISCUSSION........................................................................................34 5.1 Introduction......................................................................................................34 5.2 Objectives of the Research...............................................................................34 5.3 Discussion of Result (Qualitative Study).........................................................34 5.4 Discussion of Result (Quantitative Study).......................................................35
vii 5.4.1 Hypothesis 1............................................................................................35 5.4.2 Hypothesis 2............................................................................................36 5.5 Conclusion .......................................................................................................37 CHAPTER 6 SUMMARY, CONCLUSIONS AND RECOMMENDATION............38 6.1 Summary of the Study .....................................................................................38 6.2 Conclusions of Research Findings...................................................................38 6.3 Limitation of the Study ....................................................................................39 6.4 Recommendations and Direction of Future Research .....................................39 REFERENCES ............................................................................................................41 APPENDIX A..............................................................................................................44
viii LIST OF FIGURES Figure 1: Research Study Conceptual Framework ......................................................14 Figure 2: Primary Data Business Industry Information (N=51)..................................23 Figure 3: The Length of Time that Companies Have Been Publicly Listed (N=51)...23 Figure 4: The Importance of Corporate Philanthropy Program...................................24 Figure 5: The Pattern of Corporate Philanthropy Engagement ...................................25 Figure 6: Type of Corporate Philanthropy in which the company is Engaged............25 LIST OF TABLES Table 1: Frequencies of Corporate Philanthropy Activities ........................................26 Table 2: Level of Corporate Philanthropy Support Activities.....................................27 Table 3: Secondary Data Demographic Information (N=142) ....................................28 Table 4: Type of Business Industry and Seasonal Trends Shown in Study Sample....29 Table 5: Descriptive Statistics of Corporate Philanthropy Trends .............................31 Table 6: Relationship between Type of Industry and Corporate Philanthropy Trend.32 Table 7: Summary of Hypothesis Testing ...................................................................33
1 CHAPTER 1 INTRODUCTION 1.1 Introductory Comments Corporate social responsibility (CSR) is one element in the growth and survival of a company that has been receiving a large amount of attention in society. A company has engaged in CSR when its operations help to enhance the society and environment instead of contributing negatively to them. CSR promotes the notion that being good also creates opportunities for company to do well financially. Corporate social responsibility is also known by a number of other names such as corporate responsibility, corporate accountability, corporate ethics, corporate citizenship or stewardship, responsible entrepreneurship, and the “triple bottom line,” to name just a few (Hohnen & Potts, 2007). As CSR issues become increasingly integrated into modern business practices, there is a trend towards referring to it as “responsible competitiveness” or “corporate sustainability.” Definitions of CSR take several forms. Lantos (2001) summarizes CSR as a form of “social contract” where a business needs to be responsive to society’s long run needs and wants by optimizing the positive effects and minimizing the negative effects of business actions on society. In the earlier emergence of CSR, Carroll (1999) stated that social responsibilities of businesses encompass the economic, legal, ethical and discretionary expectations that society has of organizations. In simpler terms, CSR has become the obligation of companies to protect and improve the state of society while ensuring fair and sustainable outcome for various stakeholders at all times (Mihalache, 2013).
2 CSR, based on Carroll’s model, is divided into a four-level pyramid. The first level is its economic responsibilities, where the company uses the CSR to maximize profit while maintaining a strong competitive position in the market. The second level is its legal responsibilities, where the company uses CSR to obey the laws and regulations set by the governing authorities. The third level involves its ethical responsibilities, where a company uses CSR to do the right thing in an ethical manner even if it is not required by the law. The fourth level is its philanthropic responsibilities, where the company uses CSR to give back to the community by doing humanitarian programs such as giving donations or offering to do volunteer work. CSR has been improving and evolving over the years. Recent CSR models are the DNA of CSR 2.0 by Visser (2010), the Value Creation Model by Gholami (2011), and Consumer-Driven Corporate Responsibility by Claydon (2013). Visser argued that a new CSR model was needed and introduced the four DNA responsibility bases, namely: value creation with the strategic goals of economic development, good governance with the strategic development of institutional effectiveness, social contribution with strategic goals with a stakeholder orientation, and environmental integrity with the strategic goal of a sustainable ecosystem (Visagie et al, 2019). Gholami’s value creation model of CSR emphasizes value creation for mutual dependence between organisations and society, and adopts Carroll’s pyramid model as a basis for value creation (Visagie et al., 2019). In 2012, the Bursa Malaysia CSR framework focused on four areas that included the environment, the community, the marketplace, and the workplace (Sarwar & Azam, 2013). Bursa Malaysia intended to put significant weight on protection of the
3 environment, enhancing relationships by finding many ways to contribute to communities as a whole, developing strong ties with the marketplace by encouraging production of green products while engaging in ethical procurement only, and enforcing good employee treatment in the workforce while guaranteeing basic human rights. The Bursa Malaysia, following the orders of the International Trade and Industry Ministry secretary, General Datuk Isham Ishak, has made it mandatory for listed companies to report a CSR or corporate sustainability programme to help enhance a company’s annual report and demonstrate market leadership (Chua, 2018). The government in Malaysia realizes that CSR is the best strategy to gauge where a company stands in comparison to its competitors, to measure the effectiveness of its management and to understand the attitude of stakeholders towards it. Companies in Malaysia, even before the mandatory orders, have been reporting their CSR programmes in their annual reports, but to what extent? This research project looked into different companies in Malaysia and analyse their CSR practices. 1.2 Background of Study Some companies in Malaysia were reporting their CSR activities, following the standard guidelines, even before the government in Malaysia made it mandatory for listed company to disclose and file such reports. In the literature review section, most past investigators believed that CSR was influenced by beliefs and culture. Malaysia is a country characterized by strong religious beliefs and a corresponding culture. The ideas presented by past investigators were that corporate philanthropy in Malaysia tended to follow a seasonal trend. With
4 this in mind, there was a high expectation that companies would conduct corporate philanthropic activities during religious or cultural festivals. But has that become a pattern or a trend set for the top performing companies in Malaysia? This study will focus on the fourth level of CSR, which is philanthropic responsibility, to investigate this claim by past investigators. 1.3 Objectives of the Research The objectives of this research study were to identify patterns of corporate philanthropy in Malaysia and to investigate the claims of previous studies which have stated that corporate philanthropy by Malaysian companies has a homogenous trend which displays more generosity during festive times. While trying to identify patterns, the research study also investigated similarities in corporate philanthropy by comparing the practices of selected publicly listed Malaysian companies. 1.4 Scope and Delimitation of the Research In this study, the focus was on public companies listed on the Bursa Malaysia. Bursa Malaysia has become the frontline regulator of the Malaysian capital market to maintain a fair and orderly market in the securities and derivatives that are traded through its facilities. This study was limited to Malaysian publicly listed companies, and did not investigate the corporate philanthropy activities of private companies, small medium enterprises (SME), partnership businesses, or sole proprietorships. This study was also delimited because a significant amount of information was obtained using online sources.
5 1.5 Research Question(s) Two questions were considered that arose from the literature review. They were as follows. 1. What trends if any do publicly-listed Malaysian companies follow in their corporate philanthropic activities? Considering the statement that “The government in Malaysia realizes the CSR is the best strategy to gauge where a company stands in comparison to its competitors, to measure the effectiveness of its management and to understand the attitude of stakeholders towards it,” how do we compare a company to its competitors if there is a homogenous trend? Or do corporate philanthropic activities vary from one company/sector to another, with no discernible trends? After reviewing the statistics collected from a number of companies, it was possible to determine whether there is a seasonal trend in the CSR activities in Malaysian companies. 2. To what extent are CSR activities related to the type of business undertaken by a company? Do the CSR activities of companies vary according to their type of business? To what extent do differences in types of businesses affect their CSR activities? 1.6 Benefits of the Research This study was conducted in order to fulfil the requirements for Independent Study that was designed to help the student learn how to conduct research. The knowledge gained from this program might be useful in future activities.
6 The result of this study may help to expand the importance of corporate philanthropy to the organization in Malaysia. With the exposure of the pattern of corporate philanthropy from publicly listed companies, this study may build public trust and enhance positive relationships between companies and their stakeholders. This study can also be used as a guide for Private Companies, Small Medium Enterprises and other businesses to engaged in corporate philanthropy and become more socially responsible. 1.7 Operational Definition Bursa Malaysia: The stock exchange in Malaysia based in Kuala Lumpur acting as the frontline regulator of the Malaysian capital Market. Corporate philanthropy: Business initiatives that have beneficial impacts on society which fall into the 3 categories of corporate giving, corporate volunteering, and corporate foundations. Seasonal corporate philanthropy: Corporate philanthropy performed by companies based on seasonal activities, which only occurs during festival times such as main religious and cultural festivals. 1.8 Summary In this chapter, some background information has been provided. The objectives of the study have been outlined, together with the motivation behind the study. This chapter also explains about CSR as a business model that helps companies to be more socially responsible toward society, and why this approach has gained more attention
7 from society. Bursa Malaysia, the stock exchange in Malaysia based in Kuala Lumpur, as the frontline regulator of the Malaysian capital market has also been introduced as well as corporate philanthropy, where businesses voluntarily undertake initiatives that have beneficial impacts on society. The next chapter will discuss more about CSR, Bursa Malaysia, corporate philanthropy, and the extent of corporate philanthropic practices in Malaysia.
8 CHAPTER 2 LITERATURE REVIEW 2.1 Introduction Corporate social responsibility is not a new issue and it has been going on for decades. Social responsibility is the expectation that businesses or individuals will strive to improve the overall welfare of society. From the business perspective, managers should take active steps to make society better by virtue of the business being in existence (Dess et al., 2019). Anita Roddick (1994) suggested that corporate responsibility is plain and simple. Consumers are expecting moral decisions; therefore, businesses need to rethink their approaches to encourage sustainable and healthy growth across the globe. Social responsibility and sustainable profit go hand in hand, serving the interest of stakeholders and opening opportunities for the company to make profitability sustainable over the long term (Mischke et al., 2021). As mentioned in Chapter 1, this study focuses on the fourth level of CSR, which is philanthropy responsibility. Corporate philanthropy, in an effort to maintain strategic income, is involved in a wide range of social and charitable causes such as monetary contributions as well as in-kind gifts (Song et al., 2016). Corporate philanthropy takes three different forms which are corporate giving, corporate volunteering, and corporate foundations (Schnurbein et al., 2016). Schnurbein et al., (2016) explained that a strategic corporate philanthropy will boost the competitive position of the corporation, create positive moral capital in relation to
9 the stakeholders, and positively influence the market premiums for Initial Public Offering (IPO) firms. 2.2 Concepts and Related Theories 2.2.1 Corporate Social Responsibility in Malaysia A study of annual reports in Malaysia for the year 2000 provided evidence that CSR activity was poor in quality and low in quantity (Thompson & Zakaria, 2004). Another study indicated that the overall level of CSR among industrial companies in Malaysia was growing, as well as the level of disclosure of CSR activities (Janggu et al., 2007). These authors further indicated that over the period from 1998 to 2003, local firms were more socially responsible than their foreign counterparts, as these firms tended to disclose more information than foreign ones. This was before the mandatory requirement was issued by the Malaysian government. The observed increase in the extent and quality of CSR reporting in Malaysia has coincided with global financial turmoil, the revised Malaysian code of corporate governance, mandatory CSR disclosure requirements, the giving of CSR specific awards, and increasing awareness of CSR issues (Haji, 2013). The Malaysian code of conduct aims to provide a framework or control mechanism that supports the company in achieving its goals, while preventing unwanted conflict and promoting ethical behavior, accountability, transparency and sustainability that is important for governance of companies and stewardship of investor capital. CSR Malaysia Publication and the Malaysian Welfare Society for Corporate Sustainability and Responsibility has given awards to a few companies in Malaysia through The Sustainability and CSR Malaysia Awards for their continuing CSR activities. This
10 event is held yearly, and the winner gets a chance to enhance their company’s goodwill when newspaper outlets or national television mention the company’s name. 2.2.2 Corporate philanthropy Schnurbein et al., (2016) has defined the three forms of corporate philanthropy as follows: 1. Corporate Giving entails all contributions in terms of money or in-kind by the corporation to society driven by four motivational categories consisting of strategic profit maximization, altruistic motivation, political motivation, and managerial utility motivation. Also known as corporate charitable donations, corporate giving is used to help maintain a company’s competitive advantages during the increasingly competitive business environment through charitable donations in terms of money, in-kind or services to the needy to alleviate a shortage of public services and products (Wang et al., 2022). 2. Corporate Volunteering aims to enhance companies’ communities and employee relations by supporting and fostering employees’ efforts to perform community service during working hours. Corporate volunteering can be expressed as employed individuals giving time during a planned activity for external not-for-profit or charitable organisations with employer support to contribute in building social capital, maintaining stronger and safer community, boosting company morale, ensuring the provision of efficient, enhancing employee skills and well-being and creating a profile that attests to the organisation’s commitment to being socially responsible (Hamilton et al., 2019).
11 3. Corporate Foundations are designed as separate legal entities that have been established and funded by a for-profit company to perform charitable activities. Corporate foundations create a way to position the company as a citizen, and are used as instrumental tools to create a company’s competitive advantage by demonstrating corporate social responsibility such as charitable donations (Morsy, 2015) Corporate philanthropy can be treated as a marketing tool that could facilitate relationships between companies and their stakeholders while enhancing corporate image, gaining media attention, altering public attitudes, and supporting promotional campaigns (Bin Amran et al., 2007). The word philanthropy brings a good meaning and expresses a good vibe, but it can also be manipulated. Corporate philanthropy can be used as a gimmick to promote a company’s “charitable image”, and used as a tool to conceal or “whitewash” corporate irregularities rather than purely doing good (Wang et al., 2022). 2.2.3 Corporate philanthropy in Malaysia Past investigation of CSR activity in Malaysia has suggested that commitment to CSR activities is often expressed in terms of charitable giving (Bin Amran et al., 2007). Malaysian consumers seem to focus more on corporate philanthropic responsibility and wanting to see companies contribute money, facilities, and employee time to humanitarian programs (Rahim et al., 2011). Zulkifli and Amran (2006) observed that activities pertaining to CSR in Malaysia were seasonal when many companies, especially Bumiputera (indigenous) controlled companies, displayed their generosity by giving out donations at festival times, such as at the Eid-Festival (Muslim community) and at Chinese New Year. These
12 donations are usually given to schools, orphanages, nursing homes, and individuals like single mothers and many more who need them. They further suggested that CSR activity tended to be linked to the nature of a company’s business activities A study made by Yusoff and Yee in 2017 suggested that CSR practices in Malaysia are influenced by the unique characteristics of “Eastern ethnic work ethos” that adheres to religious beliefs and culture due to the nature of its people being enmeshed in a mosaic of different races, religions, beliefs, and cultural practices. They also suggested that CSR tends to be a seasonal activity, such as philanthropic contributions during the main religious and cultural festivals. Saleh et al. (2011) indicated that some companies’ community activities in Malaysia involved giving donations, creating sponsorships for sports events, and making contributions to educational and activities related to national pride. Top Glove Corporation Berhad, a publicly listed company, won top honors at the 2022 Sustainability & CSR Malaysia Awards. Its Top Glove Foundation was recognized for community outreach efforts including financial contributions, donations of personal protective equipment and philanthropic activities totaling approximately RM190 million (The Sun Daily, 2022). 2.2.4 Bursa Malaysia and Corporate Social Responsibility Bursa Malaysia, as the frontline regulator of the Malaysian capital market, has the duty to maintain a fair and orderly market in the securities and derivatives that are traded through its facilities. As the stock exchange of Malaysia, Bursa Malaysia requires all listed companies to issue their annual reports for the public through them.
13 Bursa Malaysia urges Malaysian Publicly Listed Companies to adhere to CSR and has created a CSR framework as guidelines for listed companies to practice CSR (Sarwar & Azam, 2013). With the guidelines to practice CSR and the availability of listed companies’ annual reports through the Bursa Malaysia website, public society has been given an easy way to access information about listed companies’ CSR practices. 2.3 Hypothesis of the Research 1. What trends or patterns if any do publicly-listed Malaysian companies follow in their corporate philanthropic activities? H1A: The corporate philanthropic activities in Malaysia display a seasonal trend. H10 The corporate philanthropic activities in Malaysia do not display a seasonal trend. Many of the companies in Malaysia, especially Bumiputera (indigenous) controlled companies, display their generosity by giving out donations during festival seasons, such as Eid-Festival and Chinese New Year. Therefore, the first hypothesis is to test whether there is a seasonal trend within the corporate philanthropy activities. 2. To what extent are corporate philanthropic activities related to the type of business undertaken by a company? H2A: There is a significant relationship between the type of industry a business is engaged in and corporate philanthropic seasonal activity. H20: There is no significant relationship between the type of industry a business is engaged in and corporate philanthropic seasonal activity.
14 Companies that are listed in the Bursa Malaysia have been categorized into different sectors; this hypothesis suggests that there will be a relationship between the type of company listed in the Bursa Malaysia and the corporate philanthropy activities. 2.4 Model Research and Conceptual Framework Figure 1 Research Study Conceptual Framework 2.5 Conclusion In this chapter, a brief review of the literature was completed. The objectives of the research are restated. The hypotheses and a conceptual framework are presented to enable visualization of the connection between the questions and the hypotheses. Type of Business/ Industry Seasonal Trends/Patterns in Corporate Philanthropy Corporate Philanthropy Trends Year 2019 Year 2020 Year 2021
15 CHAPTER 3 RESEARCH METHODOLOGY 3.1 Introduction In this chapter, the research methodology is explained. The data was extracted from company annual reports and subsequently was subjected to statistical analysis. In addition to this, survey questionnaires were distributed to publicly listed companies asking for information about their philanthropic activities. 3.2 Research Design A descriptive research approach was utilized. Mathematical modelling and a quantitative analytical approach was adopted. The primary research method used was to access annual reports from the Bursa Malaysia website for different companies operating in Malaysia. Bursa Malaysia provides annual reports for listed companies in Malaysia and these are available for public use. The first data collection task adopted in this study was to review the disclosures of corporate philanthropy in Malaysia. Additional data was collected by distributing questionnaire surveys to selected publicly listed companies. In the second stage of this study, the type and variability of corporate philanthropy reports submitted by different companies in Malaysia was investigated. 3.3 Population and Sampling Frame Publicly listed companies in Malaysia in the year of 2020 were considered. There were 954 publicly listed companies in the Bursa Malaysia in that year which
16 were divided into 3 types of markets: the MAIN market (a number of companies that had issue at 25% of its total shares to the public), the ACE market (stands for Access, Certainty, Efficiency which the ideal market for start-ups and new companies who are looking to push for more capital by listing their companies public), and the LEAP market (a platform intended to attract SMEs). The population consisted of 755 publicly listed company for 13 different sectors from the main market (Bursa Malaysia, 2021) The sample number chosen (142) was based on an error of .075, a confidence level of .95, and a sample proportion of .50. The derivation of these figures were based on the formula below. Where z is the z score, ε is the margin of error, N is the population size, and p̂ is the population proportion. The formula used to calculate and evaluate Tests of Independence was by using the Chi square method. It was as follows: Where fo = the observed frequency and fe = the expected frequency if NO relationship existed between variables.
17 3.4 Data Collection Method The data collection method is important to any study. The data collection method was used mostly to access online secondary data, which were gathered from various company annual reports. The data collection method is described as follows. First, there are 954 companies listed in different markets. The researcher chose the main market as the population, which consists of 755 companies from 13 different sectors. From the 755 companies, 142 were selected from Bursa Malaysia as the sample which covered 18.81% of the total population. Second, the chosen companies were grouped by their sector and a comparison was made of their corporate philanthropy. The sample was chosen while skimming through the names of the companies listed in Bursa Malaysia. The reason why this study collected data from annual reports is because annual reports of listed companies are the most important source of corporate reporting and accessible sources of information, either in hard copy or electronic publication (Saleh et al., 2010). Moreover, the Bursa Malaysia has made it mandatory for all listed companies to disclose their CSR activities in their annual reports to give a better image and reputation to the companies that could improve their financial performance, enhance their brand image, and increase their ability to attract and retain the best workforce (Baba, 2017). A small amount of primary data was also collected by distributing survey questionnaires. The survey questionnaires were distributed with the hope to receive responses from 142 companies out of 755 companies. This primary data was obtained
18 after emailing 756 companies twice, and calling 250 companies by telephone. Responses from 51 companies were received. 3.5 Research Instrument and Measurements The questionnaires survey consisted of 8 sections. Section 1 and Section 2 were “get to know” sections, where the questions determined the type of business of and the period of how long the companies had been listed in the Bursa Malaysia. Section 3 consisted of 7 questions that determined how important corporate philanthropy was to the company. Section 4 was the most important part which explored the pattern of the company’s philanthropy engagement. Section 5 asked about the type of corporate philanthropy in which the company had engaged. Section 6 and Section 7 asked about the company’s level of support towards various activities. Section 8 was optional, where the company could attach any magazine or newspaper clippings that reported on its corporate philanthropy activities. A quantitative research method was used. This meant that the data which was gathered from the annual report, which was qualitative, was converted into numerical form to help facilitate the research process. A survey questionnaire was also distributed to selected publicly listed companies via email to collect data, which was also converted into numerical form. Numerical evidence is required in order to draw conclusions or to test hypotheses. In the age of technology, the computer was needed in order to ease the process of analysing data. In this study, external sources of information such as held by Bursa Malaysia were accessed. Bursa Malaysia, which operates under the purview of the Securities Commissions and the Ministry of Finance in Malaysia, operates and regulates a fully
19 integrated securities exchange offering a comprehensive range of exchange-related facilities, including listing, trading, clearing, settlement, and depository services. The data needed from the annual report is the firm’s corporate philanthropy practices, whether the practices are conducted seasonally during Malaysian festivals or all year long, and whether the practices have the unique characteristics of “Eastern ethnic work ethos” that adhere to religious beliefs and culture due to the nature of people being enmeshed in a mosaic of different races, religions, beliefs, and cultural practices as claimed by past investigators or not. Validity—To ensure the validity of the research instrument, the researcher took the following steps. First, 142 companies selected annual reports were collected from Bursa Malaysia for the years 2019, 2020 and 2021. Second, the researcher read and extracted the data from the annual reports. Meanwhile, the questionnaires were distributed within the specified timeframe to be collected from the selected companies. Three experienced researchers also independently reviewed the survey questions to verify their coverage of the research question variables, and provided helpful feedback and suggestions before primary data was collected. Reliability—To ensure the reliability of the extracted data, the selected annual reports were counter-checked against the annual reports posted on each of the selected companies websites. The annual report was determined to be reliable when the two annual reports were identical. The survey questionnaires survey were distributed via email addresses which were obtained from annual reports and company websites.
20 3.6 Data Analysis Technique The primary data collected from the survey questionnaires were tabulated in a spreadsheet. The results are shown in figures or tables which were extracted from the spreadsheet. All data collected from the companies’ annual reports were transformed into numerical data before analysis. The data were grouped into types of CSR (Seasonal CSR, Not Seasonal CSR for the years 2019, 2020 and 2021) and the business category in accordance with Bursa Malaysia classification. The mean and standard deviation for the variables derived from the observed data was analyzed descriptively. The relationship between types of business industries and corporate philanthropy trends were calculated using the Chi-squared test function in a spreadsheet. Chi-squared tests were used to test the validity of the hypothesis where the p-values show whether the observed results were statistically significant or not. If the p-value was less than the alpha level, the researcher would reject the null hypothesis. 3.7 Ethical Considerations Even though the data utilized is available for public use and posted in Bursa Malaysia, the analysis could lead to a sensitive debate about those companies not following the seasonal CSR trend. Therefore, the names of the companies selected remain confidential and were only presented to the advisor personally for validity and reliability purposes. This was done in order to protect the selected companies from any adverse comments, respecting company privacy, and avoiding any misconceptions about the aims and objectives of the research. Ethical considerations regarding survey questions were reviewed by the MBA Committee, and use of the survey was approved
21 by this committee as in harmony with university policies for the ethical conduct of research. 3.8 Summary In this chapter, an explanation for the research methodology, population and sample size, research instrument, and data collection method has been discussed. Ethical considerations have also been considered and explained thoroughly. In the next chapter, the findings of the study are presented and explained.
22 CHAPTER 4 RESULTS OF STUDY 4.1 Introduction In this chapter, the result of the study were reported based on the qualitative and quantitative analyses carried out. 4.2 Qualitative Study Upon studying the annual reports based on document analysis, this study found that most companies usually report or disclose their CSR activities in the Sustainability Statement or Sustainability Report section. This section is included in the annual report, but some companies choose to exclude this from the annual report and report it separately. 4.2.1 Sustainability Statement Most of the companies followed the Bursa Malaysia Sustainability Reporting Guide when disclosing their sustainability activity. The researcher was thorough in reading the annual report because there were slight differences in the way the companies reported their CSR activity. 4.3 Descriptive Analysis In this section, frequency and demographic information is presented. The data includes the type of business industry in which firms were engaged.
23 4.3.1 Demographic Information for Primary Data The primary data was obtained after emailing 756 companies twice, and calling 250 companies by telephone. The results are from 51 responses that were received. Figure 2 Primary Data Business Industry Information (N = 51) Based on Figure 2 above, the highest group of respondent firms were from the consumer products and services industry, followed closely by the industrial products and services industry. The lowest respondents were from the Gas and Energy Industry and Plantation Industries. Figure 3 The Length of Time that Companies Have Been Publicly Listed (N = 51) 29% 8% 23% 6% 6% 18% 10% Type of Business Industry Consumers Products & Services Industry Financial Industry Industrial Products & Services Industry Gas and Energy Plantation Industries 33% 18% 6% 12% 4% 27% Listing Period 1 - 10 Years 11 - 20 Years 21 - 30 Years 31 - 40 Years 41 - 50 Years More than 50 Years
24 Based on Figure 3 above, the highest number of responses were received from newly listed companies, which was 33 per cent, followed by 27 per cent from companies that had been listed for more than 50 years. 4.3.2 The Importance of Corporate Philanthropy Programs In this section, companies were asked how they viewed their Corporate Philanthropy programs. The question attempted to measure the effect of corporate philanthropy on the company and the society around it. Figure 4 The Importance of Corporate Philanthropy Program Figure 4 indicates that Corporate Philanthropy helped most of the companies in enhancing environmental conditions, society, employee performance, company reputation, business ethics and compliance, as well as attracting more customers. -80% -60% -40% -20% 0% 20% 40% 60% 80% 100% Corporate philanthropy activities help to enhance the company's business ethic and compliance. Corporate philanthropy is beneficial for a company's reputation. Corporate philanthropy has many benefit but does not necessarily enhance a company's financial… Corporate philanthropy has not enhance my employees' performance. My company's corporate philanthropy program has attracted more customers to our business. My company's corporate philanthropy program helps to enhance society. My company's corporate philanthropy program has not enhance the environment conditions. The importance of a Corporate Philanthropy program. Strongly Disagree Disagree Not Sure Agree Strongly Agree
25 4.3.3 The Pattern of Corporate Philanthropy Engagement This section collected the main data in order to test the hypotheses. In this section, the questions asked about the pattern of corporate philanthropy engagement, to determine whether corporate philanthropy in Malaysia displays a seasonal trend or not. Figure 5 The Pattern of Corporate Philanthropy Engagement Figure 5 shows that most companies are willing to help their communities regardless of religious, racial or cultural background. Although most companies are active in participating in corporate philanthropy during festival seasons, they are also active in participating outside of festival seasons.
26 4.3.4 Type of Corporate Philanthropy in which the Company is Engaged. Figure 6 Type of Corporate Philanthropy in which the Company is Engaged Figure 6 indicates that 80.39% of the respondents engaged in corporate giving in money or in-kind. 4.3.5 Frequencies and Levels of Corporate Philanthropy Activities Table 1 Frequencies of Corporate Philanthropy Activities Never Rarely Sometimes Often Always Culture or recreation (empowering social capital) 0.00% 12.00% 44.00% 28.00% 16.00% Educational or research (sponsorship) 0.00% 13.73% 43.14% 15.69% 27.45% Health 0.00% 7.84% 29.41% 39.22% 23.53% Social services 0.00% 7.84% 27.45% 33.33% 31.37% Environment 0.00% 8.00% 34.00% 36.00% 22.00% Development or housing 3.92% 19.61% 37.25% 29.41% 9.80% Law, advocacy or politics 11.76% 23.53% 35.29% 21.57% 7.84% Religious activities 8.00% 20.00% 34.00% 28.00% 10.00% 41 28 26 0 5 10 15 20 25 30 35 40 45 Corporate giving (contributing to the society in terms of money or in kind) Corporate volunteering (performing community service during working hours) Corporate foundation (creating separate entity to perform charitable activities) Type of Corporate Philanthropy in which the Company is engaged
27 Table 1 shows that Publicly Listed Companies were keen to engage in corporate philanthropy that involved health, social services, or the environment. It is safe to assume that this result was affected by the recent COVID-19 pandemic. On the other hand, companies seemed to show low frequencies in development, housing, law, advocacy, and political or religious activities. Table 2 Level of Corporate Philanthropy Support Activities None Low Moderate High Very High Culture or recreation (empowering social capital) 0.00% 7.84% 49.02% 29.41% 13.73% Educational or research (sponsorship) 0.00% 8.00% 36.00% 38.00% 18.00% Health 0.00% 2.00% 42.00% 38.00% 18.00% Social services 0.00% 6.00% 36.00% 40.00% 18.00% Environment 0.00% 4.00% 40.00% 36.00% 20.00% Development or housing 14.00% 16.00% 28.00% 34.00% 8.00% Law, advocacy or politics 20.00% 12.00% 38.00% 26.00% 4.00% Religious activities 12.00% 8.00% 44.00% 30.00% 6.00% Table 2 indicates that Publicly Listed Companies showed high levels of support towards cultural, recreational, educational, research, health, social services, environmental, development and housing activities. Even though companies engaged with development or housing only infrequently, there was a high level of support for those activities.
28 4.3.6 Demographic Information for Secondary Data Table 3 shows the business sectors represented by the firms that were studied. Table 3 Secondary Data Demographic Information (N = 142) Type of Business Sector Frequencies Percentage (%) Construction Industry 10 7.04 Consumer Product & Services Industry 31 21.83 Energy Industry 5 3.52 Financial Industry 6 4.23 Health Care Industry 3 2.11 Industrial Product & Services Industry 40 28.17 Plantation Industry 8 5.63 Property Industry 18 12.68 Real Estate Investment Trusts 3 2.11 Technology Industries 8 5.63 Telecommunications & Media Industry 3 2.11 Transportation & Logistic Industry 5 3.52 Utilities Industry 2 1.41 Grand Total 142 100.00 Y2019 Frequencies Percentage (%) Have Seasonal Trend (HT) 11 7.75 Do not have seasonal Trend (NT) 131 92.25 Grand Total 142 100.00% Y2020 Frequencies Percentage (%) Have Seasonal Trend (HT) 2 1.41 Do not have seasonal Trend (NT) 140 98.59 Grand Total 142 100.00% Y2021 Frequencies Percentage (%) Have Seasonal Trend (HT) 4 2.82 Do not have seasonal Trend (NT) 138 97.18 Grand Total 142 100.00%
29 The largest number of chosen companies were from the industrial products and services sector; this was followed closely by the consumer products and services sector, and services industries groups. This data was selected as such in order to fulfil the .075 margin of error, a confidence level of .95, and population proportion of .50. The 142 sample firms were divided into each sector by the percentage of total companies in the main market. For example, the main market consists of 755 companies of which a total of 52 companies were from the construction sector. Therefore, out of 142 sample firms, 10 firms were selected from the construction sector based on the percentage of .07. Table 4 Type of Business Industry and Seasonal Trends Shown in the Study Sample Y2019 Y2020 Y2021 Type of Business Sector HT NT HT NT HT NT Construction Industry 1 9 1 9 1 9 Consumer Product & Services Industry 2 29 1 30 1 30 Energy Industry 5 5 5 Financial Industry 2 4 6 1 5 Health Care Industry 3 3 3 Industrial Product & Services Industry 1 39 40 40 Plantation Industry 8 8 8 Property Industry 3 15 18 18 Real Estate Investment Trusts 3 3 3 Technology Industries 1 7 8 8 Telecommunications & Media Industry 3 3 3 Transportation & Logistics Industry 1 4 5 1 4 Utilities Industry 2 2 2 Total 11 131 2 140 4 138 Grand Total 142 142 142 Note. HT = Has a seasonal trend, NT = No seasonal trend
30 There were only 11 companies that showed a seasonal trend in their philanthropy. These fell under Construction, Consumer Product & Services, Financial, Industrial Product & Services, Property, Technology, and Transportation & Logistics for the year 2019. Only Construction and Consumer Product & Services Industry showed a seasonal trend in the year 2020; the same trend continued in 2021. 4.4 Hypothesis Testing In this section the descriptive statistics of the CSR trends are presented. The main purpose was to analyse whether selected companies showed a seasonal corporate philanthropy trend activity or not. Then, the relationship between the business sector and the seasonal corporate trend activity was investigated. 4.4.1 Descriptive Statistical Analysis of the Corporate Philanthropy Trend For the following analysis, the data were converted from descriptive into numerical data. Therefore, the company that had a seasonal corporate philanthropy trend was assumed to have a value of 1, and those that did not show a seasonal corporate philanthropy trend were allocated a value of 2. The results of the descriptive statistical analysis are shown in Table 5 below.
31 Table 5 Descriptive Statistics of Corporate Philanthropy Trends Y2019 Y2020 Y2021 Mean 1.92 1.99 1.97 Standard Error 0.02 0.01 0.01 Median 2.00 2.00 2.00 Mode 2.00 2.00 2.00 Standard Deviation 0.27 0.12 0.17 Sample Variance 0.07 0.01 0.03 Kurtosis 8.33 68.44 31.68 Skewness -3.20 -8.34 -5.76 Range 1.00 1.00 1.00 Minimum 1.00 1.00 1.00 Maximum 2.00 2.00 2.00 Sum 273.00 282.00 280.00 Count 142.00 142.00 142.00 Confidence Level (95.0%) 0.04 0.02 0.03 In three years of data, the same median value was obtained, although for the year 2019, a slightly lower mean was obtained than for the years 2020 and 2021. The results shows that with a confidence level of 95 percent, most of the companies do not have a seasonal trend in their philanthropy for these three years. The same results are also indicated by the mean, mode, and median obtained for all three years.
32 Table 6 Relationship between Type of Industry and Corporate Philanthropy Trend Expected Frequency Year 2019 Year 2020 Year 2021 Type of Business Industry HT NT GT HT NT GT HT NT GT Construction Industry 0.77 9.23 10 0.14 9.86 10 0.28 9.72 10 Consumer Product & Services Industry 2.40 28.60 31 0.44 30.56 31 0.87 30.13 31 Energy Industry 0.39 4.61 5 0.07 4.93 5 0.14 4.86 5 Financial Industry 0.46 5.54 6 0.08 5.92 6 0.17 5.83 6 Health Care Industry 0.23 2.77 3 0.04 2.96 3 0.08 2.92 3 Industrial Product & Services Industry 3.10 36.90 40 0.56 39.44 40 1.13 38.87 40 Plantation Industry 0.62 7.38 8 0.11 7.89 8 0.23 7.77 8 Property Industry 1.39 16.61 18 0.25 17.75 18 0.51 17.49 18 Real Estate Investment Trusts 0.23 2.77 3 0.04 2.96 3 0.08 2.92 3 Technology Industries 0.62 7.38 8 0.11 7.89 8 0.23 7.77 8 Telecommunications & Media Industry 0.23 2.77 3 0.04 2.96 3 0.08 2.92 3 Transportation & Logistic Industry 0.39 4.61 5 0.07 4.93 5 0.14 4.86 5 Utilities Industry 0.15 1.85 2 0.03 1.97 2 0.06 1.94 2 Grand Total (GT) 11 131 142 2 140 142 4 138 142 p-value = 0.56 p-value = 0.91 p-value = 0.48 Level of Significance, α = 0.075 Note. HT = Has seasonal trend; NT = Does not have a seasonal trend; GT = Grand Total Working on the basis of the data types identified in Table 3, the expected frequencies were calculated using an Excel spreadsheet as shown in Table 6. The relationship between the type of business industry and the CSR trend was assessed and the results are shown in Table 6 above. The p-value for all three years was greater than
33 the 7.5 percent level. This indicates that the null hypotheses are to be accepted since there is not enough evidence available to suggest that the null hypothesis is false. 4.5 Summary of Hypothesis Testing The hypothesis testing results are summarized as shown in Table 7 below. Table 7 Summary of Hypothesis Testing Hypothesis Description Result H10 The corporate philanthropy activities in Malaysia do not display a seasonal trend. Null H20 There is no significant relationship between the type of business industry engaged in and corporate philanthropy seasonal activity. Null 4.6 Summary In this chapter, the results for the analysis and hypothesis testing are reported. All the data supported the null propositions. The discussion of the result and findings has been undertaken in the next chapter.
34 CHAPTER 5 DISCUSSION 5.1 Introduction In this chapter, the reported results obtained, based on qualitative and quantitative data, are discussed. 5.2 Objectives of the Research As explained earlier in chapter 1, the objective of this research was to identify the pattern of corporate philanthropy in Malaysia, and to look into the similarity of implementation of corporate philanthropy at the same time. While conducting the research, the objectives were expanded to find the relationship of corporate philanthropy practices to the nature of the business. 5.3 Discussion of Results (Qualitative Study) Upon reading and studying the annual reports of companies, it seemed safe to assume that there were no significant seasonal trends associated with corporate philanthropy activities in Malaysia. Since most of the companies follow the Bursa Malaysia Sustainability Reporting Guide, a basic pattern was found in the CSR reporting. Most of the companies in Malaysia seemed to favor education in their philanthropic contributions, as most of the annual reports by various companies reflected contributions or donations in terms of money and in kind toward schools.
35 Commencing in the year 2020, the world was shocked by the COVID-19 pandemic, inducing most of the companies to conduct their CSR in order to cope with the pandemic. Investigation of annual reports showed that most companies elected to serve their communities by helping those deeply affected by the pandemic as part of their CSR activities. 5.4 Discussion of Results (Quantitative Study) 5.4.1 Hypothesis 1 Hypothesis 1 indicated that the companies in Malaysia were expected to follow a trend in performing their corporate philanthropy activities as suggested by past investigators through their papers. Past investigators, as discussed in Chapter 2, suggested that companies in Malaysia mostly practiced their CSR during religious and cultural festivals. Hence, there was a high anticipation that companies in Malaysia would conduct their corporate philanthropy activities during Malaysia’s festival season. The results obtained supported the null hypothesis. No significant evidence was found to suggest that there are seasonal trends in the corporate philanthropy activities of companies in Malaysia. In Malaysia, the CSR activity was poor in quality and low in quantity during the year 2000 (Thomson et al, 2004). In 2013, Haji explained that there was an increase in the quality of CSR reporting in Malaysia with the help of the revised Malaysian code of corporate governance, the giving of specific CSR awards, and increasing awareness of CSR issues. The past investigators had claimed that CSR in Malaysia, including
36 corporate philanthropy, was usually conducted during festival times, especially during the main religious and cultural festivals. The current study had different findings and found no evidence to suggest seasonal trends in the corporate philanthropy activities in recent years. The Bursa Malaysia, with the help of the Malaysian government, has made it mandatory for every publicly listed company to produce a thorough statement describing its CSR activities. This amendment should have further increased CSR awareness for both the companies and the general public. The increasing competitive advantages that were caused by this regulatory change has prodded most companies to change their CSR strategies to reach their communities, even outside of festival seasons. The results may also have been influenced by government effort to promote ethnic harmony, national unity and efficient governance through the 1Malaysia programme. CSR activities in Malaysia tend to be affected by current issues. For example, upon reading the annual report, most companies in Malaysia seem to favor education in their corporate philanthropy contributions. But, the survey results suggest that most companies favor education, with the addition of health and social services. These responses can be presumably linked with the COVID-19 pandemic that shocked the whole world in the recent years. 5.4.2 Hypothesis 2 Hypothesis 2 of this study predicted that there was a positive relationship between the type of business industry and the trend of the corporate philanthropy activities.
37 The results showed that there was no positive relationship between the type of business industry and the trend of the corporate philanthropy activities. The Bursa Malaysia has created a CSR framework as guidelines for companies to practice CSR (Sarwar et al, 2013). The publicly listed companies are required to follow the guidelines from Bursa Malaysia regardless of their nature or type of business. This indicates that CSR activities, as well as corporate philanthropy activities, are mostly following the guidelines instead of being influenced by the type of business industry. 5.5 Summary In this chapter, a discussion of the results has been presented. The qualitative data presented based on readings of the annual reports and the quantitative study were presented to support both of the null hypotheses.
38 CHAPTER 6 SUMMARY, CONCLUSIONS AND RECOMMENDATION 6.1 Summary of the Study Do companies in Malaysia show a seasonal trend in their corporate philanthropy activities, or is there variation among those firms listed on Bursa Malaysia? The study has shown the answer to this question by testing the null hypothesis. No, companies in Malaysia do not show seasonal trends in their corporate philanthropy activities. 6.2 Conclusions of Research Findings Past studies indicated that corporate philanthropy activities are influenced by beliefs and culture. Therefore, the anticipation was that companies would conduct their corporate philanthropy activities during religious or cultural festivals. This research was conducted with the same anticipation but the results of the study suggest otherwise. This research found that a few companies conducted corporate philanthropy during the festival season, but most companies conducted their corporate philanthropic activities beyond that time. With the increasing awareness of CSR activities and the increment of competitive advantage from CSR activities, more and more companies are changing their strategies to reach their communities regardless of their religious or cultural backgrounds. 6.3 Limitations of the Study
39 This study was conducted during the COVID-19 pandemic. Travelling was not possible as the country moved into lockdown and quarantine. Therefore, this research was completed online, as visits to the library or places to help enhance the study were cut off. The survey questionnaire was sent to 755 companies via email addresses retrieved from each company’s website, but the response rate was less than 2 per cent. Therefore, the researchers decided to make telephone calls to randomly chosen companies. After telephone calls were made to more than 200 companies, a 25 per cent response was achieved for an overall response rate of 6.8%. The companies that gave no response were either busy, rejected the call, or put the caller on hold for too long. 6.4 Recommendation and Direction of Future Research Based on the findings of this study, more future research needs to be conducted. This research found that CSR activities in Malaysia are influenced by current issues. Future studies can be conducted to determine the extent to this finding. Regulations from the government and Bursa Malaysia may have changed the ways that companies conduct CSR activities. Future studies can be conducted in greater depth to find the relationship between the regulations and companies’ CSR activities. The COVID-19 pandemic narrowed the range of company CSR activities. Therefore, the current study may have limited ability to generalize. Similar research can be conducted in the future where the CSR activities are no longer limited by the COVID-19 pandemic. Future research can be more qualitative in nature, and include
40 interviews of the chosen companies so that more accurate details of their corporate philanthropy activities may be reported. This research was conducted for publicly listed companies in the Bursa Malaysia. Therefore, similar research conducted in the future may include other types of businesses, such as non-listed public companies or private companies. The inclusion of non-listed companies or private companies could very well change the results obtained. This study focused only on one part of CSR activities which was corporate philanthropy. Future research may be able to focus on CSR as a whole.