An Investigation into the Extent of Corporate Social Responsibility Reporting; Survey of Companies Listed in Nairobi Securities Exchange in Kenya

Abstract

Research findings have revealed that many companies have failed due to poor management of the resources prompting the stakeholders to be concerned about how the management utilizes the resources at their disposal. This has led to the increased demand for information about how the managers are utilizing shareholder resources and whether the diverse stakeholders' interests are being safeguarded. As a result of this companies have adopted the practice of disclosing information on corporate social responsibility activities. This concept has gained prominence in many developed companies, but in developing countries like Kenya the practice is done on the voluntary basis. Hence the purpose of this study was aimed at exploring the extent to which listed companies in Kenya have adopted the practice of CSR reporting. Being guided by Legitimacy theory, stakeholder theory, and institutional theory, the study employed descriptive research design to identify the extent of CSR disclosures among the 37 sampled companies which were selected randomly from the population of the 60 companies listed in Nairobi securities exchange in Kenya. Document analysis was used to collect primary data from the companies' annual reports, while secondary data was collected from online journals and books. The results of the study revealed that CSR reporting in Kenya has improved but still much needs to be done to encourage the practice. Further analysis revealed that there is no significant difference in CSR reporting between the service sector and the manufacturing sector. With regard to disclosure by industry categories, the automobiles, insurance and banking had the highest level of CSR disclosures while telecommunication and investment industries had the lowest with significant dispersion among the industry categories.  Based on the disclosure themes the results reveal that the companies report more information only on corporate governance because it is mandatory and on community involvement as an indicator of a shallow definition of sustainability reporting. The product/service safety as well as the employee welfare was the least reported. Based on these findings, this study recommends that CSR reporting be made mandatory and the accounting regulators provide guidelines and training on the quality, quantity and content of CSR reports so as to encourage and at the same support the implementation of CSR reporting practices in the country.