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Corporate political connection and corporate social responsibility disclosures: a neo-pluralist hypothesis and empirical evidence
journal contributionposted on 2018-01-01, 00:00 authored by Mohammad MuttakinMohammad Muttakin, Dessalegn Mihret, Arifur KhanArifur Khan
Purpose – This study examines the association of corporate political connection with the level of voluntary corporate social responsibility (CSR) disclosures to determine how the relationships between the state and the corporate sector influence CSR engagement. Design/methodology/approach – Based on a neo-pluralist view of legitimacy theory, which conceptualises the state as a concentration of power amenable to exploitation by the corporate sector, the study develops and empirically tests a hypothesis that CSR disclosures are inversely associated with political connection. A sample of 936 firm-year observations is used with data collected from annual reports of companies listed on the Dhaka Stock Exchange in Bangladesh from 2005 to 2013. Findings – Results indicate that corporate political connection is associated with reduced CSR disclosures. This finding suggests that the perceived need for CSR disclosures as a legitimation strategy diminishes for politically connected firms. The finding supports a neo-pluralist argument that political connection could enable firms to eschew stakeholder pressure associated with potential legitimacy threats originating from poor CSR performance. This conclusion challenges the pluralist view of legitimacy theory that considers the state as a neutral arbiter resolving conflict among stakeholder groups in society. Originality/value – The study makes a significant contribution to the literature by developing a neo-pluralist theorisation of voluntary CSR disclosures within legitimacy theory and empirically testing it. Because prior empirical CSR disclosure research is largely underpinned by the pluralistic conception of society, examining this phenomenon from a neo-pluralist perspective enables a more complete understanding of CSR disclosure behaviours of firms.