The Consumer's Impact on Reporting Quality: A Content-analysis of Danish CSR-Reports

Abstract

In 2009, the Danish Business Authority introduced the comply or explain model, which made Corporate Social Responsibility (CSR)-reporting mandatory for certain companies and created a beneficial research environment to study CSR. There are different quality frameworks for CSRreporting, which means the reports vary in length and quality. Thus, there is a need for evaluating the quality of CSR-reports. CSR is closely connected to stakeholder theory and consumers are seen as a primary stakeholder, which motivates a study focused on this particular stakeholder group. In this thesis, differences in Danish consumer-focused companies’ (CFCs) narrative quality patterns in CSRreports are investigated. Specifically, the narrative quality patterns are found through content analysis and subsequently applied in a multiple regression. Two frameworks are used as quality patterns: Sustainability Worldviews and Disclosure Quality. Sustainability Worldviews consist of five stages ranging from very weak to very strong sustainability. The Disclosure Quality is determined by the Length, Readability, Tone, Horizon- and Numerical content of the reports. Keyword frequencies and characteristics in the reports are used to determine scores in each of the categories of the frameworks. A high keyword count relative to the total wordcount gives a report a high score in a category. These scores are then used as dependent variables in a multiple regression and tested against companies’ presence in a consumer-focused industry. The combination of content- and statistical analysis focusing on consumer-focused industries is a contribution to the literature, as it uses an alternative method to analyze the quality of CSR-reports in an area calling for more attention. The results indicate a higher reporting quality in CFCs based on the narrative quality patterns. In the Sustainability Worldviews, the results show a positive relationship between Stage 5, very strong sustainability, and CFCs. The results also indicate a higher Disclosure Quality, as there is a positive relationship between CFCs and Readability, Length and Horizon-content. Together, the findings suggest that stakeholder pressure from consumers is more important compared to other stakeholders but also open a palette of other possible explanations. This calls for further research focusing on why CFCs might report of higher quality. This study also contributes with a method to validate the quality of reporting. Here, future research could aim to refine the analysis of quality in CSR-reporting by considering additional aspects of CSR-reporting narratives or by further developing the measures used in this study by applying them on different samples.