Do well-reputed companies carry out higher quality social reporting? An empirical approach
| DOI | https://doi.org/10.1108/JIC-06-2020-0214 |
| Published date | 10 December 2020 |
| Date | 10 December 2020 |
| Pages | 889-917 |
| Subject Matter | Information & knowledge management,Knowledge management,HR & organizational behaviour,Organizational structure/dynamics,Accounting & finance,Accounting/accountancy,Behavioural accounting |
| Author | Francisca Castilla-Polo,María Del Consuelo Ruiz-Rodríguez |
Do well-reputed companies carry
out higher quality social reporting?
An empirical approach
Francisca Castilla-Polo
Financial Economy and Accounting, Facultad de Ci
encias Sociales y Jur
ıdicas,
Jaen University, Universidad de Ja
en, Jaen, Spain, and
Mar
ıa Del Consuelo Ruiz-Rodr
ıguez
Financial Economy and Accounting, Jaen University, Universidad de Jaen,
Jaen, Spain
Abstract
Purpose –The purpose of this research objective was to analyse social reporting within MERCO Business
companies both from the point of view of the quantity of information disclosed and the references about their
quality. This approach constitutes a novelty with respect to previous literature on the subject.
Design/methodology/approach –This paper assesses how social reporting is being carried out by the
companies included in the MERCO Corporate Reputation Business Monitor, MERCO Business, during the
period 2014–2016. The methodological design include the construction of a weighted index based on two
unweighted indexes related to the quantity revealed and the quality detected. In addition, thisstudy integrates
intellectual capital and social responsibility approaches in order to deep into these voluntary disclosures.
Findings –While social reporting is considerable from a quantitative point of view within MERCO Business
companies, they do not reach very high levels of quality, which is good to counteract the final value of the
quantity–quality index that the authors’propose.
Research limitations/implications –In MERCO Business companies, quantity is not a proxy for quality
within social reporting. In this sense, only considering both dimensions it will be possible to assess these
disclosures in a more complete way.
Practical implications –This study allows a more accurate and comparable view of social reporting than
those studies that only focus on how much information is disclosed. Besides, it involves an important advance
in the identification of the relative quality of social reporting, opening a new line of research that will be key to
comparing this type of disclosures in a more homogeneous way. Likewise, the results can be appliedin future
studies in the intellectual capital field given the complementarity between both types of disclosures.
Social implications –Likewise, these results will be of interest for future actions aimed at regulating the
improvement of the quality of social reporting in the hands of managers, investors and regulators.
Originality/value –The authors have tested the value of quality in social reporting using a weighted index
amongst the most reputable companies in the Spanish scenario. These disclosures have been compared with
and without the use of it in order to deduce its value to obtain valid conclusions about social reporting.
Keywords Reputation, Intellectual capital reporting, Quantity, Quality, Social reporting
Paper type Research paper
1. Introduction
Intellectual capital (IC) and sustainability are complex, comparable and mutually supportive
issues (Massaro et al., 2018). For this reason, within the different formats used by companies
to reveal their social and environmental performance, it is not surprising to find references
about their IC (Oliveira et al., 2010;Cinquini et al., 2012;Castilla-Polo and Ruiz-Rodr
ıguez,
2017). In fact, for some time now, the integration of formats to disclose IC and social
information has been proposed (Del Bello, 2006;Castilla-Polo and Gallardo-V
azquez, 2007;
Pedrini, 2007;Veltri and Nardo, 2013). In contrast with the reduced use of specific IC reports
(Tejedo, 2016), the high interest of companies in publicizing their social behaviour, practices
widely known as social reporting (SR) [1], follows a growing trend (KPMG, 2017). For all the
above, SR is used as a strategic framework to signal IC and at the same time, a way to gain
Companies and
higher quality
social
reporting
889
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1469-1930.htm
Received 29 June 2020
Revised 11 September 2020
29 October 2020
Accepted 27 November 2020
Journal of Intellectual Capital
Vol. 22 No. 5, 2021
pp. 889-917
© Emerald Publishing Limited
1469-1930
DOI 10.1108/JIC-06-2020-0214
knowledge about IC (Cinquini et al., 2012). This leads us to consider SR as a non-specific route
for the analysis of IC such as that of Cinquini et al. (2012),Oliveira et al. (2010) and Tejedo and
Araujo (2020).
In this study, we have analysed the case of companies with an excellent reputation, since
we understand that this is the main intangible asset for achieving sustainable competitive
advantages (Lourenco et al., 2014) and a source of significant external/relational capital (Duff,
2016). According to Fombrun and Shanley (1990),SR–as a way to show social
responsiveness –may influence stakeholders’judgements, which are the foundation of
reputation. Surroca et al. (2010),Dyduch and Krasodomska (2017) and Castelo and Lima
(2006) also refer to the role of social objectives in the creation/improvement of a better
reputation for companies. Specifically, the research on reputation management warns of the
need to develop a good reporting strategy, especially in those issues included within the IC
and SR spheres (Axjonow, 2018;Birkey, 2016;G€
urel et al., 2012).
The direct relationship between SR and reputation has been extensively studied
(Axjonow, 2018;Oyewumiz et al., 2018;Dyduch and Krasodomska, 2017;Birkey et al., 2016).
We must also highlight the positive relationship between IC disclosures and reputation
(Oliveira et al., 2010), in which the case of human capital stands out (Ginesti et al., 2018).
However, there is also the opposite sense of this relationship, and according to recent research
it is to be expected that companies with a better reputation will make social disclosure of a
superior level. On precisely this topic, in a two-way analysis of the reputation–SR
relationship, Castilla-Polo and S
anchez-Hern
andez (2020) found slight differences in favour of
the reputation–SR direction of this relation. Our study starts from this last approach,
assuming that better reputation should lead to better and higher quality SR, considering the
IC information included in these disclosures in a general way. However, it is not our objective
to differentiate both types of disclosures. See Appendix for a comprehensive overview of the
IC–SR research context used as our starting point.
In the literature on SR, quality appears comparatively less studied than quantity. Alotaibi
and Hussainey (2016) highlight the existence of a greater interest amongst social researchers
in analysing its extension to the detriment of the study of its quality and Brammer and
Pavellin (2008) point out the limited interest in quality is due to the difficulty of analysing it.
Most of the time, quantity is often used to draw conclusions about quality. We agree with
Beretta and Bozzolan (2004) when they stated that the quantity of disclosures is not a
satisfactory proxy for its quality. Nonetheless, this vision of quality is supported by a
substantial number of studies because of its easy empirical implementation.
Linked to the above, the main critique of SR research is summarized by Michelon et al.
(2015, p. 60) under the following discourse: “despite the widespread popularity of them,
concerns have been raised as to whether their introduction and development is designed
simply to suggest a positive image of the organization, being essentially one-sided and
incomplete, or to communicate its effective commitment by recognizing and discussing
environmental and social challenges and problems”. In short, these authors demand observe
the degree of commitment to SR which justifies the need for more research in terms of quality,
an issue already pointed out by Beretta and Bozzolan (2008). This idea is shared in the IC
disclosure studies where there is an equally growing need to increase their quality (Duff, 2018;
Cuozzo et al., 2017;Melloni et al., 2015). Both types of voluntary disclosures should improve
the trust of their target audience with quality, a research gap we propose to analyse.
Regarding the methodological approach prevailing in this study, we support the
development of an index for SR (Laskar and Maji, 2018;Dias et al., 2017;Garg, 2017;Alotaibi
and Hussainey, 2016;Habek and Wolniak, 2016, amongst others) and IC information included
in SR (Ruiz-Rodr
ıguez and Castilla-Polo, 2019;Ferreira et al., 2017;Lim et al., 2017, between
others) as do the vast majority of antecedents. An index allows a summary measure to be
built for voluntary disclosures which includes not only quantity issues but also quality and
JIC
22,5
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