Purpose: This study examines the influence of corporate social disclosure on firm performance within the context of Bangladesh.
Design/methodology/approach: This study develops hypotheses with the light of legitimacy and signalling theory using top 200 firms listed on the Dhaka Stock Exchange, Bangladesh. Corporate social disclosure (CSD) data are based on the period from 2011 to 2013, and the firm performance (FP) is based on the respective following year 2012 to 2014. A corporate social disclosure index (CSDI) including three categories (long-term, short- term and general disclosure) is constructed to measure the extent of social disclosures in annual reports. Firm performance is measured based on three indicators including Return on Asset (ROA), Market Capitalization, and Tobin Q. Ordinary Least Square (OLS) and Two Stage Least Square (2SLS) are used in analysing the data.
Findings: It is found that there is a significant relationship between corporate social disclosure and the following year's firm performance for every performance indicator. It is also found that long-term disclosure plays a key role in influencing the firm performance.
Originality/ value: CSD is country-specific and, hence, the effects of corporate social disclosure on firm performance can vary from country to country. This study enhances understating of such relationship as it considers within the context of a developing country. The finding of this study is robust as every indicator of firm performance is found to be related positively to firm performance.