Sustainability accounting: The case of corporate social health accounting and reporting

Abstract

This thesis contains three essays that examine corporate social health accounting and reporting (CSHAR) in relation to firm- and country-level governance, firm value, and tax avoidance within an international cross-country context along with an introductory and concluding chapter. The essays present interconnected studies on health within the broader social and environmental accounting (SEA) literature, starting with a systematic review of the current state of studies on CSHAR from 1980 till Feb-2023, as well as quantitative empirical analyses of the determinants and effects of CSHAR in various contexts and industrial settings over an inclusive period from 2002 to 2020. The first essay presents a systematic literature review (SLR) of theoretical, empirical and conceptual studies on CSHAR within the extant accounting literature found predominantly in accounting and interdisciplinary journals. The study reviews 106 articles published in English from 1980 to Feb-2023 and identifies studies across 27 countries within 26 top-rated journals. The SLR offers several findings. First, we find that existing CSHAR studies are largely descriptive and/or rely on single rather than integrated theoretical perspectives. Second, we show that the extant studies have focused predominantly on the financial and non-financial outcomes of CSHAR, with little attention to the determinants of CSHAR. Third, we identify a number of research design weaknesses including a lack of cross-country studies, mixed-methods approach and rigorous quantitative studies. Finally, we present directions for future CSHAR research. In the second essay, the thesis examines the effects of governance (firm- and country-level) on CSHAR, the impact of CSHAR on firm value, and the moderating impact of governance on the relationship between CSHAR and firm value. This investigation is done using data from the Refinitiv database constituting 51,936 firm-year observations from 9,736 active firms on the environmental, social, and governance (ESG) database from 75 countries over the period 2002–2020. Using high-dimension fixed-effects and two-stage least squares (2SLS) methods of analysis, the study reveals the following findings. First corporate governance (CG) and national governance (NG) have a positive impact on CSHAR. Secondly, CG has a positive impact on FV. Third, CG and NG have a significant positive impact in moderating the relationship between CSHAR and FV and thus, firms may be engaging in CSHAR for ‘substantive’ reasons as postulated by the neo-institutional theory. These results are robust to alternative estimation techniques and endogeneities. The third essay investigates the impact of CSHAR on corporate tax avoidance (CTA) and the moderating impact of international tax competitiveness (ITC) on the relationship between CSHAR and CTA. Using a large sample of cross-country data covering 1,971 firms (10,691 firm-year observation) from 47 countries over the period 2002 to 2020, the study analyses these relationships using the high-dimension fixed-effects and 2SLS estimation methods. First, the findings reveal that firms engage in CSHAR as a way of shielding negative actions, such as CTA to ameliorate the adverse impact on firm reputation. This action tends to be more pronounced in common law countries than in civil law countries, where the results are insignificant. Secondly, the ITC is found to significantly moderate the relationship between CSHAR and CTA. Hence, firms in highly competitive tax jurisdictions have a higher tendency to use CSHAR, as a means of legitimizing their negative actions, including tax avoidance.

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Identifiers

ORCID for Gifty Adjei-Mensah: orcid.org/0000-0001-8957-2766

ORCID for Collins Ntim: orcid.org/0000-0002-1042-4056

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