Content analysis is used in this study to enable a critical examination of the volume, quality and nature of social reporting practices in the annual reports of 68 companies from nine AME countries, Saudi Arabia, Qatar, Bahrain, Oman, Kuwait, Syria, Jordan and Egypt (see Appendix A). The examination aims at exploring the potential of these practices to act as
‘emancipatory/radical’ or ‘repressive/counter’ radical forces in the societies of the nine Arab countries and explaining possible factors and reasons behind the quality and nature of these disclosures in line with the contextual and theoretical analysis carried out in previous sections. Content analysis also aims at bringing insights from social reporting practices in an Arab, non-Western context and giving a voice and value to the particular culture and needs of this context.
As Gray et al. (1995a) suggest, content analysis, as a research method, has been widely used in the social accounting and corporate social reporting (CSR) literature (see, for instance,Ernst & Ernst, 1976;Guthrie & Mathews, 1985; Cowen, Ferrari, & Parker, 1987; Tinker & Neimark, 1987; Harte &
Owen, 1991; Guthrie & Parker, 1990; Roberts, 1991; Adams, Coutts, &
Harte, 1995; Adams, Hill, & Roberts, 1998; Adams & Laing, 2000; Gray et al., 1995a;Gray, Kouhy, & Lavers, 1995b; Buhr, 1998; Unerman, 1999, 2000; O’Dwyer, 1999; Campbell, 2000; Lodhia, 2000; Wilmshurst & Frost, 2000). Content analysis places narrative text, or other types of communica- tion, into categories to facilitate analysis in order to derive conclusions about
‘thematic content’ (Budd, Thorp-Robert, & Donohue, 1967, cited inBuhr, 1998; Krippendorff, 1980 cited in Unerman, 1999). Content analysis, as a result, has been deemed to be an appropriate research method for studying corporate annual reports (CARs) in general and for CSR analysis in particular (Unerman, 1999). The method helps in ‘structuring essentially unstructured documents’ in order to highlight matters that many stakeholders will not have necessarily been so consciously aware of (Hines, 1988cited in Unerman, 1999) and can deal with large volumes of data (Unerman, 1999).
Most CSR studies focused on one corporate document, namely the CAR as the sampling unit (Unerman, 1999). The focus on the CAR in CSR research could be due to a number of important characteristics of this
corporate document. First, the CAR is a ‘systematically produced’ statutory and, at least partially, standardised document that is known in advance should exist for each year studied – the latter point, allowing in turn, for year on year comparison (Gray et al., 1995a;Unerman, 1999;Bebbington, n.d.). Further, the document is the most widely distributed of all public documents and, therefore, the most accessible to researchers (Unerman, 1999; Campbell, 2000). Second, the CAR is viewed by researchers as an important document that is used by the organisation to construct its own social imagery (Gray et al., 1995a). Macintosh (1990)explained this idea further when stating that the annual report represents ‘‘y a permanent expression of those social issues which top management regard as important and wish to communicate to shareholders and the public, and so are a record of the entity’s historical social consciousness’’ (Macintosh, 1990, p. 168, cited inBuhr, 1998, p. 169).Tinker and Neimark (1987)go further to suggest that the social role of the CAR is not limited to reflecting the organisation’s ‘historical social consciousness’, but also playing a part in forming the worldview or social ideology that fashions and legitimises particular social conditions and dimensions such as a woman’s place in society. The above characteristics combined have made the CAR a very interesting document for CSR researchers to study. There is a concern in the literature, however, regarding this nearly sole focus on CARs as the sampling unit. As such, the focus may result in representing an incomplete picture of disclosure practices by corporations, since companies do use a number of other reporting mediums (Roberts, 1991; Wilmshurst & Frost, 2000). Furthermore, this emphasis in the CSR literature on formal accounts prepared by organisations is privileging these corporations, which prioritises/emphasises shareholders as agents of social change and somewhat ignores the role of the state and wider public sphere (Lehman, 1999). This current study, while recognising the limitations of solely using CAR as the sampling unit, found that attempts to obtain other types of documents from the nine countries, including governmental documents or press releases, are very difficult. This difficulty could be due to the context whereby Arab countries, after gaining their independence, moved to nationalisation and a centrally planned economy where the bulk of investment is in public sector companies. This sector is accountable to the government and reporting, therefore, manifested in detailed reports made available to governmental bodies at least ostensibly representative of the public interest. These reports are not available for direct public use.
The CSR content analysis literature does not provide a clear reference to recording units (categories of analysis) (Unerman, 1999), with most studies
basing their categories of analysis on the framework of either Ernst and Ernst (1976) or Guthrie and Mathews (1985) (Adams et al., 1998cited in O’Dwyer, 1999) or Gray et al.’s (1995a) study. Gray et al.’s (1995a) framework identified five major themes for categorising CSR in the mainstream social accounting literature. These themes concern the way that the ‘natural environment’, ‘employees’, ‘community’, ‘customers’ and
‘others’ are reported on. The structuring of the research instrument in this study with its definitions and categories of analysis is based on this social accounting literature (for instance, Ernst & Ernst, 1976; Guthrie &
Mathews, 1985; Cowen et al., 1987; Tinker & Neimark, 1987; Harte &
Owen, 1991; Guthrie & Parker, 1990; Roberts, 1991; Adams et al., 1995, 1998, 2000; Gray et al., 1995a, 1995b; Buhr, 1998; Unerman, 1999, 2000;
O’Dwyer, 1999;Campbell, 2000;Lodhia, 2000;Wilmshurst & Frost, 2000;
Kuasirikun & Sherer, 2004) as well as the appreciation of the context analysis of the nine AME countries. In this manner, given that social accounting literature in general and in relation to countries in the AME in particular are not very well developed, both deductive and inductive approaches have been employed in order to construct a research instrument within which social disclosure in the nine countries can be categorised. The result of this process is the research instrument shown inAppendix B. The researcher conducted a pilot study on the initial instrument to ensure that the categories felt ‘right’ and were ‘workable’ and that categories included in the instrument capture the volume, quality and nature of social reporting by Arab companies. The initial instrument, however, did not prove sufficient for analysing social reporting in the nine Arab countries, as there was information that clearly had to do with social disclosure that did not fall into the initial research instrument’s categories. Furthermore, this initial instrument failed to capture the trends and particular nature of social reporting by Arab companies. As a result, the categories were further refined based again on the relevant literature, in addition to a number of inductive categories that were added after the review of the 68 annual reports. Indeed, the fourth dimension in the research instrument, as well as other Islamic and national/governmental considerations in the economic dimension, was added as the result of these pilot studies. The final categories produced, therefore, reflect the researcher’s reading of the annual reports, her appreciation of the AME context and the relevant social accounting literature. The research instrument used for this study contains four major disclosure dimensions aimed at facilitating the analysis of the volume, nature and quality of social reporting by the 68 companies. These dimensions are ‘economic’, ‘environmental’, ‘general social’ and ‘other
cultural characteristics of the reports’. A set of 22 categories of analysis is classified under these four disclosure dimensions. The research instru- ments and categories for each of these dimensions are contained in Appendices B–E, respectively.
The study, while reporting on the volume of disclosure under different social reporting categories, is mainly concerned to highlight the nature and quality of these disclosures in order to explore the extent of accountability and transparency inherent in these disclosures. Therefore, capturing the data using content analysis is done by analysing sentences (not counting them). In a similar vein,Gallhofer, Haslam, and Ten (1996)paper’s concern was to explore in greater detail, through an interpretive content analysis, the character of environmental reporting (p. 73). Their analysis concentrated on analysing the content and quality of the environmental disclosure, rather than counting words or sentences. They provided quotations from 38 UK companies’ annual reports for the year 1993 and analysed these quotations in relation to their quality and nature. In doing so, they commented on characteristics such as whether disclosure by the 38 UK companies was narrative, monetary or non-monetary and whether these disclosures were verified by a third party or not. This current study analyses sentences in relation to the understanding of social accounting given earlier, and allocates these disclosures to the suitable categories. In addition, similar to Gallhofer et al. (1996), the study aims at analysing the meanings of these disclosures and relating these meanings to the context analysis and ‘basic context data’. This ‘basic context data’ in the mainstream CSR literature is mainly related to company size, profitability, ownership and industry sector (Gray et al., 1995b). This study, however, goes beyond such limited factors to consider the main social, economic, political and environmental factors in Arab countries that may reasonably be taken to have an effect on corporate choice and the levels of social data disclosed (or not disclosed) in annual reports. The quality of disclosures was assessed when any of the categories and subcategories manifested in disclosure. Additional information was then collected including whether reporting was only concentrating on ostensibly neutral or positive information, or included some critical/negative information as well. In addition, it was recorded whether financial and qualitative information was provided and the level and sophistication of the information was commented upon. For example, it was noted whether financial information concerned only conventional financial data such as investments and provisions, contingent liabilities, fines and financial savings or included more socially inclined reporting such as value added statements, environmental balance sheets, full cost analysis or advanced sustainability
reporting like Life Cycle Analysis (LCA). Other measures to determine the quality of social disclosures included a search for evidence of independent verification or stakeholders’ engagement and feedback mechanisms.
Furthermore, illustrations and citations taken from the annual reports are presented and analysed in order to better critically evaluate the level, nature and quality of disclosure by the 68 Arab companies. The assessment has also concentrated on what social-related issues are made visible and what are not. All social disclosures considered in this study, with the exception of Zakat obligation disclosures required by Saudi companies, are non- mandatory ‘voluntary’ disclosures. Therefore, the final research instrument contained no significant mandatory disclosure requirements for the period under exploration in any of the nine countries involved in the study.
A list of the FT’s top 100 companies in the Middle East was obtained in May 2001. The researcher attempted to contact each of these companies that fell in the nine countries in the study, in order to request the most recent annual report. The response level was low. Consequently, the researcher tried to download and print the annual reports of the rest of the companies from the Internet. The researcher, however, was not always able to find a website in respect of the companies in the top 100 list. Furthermore, not all the companies having a website included their reports on their website. In addition, the top 100 list did not include any companies from Egypt or Syria. The researcher, therefore, tried to obtain as many reports as she could from the nine countries in the sample, whether these were included in the FT top 100 list or not. These efforts included visiting companies in Syria and requesting their annual reports and asking friends to collect annual reports.
These reports should in principle be publicly available, but in practice it is difficult for non-residents to obtain them.20The researcher’s efforts yielded 68 annual reports from the nine Arab countries (see Appendix A).21 Difficulties in obtaining annual reports from Arab countries have, on some occasions, been documented in the social accounting literature. For instance, Hanafi and Gray (2005) share the difficulties which faced them in obtaining CARs from listed Egyptian companies. In this current study, all companies contacted were requested to provide both their most recent annual reports and any most recent separately published social report (if any). Only one company in the sample published a social report (Bahraini Telecommunications Company). This report was analysed as part of the annual report. Arab companies in general accommodate social disclosure in their average of 35–45 pages annual reports. The reports, especially the ones produced by GCCs and Jordanian companies, look significantly similar to those produced by Western companies. The reports usually contain Arabic
and English sections. The two sections were checked and proved to be the same. Only in Syria and Egypt were the reports obtained produced in the Arabic language only. The time period in which companies were contacted was between May and December 2001. All the reports received or printed from the Internet were mostly related to year 2000 annual reports. A few reports related to 1999. The majority of companies (85% of the sample) are public companies listed on the stock exchange. Only four companies are characterised by a joint ownership between the government of the country and the private sector and five companies are commercial state-owned companies.22 The sample includes companies from different sectors (see Table 1), with majority of these companies being from the financial sector.
This is due to the fact that a significant number of Arab companies registered on the stock exchange belong to the financial sector.23