Investigating the relationship between corporate social responsibility disclosure and cost of capital, the role of stakeholder preferences and financial transparency

Dissertation to receive the master's degree "MA"

Field: Accounting

Tension: Accounting

Abstract:

Social disclosure and reporting is the process of transferring information related to the social and environmental effects of the company's economic performance to society. The expansion of the organization's responsibility implies that the organization's responsibilities have gone beyond what it was in the past, that is, "providing money for shareholders". Moving in the direction of social and environmental responsibilities is a necessary and vital factor that leads to the continuation of the organization's activity in the long term. This research is based on the purpose of fundamental research and based on descriptive-survey research method. The statistical population of the present study includes all the companies admitted to the Tehran Stock Exchange, a systematic (systematic) sampling method was used to determine the sample size, and 98 companies were selected as a sample. Hypothesis number two, which is rejected with an error level of 0.03, and the opposite hypothesis is rejected, and as a result, the effect of reducing the cost of monitoring by investors and the cost of issuing shares at a high level of financial transparency is rejected, and hypothesis number three is rejected with an error level of zero. The company and related disclosures have been on the agenda for years. Moving in the direction of social responsibilities is a necessary factor that leads to the continuation of the company and organization in the long term. The meaning of social responsibility is that the company should always consider itself a part of the society and feel responsible towards the society and strive to improve public welfare independently of the direct interests of the company. Social disclosure and reporting is a tool for informing the society about the social responsibilities of the company and the organization.

Social reporting and disclosure is the process of transmitting information related to the social and environmental effects of the company's economic performance to the society. The expansion of the organization's responsibility implies that the organization's responsibilities have gone beyond what it was in the past, that is, "providing money for shareholders". Moving in the direction of social and environmental responsibilities is a necessary and vital factor that leads to the continuation of the organization's activity in the long term. Extensive studies and research in late 2002 by the PricewaterhouseCoopers International Institute indicated that nearly 70% of senior managers believe that showing the company's social responsibilities has a significant impact on the profitability of the company's activities. The cost of capital is the minimum rate of return that is required to maintain the company's market value. The cost of capital is considered as a fundamental factor in decisions related to investment, capital budgeting, working capital management, establishing an optimal financial structure, helping to measure performance and determining the value of the company by helping to discount cash flows. (Khosh Taynet, 2013)

According to this point of view, company managers should feel responsible towards their shareholders and investors. By carrying out activities that arise from the company's social concerns, the company achieves some degree of self-governance, and with such self-imposed controls, it reduces government interference. This issue, in turn, reduces conflicts between government organizations and institutions. In the general view, this view is consistent with the third stage of the historical process, according to which, the organization is required to work towards solving the issues and problems of the society. As a result, profitability is only one of the goals of an economic enterprise. Proponents of this philosophy believe that because the society has given permission to the company to operate and use scarce resources and created the right environment for it to earn profit, the company should consider itself indebted to the society and always consider itself to be its servant. It is caused by the activities of the business unit.. Since every business unit is a member of the society in which it operates and continuously interacts with other members of the society, and based on the unwritten social contracts between the members of the society that are established to protect the interests of all members, it is necessary for the business unit to be aware of its obligations and responsibilities and not limit them to protecting the interests of shareholders, but other obligations and responsibilities towards other groups in the society such as creditors, employees, customers and sellers and groups in the society as well as the environment around itself.

Also, social accounting can be defined in relation to the information published by an organization that allows interested parties to evaluate the organization's performance in facing social issues (positive and negative).

Social accounting is the process of collecting, measuring and reporting transactions and the mutual effects of these transactions between a business unit and its surrounding society. Social accounting, through measuring and reporting the mutual effects of a business unit and its surrounding society, evaluates the ability to fulfill social obligations. makes it possible.

The issue of social responsibility is not separate from this issue, because there is no consensus among management scientists regarding the provision of a single definition of social responsibility. "Griffin" and "Barney" define social responsibility as follows: "Social responsibility is a set of duties and obligations that the organization must perform in order to maintain, care for, and help the society in which it operates." "Derek French" and "Hiner Saward" in the book "Culture of Management" write about social responsibility: "Social responsibility is a duty of private institutions, in the sense that they do not have a negative impact on the social life in which they work. The amount of this duty generally includes duties such as: not polluting, not discriminating in employment, not engaging in unethical activities and informing the consumer about the quality of the products. It is also a task based on positive participation in the lives of people in the society". (Khosh Taynet, 2013)

In this research, we are trying to reach the conclusion that what is the relationship between the disclosure of corporate social responsibility and the cost of capital according to the role of the interests of the beneficiaries and financial transparency?

1-2 The importance and necessity of conducting research

Social responsibility is the commitment of decision makers for actions that, in general, in addition to providing for their own interests, It also improves the well-being of the society. In this definition, there are several elements: First, social responsibility is an obligation that institutions must be accountable for. Secondly, institutions are responsible to avoid polluting the environment, discriminating in employment matters, neglecting to meet the needs of their employees, producing harmful products and the like that harm the health of the society. And finally, organizations should try to improve the social welfare accepted by the majority of the society by allocating financial resources. Such actions include: helping the country's culture and cultural institutions and improving the quality of life. In the end, the meaning of social responsibility is that, because organizations have a major impact on the social system, the way they operate must be such that there is no harm to the society, and in case of harm, the relevant organizations are required to compensate it. In simpler words, organizations should act as a component related to the larger system in which they are located. (Foroghi, 2017)

It should be noted that there is a difference between management ethics, social accountability, and social commitment with social responsibility. In this regard, "Andersen" writes in his book: "Both terms management ethics and social responsibility are related to the observance of the values ??and norms and moral principles of the society and the achievement of the organization's goals by the managers. With the difference that social responsibility is related to the macro issues of the organization and ethics is related to the individual behavior of managers and employees. It is of special importance and necessary. 1-3 Research Objectives Our main objective is to investigate the relationship between corporate social responsibility disclosure (CSR) and the implicit cost of capital stock. Voluntary reporting of voluntary corporate responsibility can be a self-selection process.