The Awareness Of Insurance Companies In Malaysia Regarding Corporate Social Responsibility Accounting Essay


The aims of this survey is to research the consciousness of insurance companies in Malaysia sing corporate societal duty ( CSR ) revelation and to analyse the extent of CSR revelation activities in Malaysia with respect of insurance industry. The sample selected from the list of accredited insurance companies from the Bank Negara Malaysia ‘s web site. The findings indicate that the insurance companies in Malaysia are cognizant of CSR revelations and preferred utilizing company ‘s web site to circulate the CSR information. There is positive relationship between corporate societal duty and company ‘ size. In add-on, the community subject is the most popular CSR revelation while the least is environment subject. Then, the happening support that there is no important relationship between ownership construction and CSR revelation.


Many research workers done their research of corporate societal duty ( CSR afterlife ) in developed and developing states such as United Kingdom, Greece, Nigeria, Kenya, New Zealand and Malaysia ( Day and Woodward, 2009 ; Obalola, 2008 ; Adams and Hossain, 1998 ; Janggu et Al, 2007 and Mohd Nazli, 2007 ; Ponnu and Okoth, 2009 ) . But most of them, non specifically do the research to selected industry like insurance industry ( Obalola, 2008 ) . This might due to insurance company is under fiscal sector and the presentations of the one-year study are different from other sectors like trading, plantation and belongings sector. The readyings of fiscal statements of insurance industry are based on ordinance set up by Bank Negara Malaysia.

The insurance industry in Malaysia is governed by Insurance Act 1966. Before that, the insurance industry was dominated by foreign insurance companies and easy the Numberss reduced and the addition of Numberss of domestic or local insurance companies ( Mansor and Radam, 1999 ) . The research workers besides stated that the growing of the insurance industry has contributed towards increased employment chances in Malaysia. Back to twosome of the old ages, the insurance companies have tried to last and catch the attending of policyholders in Malayan concern. Therefore, the CSR disclosures play an of import function to insurance companies to see high growing over the old ages ( Mansor and Radam, 1999 ) . Van den Berge and Louche ( 2005 ) stated that the insurance sector presents some feature, which make it an interesting instance for using the analysis of CSR revelation.

Presents, the insurance industry has widened in Malaysia. But, the consciousness of the companies sing CSR perceptual experience is likely ‘warm ‘ and non much reacting the issues to the society ( Nik Ahmad and Abdul Rahman, 2005 ) . Since 2006, the public listed companies in Malaysia should unwrap the CSR activities in the one-year study that been regulated by Bursa Malaysia ( Bursa Malaysia, 2006 ) . This is to make consciousness among the companies towards the stakeholders and society. In add-on, the Ministry of Women, Family and Community Development had launched The Prime Minister ‘s CSR Award in 2007, to recognize companies that have made a difference to the communities in which they are active through their CSR programmes. This programme encourages the companies to unwrap the CSR activities and acquire ‘value-added ‘ to them when they are the victors.

The aims of this survey are to research the consciousness of the CSR revelation in insurance companies and to analyse the extent of the CSR revelation of insurance industry in Malaysia. Consequently, this survey is to reply the undermentioned research inquiries:

Are the insurance companies aware of CSR revelation?

To what extent the CSR revelation been implemented in insurance industry?

The reminder of the paper as follows. First subdivision of this paper highlights the literature reappraisal and development of the hypotheses. The 2nd subdivision addresses the research methodological analysis and the variables measuring. The 4th subdivision presents the treatment of the consequences. Finally, the decision and restriction of this survey.


Previous surveies have been determined different theories in order to analyse and explicate the corporate societal duty. Harmonizing to Moir ( 2001 ) , there are three theories which might explicate the CSR activities ; stakeholder theory, societal contract theory and legitimacy theory. Stakeholder theory is used to analyse the groups to whom the company should be responsible. Research done by Naser at Al. ( 2006 ) based on Qatari companies, they used stakeholder theory to explicate the fluctuation in the extent of CSR revelation.

A figure of similar surveies used legitimacy theory in effort to explicate the CSR revelations ( Naser at al. , 2006 ; Mior, 2001 and Nik Ahmad et al. , 2003 ) . Naser et Al ( 2006 ) stated that under legitimacy theory the company attempts to keep its endurance and continuity by voluntarily unwraping detailed information to society justifies the bing of the companies. Besides that, legitimacy theory is perceptual experience that the actions of the company are desirable ( Mior, 2001 ) . Harmonizing to Nik Ahmad et al. , ( 2003 ) , the legitimacy theory is the mode in which the company runs its concern and studies activities that influence the by the societal values of the society and community.

Hypothesiss development


The direction of the companies in insurance industry should aware the CSR construct. Haron et Al ( 2006 ) stated that trading and services and industrial merchandise industry show high revelation rate. While, Mohd Ghazali ( 2007 ) found that the industry and CSR revelation is non important. This might due to different industry focal point on difference country and non cognizant of the CSR construct. The hypothesis is as follows ;

H1 – The companies in insurance industry are cognizant of CSR revelation.


The relationship of CSR and size of the company had been used by most of the old research workers ( Janggu et al, 2007 ; Ponnu and Okoth, 2009 ) . Most of the old surveies found that, the larger the company, the more they unwrap the CSR activities. Study done by Haniffa and Cooke ( 2005 ) and Janggu et Al ( 2007 ) stated that there is important relationship between size and CSR revelation. This relationship besides supported by Naser et Al. ( 2006 ) that CSR revelation is associated with the house size. But, contradict to Ponnu and Okoth ( 2009 ) , there is no important relationship between house size and CSR revelation. Therefore, the difference in that determination, size is the following variable to develop hypothesis.

H2 – The CSR revelation in insurance industry is positively related to the size of the company.

Theme country

Bursa Malaysia stated four chief subject countries for CSR pattern ; environment, community, workplace and market place. These subjects are really of import to find the strategic CSR revelation which related to the relationship to clients and challengers ( Porter and Kramer, 2006 ) . Day ( 2009 ) besides being used these four subjects to analyze the revelation of CSR in the fiscal sectors in UK while Ponnu and Okoth ( 2009 ) in Kenya. Janggu et Al ( 2007 ) found that, the most popular subject revelation is human resource followed by environmental information and the least subject is information on companies ‘ engagement with community. While, Nik Ahmad et Al ( 2003 ) found that, the most disclosure subjects are country of merchandise and consumers followed by workplace. Haron et Al ( 2006 ) , stated that the highest figure of revelation is human resource subject. Ponnu and Okoth ( 2009 ) found that the Kenyan companies more likely to unwrap information respect to community engagement and followed by merchandise and consumers. Therefore, the overall statement leads to the undermentioned hyphothesis ;

H3 – There are no important relationship between CSR revelation and theme country of CSR

Ownership construction

In line with old surveies, the research workers examined the ownership construction with the extent of CSR revelation ( Janggu et al, 2007 ; Mohd Nazli, 2007 ; Darus et Al, 2009 ) . In Malayan insurance ownership construction, the company may be categorized into two groups. There are local and foreign ownership. Local ownership means the insurance company is incorporated in Malaysia and ain by the local citizen. While, foreign ownership means the insurance company is incorporated outside Malaysia but running and has the concern operation inside Malaysia and owned by the foreign citizen. These type of companies besides known as multi-national company. Harmonizing to Janggu et Al ( 2007 ) , the local ownership companies unwrap more information than foreign ownership companies. Then, Darus el Al ( 2009 ) besides stated that the foreign ownership is insignificantly related to the CSR revelation. So, the following hypothesis is ;

H4 – There are no important relationship between CSR revelation and ownership construction of the company



Datas were collected through study of one-year study and companies ‘ web site. The sample choice of companies based on simple random sampling. The selected samples are from life, general, and life and general concern companies. The lists of accredited insurance companies are obtained from the Bank Negara Malaysia web site. Therefore, merely five companies had been selected and accepted. Then, the one-year studies of each company for four old ages were downloaded from the company ‘s web site. Additionally, the informations findings were supported with the empirical articles and instance survey worldwide which are related to the CSR and insurance industry.

All relevancy files and paperss sing CSR revelations were downloaded. Like old survey, the content analysis was used in this survey ( Ponnu and Okoth, 2009 ; Mohd Ghazali, 2007 ; Nik Ahmad et Al, 2003 ; Janggu et Al, 2007 ; Darus et Al, 2009 ; Haron et Al, 2006 ) . Some surveies used interviews and studies to roll up the information ( Nik Ahmad and Abdul Rahman, 2005 ) . Due to the clip restriction and short period, the interview session or study can non be conducted.

Method ( Variable measuring )

Dependent variable

The dependant variable in this survey is degree of CSR revelation. The measuring used is the figure of words in the corporate one-year studies for twelvemonth 2006 until 2009. When the companies larger and profitableness in subject of size, more describing the CSR activities and non depending on the ownership construction, therefore the degree of CSR revelation will increase every bit good as the consciousness among the companies.

Independent variable

Location of CSR revelation

The consciousness of the insurance companies sing CSR revelation is tested utilizing the location of the CSR coverage, either in the one-year study or in the web site. Harmonizing to William and Ho Wern Pei ( 1999 ) stated that Australian and Singaporean houses unwrap significantly more CSR information on web site than in one-year studies while Hong Kong and Malayan companies did non supply any important differences. The location of CSR revelation in the one-year study is found out from CSR subdivision and Chairman ‘s Statements. While, in the company ‘s web site found out from CSR, events or community charity.


Size of the company measured by entire assets. Most old surveies used entire assets to mensurate the size. Naser et Al. ( 2006 ) had used company size to mensurate the degree of CSR revelation and measured by the house ‘s market capitalization, concern hazard and corporate growing. In this survey used entire assets and entire grosss of the companies in mensurating the CSR revelation.

Theme country

Bursa Malaysia had set up four focal country that the companies should focused ; environment, community, market place and workplace. These focal countries have same importance and important significance for the company itself and the stakeholder every bit good as the populace. The measuring for the subject countries are based on the activities involve or done by the companies from twelvemonth 2006 until 2009.

Ownership construction

Companies ownership besides one of the importance features of CSR revelation. This is because the ownership construction can impact the CSR coverage and activities ( Janggu et al, 2007 ; MOhd Ghazali, 2007, Darus et Al, 2009 ) . In this survey, the ownership constructions are based on foreign and local ownership that are different in term of integrated inside or outside Malaysia. When the companies incorporated outside Malaysia, they tend to unwrap more CSR to guarantee that the being accepted by the society and in the industry every bit good.

Therefore, the measurings of independent variables are given in Table 1.

Table 1

Concept of the independent variables

Explanatory variables


Awareness of CSR revelation ( AWARE )

The location of CSR revelation ; one-year study or company ‘s web sites

Size of the company ( SIZE )

Proxy: Entire assets and grosss

Subjects country ( THEME )

The activities done by the companies based on four subjects countries

Ownership ( OWN )

The ownership is either local or foreign ownership


Most of the company discloses their CSR in the company ‘s web site and in the one-year studies. This is due to easy to the stakeholders to cognize the activities done by the company. The consequences besides prove that twelvemonth 2009 is the most reported of CSR revelation among the four old ages. Although in twelvemonth 2009 the economic system is non ‘boom ‘ economic system, but the companies ‘ direction tried their best to unwrap the CSR coverage and affect the CSR activities.

The consciousness and apprehension of the companies sing CSR construct is measured by the location of CSR revelation. The consequence of H1 indicates that, most of the companies ( 100 % ) are cognizant the CSR construct and unwrap the activities in the web sites and one-year studies. About 40 % of the companies merely reported on the one-year studies and at the same clip have the CSR subdivision. Then, it can be concluded that they are more preferring used web sites to uncover or to show the activities to the stakeholders and the populace. This is might due to the web site itself are more easy to update the activities and unwrap to others. Furthermore, 60 % the insurance companies are prefer to utilize term like ‘corporate societal duty ‘ and 20 % used term ‘charity community ‘ and ‘event ‘ in the company ‘s web site. The consciousness of the CSR has addition due to instruction and heightened of the issues by the media and public.

The consequence of this survey indicates that the size of the company significantly related to CSR revelation. Therefore, H2 sing the CSR revelation in insurance industry, is positively related to size of the company. The larger the company, the more likeliness to unwrap the CSR ( Day and Woodward, 2009 ) . For illustration, when the company became larger and do more net incomes, they tend to unwrap more CSR disclosures to keep the trustworthy of the stakeholders. Furthermore, they are seeking to prolong the CSR coverage and be in the market among the rivals are really hard. Small and less profitable concern companies are deficiency of informations and may be due to be restraints to unwrap more CRS ( Ponnu and Okoth, 2009 ) .

The most popular subject of CSR revelation in insurance industry is community. Then, followed by workplace subject. The community subject reported by most of the companies such as, ‘donation ‘ , ‘charity ‘ and ‘sponsorship ‘ . The least disclosure subject is environment. This consequence ( H3 ) is consistent with the survey done by Haniffa and Cooke ( 2005 ) and Janggu et Al. ( 2007 ) . This is might due to the insurance industry is straight and need to keep the relationship with their clients. Furthermore, the insurance companies normally choose a strategic place in CSR revelation which the activities are otherwise from the other insurance companies ( rivals ) and profit the companies every bit good as the society ( Porter and Kramer, 2006 ) .

Consequence of H4 shows that no important relationship between CSR revelation and ownership of the company. Both foreign and local insurance ownership company discloses the CSR activities in their one-year study and web site. This is due to Torahs and ordinance that all companies in Malaysia should unwrap the CSR activities in the one-year study. The location is largely at the Chairman ‘s Statements and CSR subdivision.

Overall, the executions of CSR in insurance industry are successful. Since CSR model issued by Bursa Malaysia, all listed companies unwrap and practise the CSR activities. But, the companies in insurance industry should more concern in the environment country and non concentrating merely on community and workplace country. This is to demo the answerability of the companies to the populace in order to derive the trustiness of the societies.


The aims of this survey are to research the consciousness of the CSR revelation and to analyse the extent of the CSR revelation of insurance industry in Malaysia. Awareness and understanding the construct of CSR is vary from single to another ( Nik Ahmad and Abdul Rahman, 2005 ) . But, the direction of the companies ( board of managers ) should stress every bit the four focal country that been issued by the Bursa Malaysia since 2006 in order to be internationally. The attempt of authorities to guarantee the listed companies in Malaysia are socially and ethically responsible to the stakeholders and society, therefore, had launched the Prime Minister ‘s CSR Awards.

The findings of this survey provide that the companies in insurance industry are cognizant the construct of CSR revelations. They are more like to unwrap the CSR information through the companies ‘ web site instead than one-year studies. Then, the size of the company and the CSR revelation is significantly related. The community subject is the most popular subject or reported in the insurance industry and followed by the workplace subject. While, the consequence shows that there is no important relationship between ownership construction and CSR revelation in the insurance industry.

CSR activities are non merely ‘frame ‘ to the company but it is an answerability of company to the stakeholders and society as a whole ( Janggu et al, 2007 ) . In add-on, corporate administration plays an of import function in CSR revelation and pattern in company ( Van den Berge and Louche, 2005 ) . The companies should take serious actions to heighten the effectivity and efficiencies of the CSR activities. Therefore, at the average clip, it would pull the possible stockholders to put in the companies.

Besides that, the companies besides might set up or present the CSR Committee squad to guarantee the CSR activities provide by the companies are efficaciously done and benefit to the populace. For illustration, among the five selected companies, merely one company, that is Lonpac Insurance Bhd has their ain CSR Committee squad. From the company ‘s web site stated that, this squad was set up in 2008 and the term of mention is ‘to carry out Corporate Social Responsibility activities in line with the CSR Vision ‘ . In order to this, all listed companies should hold their ain CSR commission that responsible and pull off the CSR activities of the companies. The populace is going progressively more cognizant of the demand for concerns to be socially responsible ( Nik Ahmad et al. , 2003 ) .

Finally, several restrictions had been noted. First, is sing choice of the companies. It is really little and can non stand for the insurance industry in Malaysia as a whole. Furthermore, this survey is focuses merely on insurance industry and the findings can non be generalized to other industries. Second, this survey is focused merely on companies ‘ one-year study and company ‘s web sites. Data gathers are entirely from one-year studies and web sites. Other possible beginnings certification such as imperativeness release, circulars, promotional cusps are exclude from this survey. Future research should be done through primary informations like questionnaire, to be more dependable and from point of position of the company ‘s director itself sing the CSR revelation in their company.