The Influence Of Government Ownership On Corporate Accounting Essay

Libya has experienced anarchy over the 42 old ages under the regulation of Gaddafi, and confiscated of the private ownership even places, existent estate and lands since the beginning of the 1880ss based on Gaddafi theory which called “ Third Universal Theory ” “ Green Book, where Gaddafi said that no 1 owns more than one auto and one house and no 1 may have another house, he added that private ownership is a feat in itself ( Gaddafi, 1975 ) . Gaddafi ‘s thoughts have changed after the prostration of the former Soviet Union, where allowed the private sector to get down engagement in the Libyan economic system in 1991 but still decelerate.

In the aftermath of concatenation for corporate crises in the markets started in mid-1997, Corporate Governance ( CG ) imposed itself on Middle East and North Africa ( MENA ) part. However, due to turning the globalisation, corporate administration range is widening by clip. The thought of this survey is to place the influence of Government Ownership ( GOVO ) as a portion of corporate administration on Corporate Social Responsibility and Environmental Reporting ( CSER ) .

Despite this possible nexus, there are limited surveies sing to the Influence of authorities ownership on the corporate societal duty and one-year environmental coverage in Libyan public sector. The planetary consciousness of corporate societal duty and environment coverage has increased. Therefore, the voluntary revelations of CSER coverage has been raised ( Buniamin, Alrazi, Johari, & A ; Abd Rahman, 2008 ) . Therefore, the consequence of GOVO on CSER in less developed states is non lower in importance than developed universe.

Therefore, the screen of CG and CSER is of import to developing states in general and Libya in peculiar because it has alone economic and politic under the “ Third Universal Theory ” “ Green Book ” which divide into three subdivisions, political, the solution of the economic job ‘New Socialism ‘ and societal ( Gaddafi, 1975 ) There is no uncertainty in recent old ages that Ownership Structure ( OS ) and CSER by houses have received more attending among research workers. However, the old surveies identified the following existing spreads which have given an drift for this survey viz. : the demand for look intoing other available factors that affect CSRER such as the consequence of GOVO on CSRER pattern in Libya where there was no old attending given to this state.

There are some researches that dealt with some facets of this rubric in Libya for illustration, Al-Khater and Naser ( 2003 ) “ Users ‘ Percepts of Corporate Social Responsibility and Accountability ” , Mashat et Al ( 2005 ) “ The Social Role of Accounting: Positions and Percepts of the Accounting, Community in Libya towards Corporate Social Responsibility and Accountability ” , Ahmad and Gao ( 2005 ) “ Corporate Environmental Reporting In Libya ” , Ellabbar and Havard ( 2005 ) “ The accounting revelation in developing states ” , Elmogla ( 2009 ) “ Corporate Social Reporting in a Passage Economy ” , Ahmad and Mousa ( 2010 ) “ Corporate Environmental Disclosure in Libya ” , Larbsh ( 2010 ) “ An Evaluation of Corporate Governance Practice in Libya ” and Zagoub ( 2011 ) “ Corporate Administration in Libyan Commercial Banks ” .

Background of the Study

Harmonizing to Cho and Patten ( 2007 ) showed that the companies do look to utilize environmental revelation as a tool of legitimacy. Therefore, the nature of legitimacy was removed by concentrating on non-litigation-related environmental information and differentiates between pecuniary and nonmonetary environmental revelation. In Libyan instance, the findings of content analysis of Ahmad ( 2004 ) showed that CED have non developed yet in Libya. If we exclude the class of wellness and safety, the Libyan companies do non supply environmental revelation either in footings of the measure or quality.

Other survey for Ellabbar and Havard ( 2005 ) reveal that the degree of general revelation of Libyan companies is at a low degree compared to neighbour Egypt companies. On the other manus, the survey of Ahmad and Mousa ( 2010 ) showed that corporate environmental revelation in Libya has been developed over the period between 2001 and 2007, both in term of its measure and quality. Complying with international accounting criterions or set up of domestic criterions will assist Libyan companies to do the revelations more efficaciously. This, therefore, pushes towards the demand for more researches in Libya while the several states have issued guidelines and recommendations for best CG and CSER patterns ( Buniamin, et al. , 2008 ) .

The increasing involvement in CSER for accomplishing corporate answerability is the measure with the new administration theoretical account of ordinance ( D. Hess, 2005 ) . Accountability of managers is considered as one of the of import issues. This certainly has deductions as environmental coverage becomes compulsory, companies will decline to describe the ‘positive ‘ information merely. Therefore, the corporate administration and environmental concern demand to be converged for good coverage. This closely linked to the acknowledgment that good corporate administration requires consideration of the impact a company has on the wider environment and the community ( Andrew, 2003 ) .

Problem of Statement

While CSER literature has focused on the impact of some features of ownership construction in general, but it ignores the impact the authorities ownership in peculiar every bit good as the impact of other features combined such as company size, company age and industry type, it might be the chief ground of acquiring assorted consequences, particularly since the most of the Libyan economic system consists of public sector and most big houses are owned by authorities and the large houses have the needed capital to take part with foreign spouses. Government-owned companies are controlled in all sectors in Libya for illustration, Energy, Telecommunications, and Construction sectors ( U.S. , 2011 ) .

The stakeholders in Libyan populace sector are limited compared to private houses ( Report, 2011 ) . In recent old ages the Libyan authorities allowed to the private companies to take part with public houses. Some of public houses are non listed in the Libyan stock market. There are some differences between public and private sector in footings of purposes, employment and attending to environmental and societal impact ( Fakher Buferna, Kenbata Bangassa, & A ; Hodgkinson, 2005 ) . Sun, Tong and Tong ( 2002 ) pointed out that the populace sector is more interested in footings of societal and political ends than net income maximization.

However, Gaddafi said that the net income is exploitation and the money and net incomes will vanish when applied new socialist society and there will be no demand for money ( Gaddafi, 1975 ) . Government-owned companies are a peculiar characteristic of Libyan companies. Therefore, ownership in this research classified into several classs, viz. authorities ownership, foreign, household and direction ownership ( Nurul Afzan Najid & A ; Rahman, 2011 ) . The ownership houses impact the revelation of CSER. For illustration, authorities and foreign ownership have a relationship with increased CSER revelation In Malayan companies ( Eng & A ; Mak, 2003 ; Haniffa & A ; Cooke, 2005 ) .

To that ground, there are some theories that have been used to explicate why houses voluntarily unwrap CSER information in their one-year studies. On the other manus, Gaddafi pointed out in his book, companies give societal benefits workers that are closer to the charitable granted or contributions such as those the rich giving to the hapless ( Gaddafi, 1975 ) . Theory development related to CSER in general is fragmented and undeveloped ( Maali, Casson, & A ; Napier, 2006 ; Sadeghzadeh, 1995 ) . In this position, the political and societal contexts have been discovered to be major determiners unwrap CSER information ( Roberts, 1992 ; M. Williams, 1999 ) . Whereas, there are some similarities between the bureau, legitimacy, and stakeholder theories fundamentally differ on primary premises.

The bureau theory makes the wealth-maximizing persons runing within the environment of efficient capital markets ( N. Bayoud, M. Kavanagh, & A ; G. Slaughter, 2012 ) . While, the stakeholder and legitimacy theories expects boards takes the demands of involvement groups linked to societal and environmental considerations ( Donaldson & A ; Preston, 1995 ; E. Freeman, 1984 ; R. E. Freeman, 1984 ; Freeman, Wicks, & A ; Parmar, 2004 ; Ranasinghe, 2011 ) . Woodward et Al. ( 1996 ) have revealed that a house is a important portion of the societal system harmonizing to both stakeholder theory and legitimacy theory.

In add-on, stakeholder theory suggests that some groups within the society are more powerful than stockholders and employees, while legitimacy theory expressions at society as a whole ( N. Bayoud, et al. , 2012 ) . The research worker draws on legitimacy theory to explicate CSER. Thus, the theoretical model development here will incorporate both influences. The three theories of government-ownership are bureau, political, and societal positions. The societal theory is related to the economic theory of establishments, which is government-owned companies are established to turn to market defects whenever the societal benefits exceed the costs ( Atkinson & A ; Stiglitz, 1980 ) .

On the other manus, the political relations positions of government-ownership is a tool for accomplishing the ends of politicians, the government-owned companies are unsuccessful because of the political intervention ( Shleifer, 1998 ) . Sing to “ The Green Book ” Gaddafi said that “ The wealth of the society is like a corporation or a shop of supply which daily provides a figure of people with a measure of supply of a definite sum which is adequate to fulfill the demands of those people during that twenty-four hours ” ( Gaddafi, 1975 ) .

The bureau theory says that government-owned companies may be established to increase the societal benefits, but may do corruptness, hapless distribution and weak managerial inducements ( Banerjee, 1997 ; Hart, Andrei Shleifer, & A ; Vishny, 1997 ; Sapienza, 2002 ) . Harmonizing to these theories, it is non clear whether government-owned companies are less profitable for the ground that they maximize the societal aims, or for the ground that they inefficiently due politicians ( Sapienza, 2002 ) . On the other manus, Gaddafi pointed out that what is received straight by the workers, as respects their ain involvements, in the signifier of rewards, per centum of the net income or societal benefits, is the same as is received by the workers in the private corporation.

The important spread in both CG and CSER literature is the rarity of such surveies in the context of emerging economic systems ( Arifur Khan, Mohammad Badrul Muttakin, & A ; Siddiqui, 2012 ; Judge, T. J. Douglas, & A ; Kutan, 2008 ) . Consequently, the consequence of CG mechanisms on CSER revelations may be different in emerging economic systems ( Arifur Khan, et al. , 2012 ) . However, the relationship between GOVO and CSER is mostly absent in the literature ( Geoffrey, 2008 ) . Therefore, it is of import to analyze the influence of authorities ownership on revelation of CSER to see how it can impact in Libya context. However, there is no grounds of research which examines the consequence of GOVO on CSRER in the Libyan context may it is due to detain in the constitution of CG system and stock market.

Significance of the Study

The research worker chose Libya in this research for some grounds. Libya has a different political and economic system ( Wallace & A ; Wilkinson, 2004 ) and Gaddafi pointed out that “ The Third Universal Theory is a trumpeter to the multitudes denoting the concluding redemption from all hobbles of unfairness, absolutism, development and economic and political hegemony ” ( Gaddafi, 1975 ) . In add-on, Libya is a peculiarly interesting state, as socialist and Islamic system have influenced on the nature of GOVO and CSER revelation. Additionally, Libya established a public organisation for the environment in 2000 to cut down negative effects on the environment ( Bayoud, Kavanagh, & A ; Slaughter, 2011 ) .

Libya has experienced alterations over a short period of clip. It has started set up a stock market in 2006 which requires a high degree of accounting revelation and CSER to accomplish an efficient market. The survey determined the points which should be enclosed by Libyan companies every bit good as the points that are enclosed by these companies in the one-year studies. Harmonizing to Ellabbar and Havard ( 2005 ) , the degree of accounting revelation of Libyan building companies is low as compared to Egypt. The low degree will be a hinderance towards set uping a capital market in Libya.

One of the ways, Libyan companies can raise this degree by following with the international accounting criterions, or the Libyan accounting profession should develop accounting criterions that are appropriate for the state ‘s environment. This survey attempts to statistically turn out whether there is any important association between the GOVO and CSER in Libyan companies during the period 2006 to 2011. The importance of this survey lies for three of import grounds ; foremost, the survey would lend to the literature to assist the research workers through the proviso of the modern CSER patterns in Libya. With a batch of attempt by the authorities and the assorted relevant organisations, and possibly the research worker can observe the difference in revelation patterns in Libyan comparing with old surveies.

Additionally, since the survey incorporates the issue of GOVO and the research worker think that this survey will be among the first efforts in Libya to the consequence of authorities ownership on corporate societal duty and the environmental coverage. Second, the consequences will convey the integration environmental considerations to the investors ‘ community in their determination devising procedure. As for practicians, will possibly go a challenge to them to be more environmentally responsible in the hereafter. Finally, for policy shapers, this research will supply indispensable grounds on the necessity of revisiting the bing criterions and ordinances.

For case, the Libyan Business Organizations LBOs and Libyan Association of Accountants and Auditors ( LAAA ) may necessitate to reinstate the importance of environmental public presentation in companies owned by authorities, and possibly, it is really seasonably to present specific criterions on environmental accounting. It is expected that this survey will convey the issue of GOVO and CSER to the attending of the Libyan research workers for farther research in this field.

To carry through the purpose, the research will place different facets of influence in the nature and extent of corporate information disclosed in companies ‘ one-year studies, from a CG and CSER position and by look intoing the voluntary corporate administration revelation made by Libyan government-owned companies. The intent of this research is to analyze the influence of CG features, viz. the authorities ownership, foreign ownership, board size, board independency, and CEO dichotomy on CSER in government-owned companies in Libya.

Research Question

The intent of this survey is to examine these issues further.

What kinds of CSER ( classs ) are largely disclosed by the Libyan companies?

Is there any factors affect the CSER in Libyan companies?

Is there any important association between authorities ownership and CSER?

Aims of the Study

This survey aims to analyze the being of CSER among Libyan companies and to place the influence of authorities ownership on CSER. Therefore, this survey attempts to accomplish the undermentioned aims:

( 1 ) To place the degree of CSER in Libyan companies.

( 2 ) To analyze the factors that influence CSER among Libyan companies.

( 3 ) To analyze the consequence of authorities ownership on CSER in Libyan companies.

Chapter 2

Literature Review

Historical and Social Background of Libya

Libya is a developing Arab and Islamic state, situated in North Africa. With an country of about 1,800,000 square kilometres ( 694,984 sq myocardial infarction ) , Libya is the seventeenth largest in the universe and the 4th largest state in Africa by country. However, approximately 90 % of the county ‘s land country is Sahara and therefore merely approximately 10 % of the county ‘s land country is used for croping and farming ( Wikipedia. , 2012 ) .

Figure Map of Libya

As shown in Figure 1 Libya has the longest coastline in Africa surrounding the Mediterranean. Libya is bordered by the Mediterranean to the North, Chad and Niger to the South, Sudan to the Southeast, Tunisia and Algeria to the West and Egypt to the East. The Libya ‘s population is about 6.4 million people ( UN, 2009 ) . Most of state ‘s population lives around the coastal strip next to the Mediterranean Sea, and more than tierce of population live in the two major metropoliss of Tripoli and Benghazi ( Oxford Business, 2008 ) .

While, the dominant group is the Arab folk, the state is besides place to other cultural including Berber folks such as “ Amazigh ” , and “ Touareq ” . In add-on, the state is home to several foreign subjects including Greeks, Maltese, Italians, Egyptians, Turks, and others ( Oxford Business, 2008 ) . The chief linguistic communication is Arabic. English and Italian are besides spoken and understood in the chief urban metropoliss and are frequently used in trade.

Furthermore, Tamazight ( Amazigh tribe linguistic communication ) and Tamahaq ( Touareq tribe linguistic communication ) are spoken by those Libyan folks ( Oxford Business, 2008 ) . The one faith in Libya is Islam, which is adhered to about 100 % of Libya ‘s population. As for Libya ‘s location, where Europe, Africa, and the Middle East meet the state has been capable to foreign military invasions and colonisation ‘s from the 8th millenary BC until 1951, when the United Nations declared the independency of Libya ( Farley, 1971 ; Mahmud, 1997 ) .

During this period, Libya was occupied by several foreign military invasions. Table 1 summarizes the most of import historical events that have occurred in Libya. Although these series of businesss has given Libya a alone mix of autochthonal and foreign civilizations ( Oxford Business Group, 2008 ) . The Arab and Islamic civilization has a important impact in forming civilization of the Libyan society. In peculiar, the Muslim faith, Arabic linguistic communication, the drawn-out household and tribal values are of import features that shape the current societal environment of Libyan society ( Agnaia, 1996 ) .

Table Main Historical Events of Libya

Date Event

Before 642

Libya was occupied by the Byzantines, Greeks, Romans, Carthaginians, Vandals and Phoenicians.


Arab Islamic Rule: Libya conquered by Arab Islamic vanquishers. In this period, Libya was ruled by several Islamic swayers ( provinces ) .


Tripoli was invaded by the Habsburg Spain.


Ottoman Empire: Libya was occupied by Ottoman Turks and it remained portion of Ottoman Empire.


Italian Colonies: the Italians supplanted the Ottoman Turks in Tripoli in 1911 and did non release their clasp until 1943 when defeated in World War II.1911


British and Gallic military disposal: the Allied powers controlled Libya and so it passed to United Nation ( UN ) disposal and achieved independency in 1951.


A monarchy hereditary and constitutional under King Idris al-Sanussi.


The find of important oil militias: enabling one of the most universe ‘s hapless states to set up an highly affluent province, and going one of taking of prima oil manufacturers.


September military putschs in 1969 ( Libyan Arab Republic ) : the regulating authorization became the Revolution Command Council ( RCC ) led by Gaddafi.


In 1973, Gaddafi declared the Cultural Revolution to promote people to take part in political life by making “ Peoples ‘s Committees ” to administer local and regional disposals. This caused administrative pandemonium in the state by get rid ofing all Torahs ; extinguishing political parties and the revolution ‘s enemies.


The People ‘s Authority ” the RCC was replaced by the General People ‘s Congress ( GPC ) as a parliamentary organic structure ( the highest legislative authorization ) which established the new political government for the state, The People ‘s Authority.


Revolution broke out on February 17, which toppled the Gaddafi government and emerged a new democratic government.

Beginning: ( A. Zagoub, 2011 )

The name of Libya came into consequence for the first clip when Italy occupied Libya between1911 and 1943. During the Italian business, the Italian authorities in Libya made several betterments in the substructure in order to retain control of the state and to function the Italians who were given the best farming area ( Oxford Business, 2008 ) . However, Italy was defeated in the Second World War and lost its control over Libya which became under the Allied powers control.

December 1951, Libya declared its independency, a constitutional and familial monarchy under King Idris al-Sanussi. During the war, the Libyan Arab Force was established by the male monarch which fought alongside the Allied forces. Therefore, he claimed the Libya throne, with encouragement from the Great Britain ( Esposito, 1998 ) . The find of important oil militias in 1959 affected the Libyan modern development, the income from petroleum crude oil gross revenues led Libya to go one of taking oil manufacturers and improved the Libyan authorities ‘s fundss and substructure ( Oxford Business, 2008 ) .

The Libyan Political Government

Muammar Gaddafi led a military putsch that overthrew King Idris in 1969. and go the swayer of Libya. He canceled the Libyan Constitution of 1951, and created Torahs based on his ain political orientation from his book “ The Green Book ” . Gaddafi officially stepped down from power in 1977, and later claimed to be simply a “ symbolic front man president ” until 2011. Dissatisfaction appeared as a effect of the increased concentration of the state ‘s wealth in the custodies of the opinion elite and this discontent continued particularly from the state ‘s younger coevals who began to name for alteration, impacted by events taking topographic point in Egypt and Tunisia protests and has been began in Benghazi in February 2011, which led to clangs with security forces that fired on the crowd ( Wikipedia. , 2011 ) .

The protests escalated into a rebellion that spread across the state ( Wikipedia, Unknown ) , On 17 February exploded a popular revolution against the Qaddafi government, which led to the autumn of his government and composing of the Transitional National Council ( TNC ) . Although there are some pockets of opposition by the old government, but now all of the Libyan districts have been liberated from the old government and began a new government.

The Libyan Economic Environment

Libyan economic and political system was alone ; this is different from the Communism, Socialist or Capital systems. After printing the 2nd portion of the Green Book, Gaddafi announced the nationalisation of all private belongings and accordingly the private sector was to the full abolished and prevented from exerting any sort of concerns even little retail trade. Gaddafi said in his book “ The socialist ownership replaced a private ownership based on the production of wage-workers who had no right in what they produced ” ( Gaddafi, 1975 ) .

Consequently, most of the Libyan economic system became controlled by Gaddafi until 2011 ( Wright, 1982 ) . While the Libyan economic system is a socialist-oriented economic system, in 1992 the authorities established Act figure 9 of 1992, the act allows the private sector to take part in Libyan economic system, the act besides permits the merchandising of government-owned companies to private sector. Furthermore, the Act figure 5 of 1997 is encourage foreign investings in the Libyan market ( Fakher Buferna, et al. , 2005 ) . Higgins ( 1959 ) pointed out that the Libyan economic system has faced many economic, societal and political obstructions as it had been under the Ottoman Empire, the Italian business and the British and Gallic military disposal.

After oil discovered and exported in commercial measures in 1961, the Libya ‘s socio and economic has increased ( M. Mahmud & A ; Russell, 2003 ) . The income from oil grosss has enabled the Libyan authorities to develop the state ‘s substructure drastically, economic system, instruction and the health care system ( Wright, 1982 ) . Saleh ( 2001 ) indicated that the chief end of these procedures was to diminish public disbursals, and to promote private sector to take part in Libyan economic system. Harmonizing to Zagoub ( 2011 ) , Libyan policies failed to develop the economic. As a consequence, the Libyan economic system suffered from several jobs and troubles that limited the gait of its economic and human development.

Additionally, the bead of universe oil monetary values in the early 1980s and the political and economic countenances imposed by the United States ( US ) and the United Nations ( UN ) since tardily 1980s because of Lockerbie matter caused a serious diminution in Libyan economic ( Ali, 2010 ) . Indeed, the failure of the Libyan political and economic system to work out these troubles that could cover with such jobs which led to public dissatisfaction with such economic doctrine. While Libya has the highest Gross Domestic Product ( GDP ) per capita in the part, and therefore a million Libyans live in poorness ( Porter & A ; Yergin, 2006 ) .

After the countenances by the US and UN was lifted in 2003, Libya has embarked on a series of economic, societal and legal reforms but easy. It has demonstrated its purpose to travel toward a free market. Libya has begun set up new assorted Torahs, such as leting the private sector to take part in the national economic system, paving the manner for privatizing of a figure of public sector Bankss and companies, and pulling the foreign investing. In add-on, Libya has applied to fall in the World Trade Organization ( WTO ) , and therefore most of Torahs are being reviewed in the context of the WTO demands ( Ali, 2010 ) .

Although, some development was reached in implementing much-needed economic reforms, these reforms face many troubles. Possibly the troubles is that Libya suffers from an unpredictable concern environment, which is characterized by managerial bureaucratism and inefficient system. In such environment, opaque legal and institutional models adopted in Libya, the determination doing process becomes complex. Another serious job insufficiency of technicians and skilled manpower that is indispensable to fulfill the development of economic system ( Ali, 2010 ; Outlook, 2010 ) .

Accounting System in Libya

Three cardinal beginnings of influenced the accounting pattern in Libya, viz. : ( a ) ordinances and governmental Torahs that control concern in this state ; ( B ) The impact of accounting imported from other states ( from the US and the UK through the experience of qualified forces and the publications ; ( degree Celsius ) the impact of practicians in the accounting field, faculty members ( Bait El-Mal, Smith, & A ; Taylor, 1973 ) . The major consequence on revelation demands came from Libyan Torahs related to economic activities, such as Financial System Law, Accounting and Auditing Profession Law,

The Libyan universities played a major function in building and developing the accounting patterns and the instruction has been recognized as a cardinal component in political and socioeconomic development. In the recent old ages, the chief obstruction of development accounting instruction and pattern In Libya, include: ( a ) The accounting course of study is unstylish ; ( B ) The scarcity of modern mentions and text editions in Arabic ; ( c ) does non be for the active professional societies ; and ( vitamin D ) inadequate the public cognition of the function of accounting.

The consequence of the survey of Mahmud and Russell ( 2003 ) revealed that Libya in order to alter and update both its accounting instruction and pattern requires a efficient strategic program. The Libyan Commercial Code and the Income Tax Law 1953 issued to maintain at least two paperss, first record should include the house ‘s entire of its outgos of day-to-day concern minutess and a monthly. The 2nd is balance sheet which is histories that include the stock list statement, the net income and loss history. These paperss are required to hold numbered pages, before being used, should stamped by a tribunal functionary ( M. Saleh, 2001 ) .

Company Disclosure Practices in Libya

The stock market in Libya has been established in 2006 and Libya issued a figure of Torahs that relate to accounting pattern and disclosure.. Harmonizing to Mashat et Al ( 2005 ) , the companies do non waver to unwrap negative or conceal the requested bad intelligence to reenforce the corporate image or the repute position and to avoid societal force per unit area. That is because of these companies are authorities owned.

Public Sector in Libya

Adopted a policy of direct intercession by the authorities in economic life is as a cardinal method after the socialist transmutation since 1978. After that was private sector plays an of import function in economic activity and employs, over 75 % of the work force, the authorities became the chief control of most facets of production and distribution, and has become more than 80 % of employment at the clemency of wages low and late from the public exchequer.

Therefore, the authorities dominates the economic countries different and reduces the private sector that has become really fringy function ( Bsekri, 2006 ) . A reappraisal of five-year economic development programs ( 1976-1980, 1981-1985 ) notes that economic gravitation displacement in the involvement of the populace sector which take the focal point of economic and societal development as it accounted for over 85 % of the fiscal allotments for the development programs referred to. Based on the vision of socialism were nationalized Bankss, foreign trade and the sweeping and retail trade and industrial companies and building companies.

And helped the oil roar in the enlargement of public sector activity, which provided for the Libyan authorities significant fiscal resources a big portion of which went to finance large-scale undertakings, the support policy of inordinate and irresponsible to make and pull off authorities installations on most fiscal militias at a clip lessening gross after the oil daze, and the low production and oil monetary values in the eightiess. The gross oil is a taking provider of finance large-scale undertakings and continued to run out most of the gross obtained from oil more than two decennaries, and became a load on the public bag and reflected raised negatively on assorted critical sectors production and service, including instruction and wellness installations.

And so it became clear shortly after of Socialist transmutation failed experiment and the demand for structural alteration in the national economic system which it did non go on during the 1880ss and 1890ss ( Bsekri, 2006 ) . The findings of the study ( A. Mashat, B. Ritchie, C. Lovatt, & A ; J. Pratten, 2005 ) showed that the greater portion of this study were less excited about the thought of attaching strategic organisations to the populace sector to vouch the societal duty.

This may reflect the discontent at the public presentation of the authorities owned companies due to jobs confronting these houses and its failure of accomplishing its ends. In add-on, Sun et Al ( 2002 ) , Dewenter and Malatesta ( 2001 ) revealed that public ownership is less efficient than private ownership. Since most Libyan companies are either to the full or partly government-owned companies, maximizing their market value is non considered to be the company ‘s chief purpose.

The Libyan companies provide some information about the employees. However, the hold in geting some information makes the utility of this information questionable ( Buzied, 1998 ; A. Kilani, 1988 ; M. Saleh, 2001 ) . In this context, nowadays the companies which are registered in the Libyan stock market should supply more information about such things that were non provided it the past, to give all investors in the market the right image about themselves and to pull more investing ( M. Elmogla, 2009 ) .

The relationship between authorities ownership ( GOVO ) is positive and significantly with the degree of revelation of CSER. The most of import variable that affects the degree of revelation of CSER is GOVO ( Roshima Said, Yuserrie Hj Zainuddin, & A ; Haron, 2009 ) . The old surveies show that GOVO has positive impact on CSER degree in Malayan houses ( Amran & A ; Devi, 2007 ; Mohd Ghazali, 2007 ; Shamsul Nahar Abdullah, Nor Raihan Mohamad, & A ; Mohd Zulkifli Mokhtar, 2011a ) .

On the other Hand, the Results of Shamsul Nahar et Al ( 2011a ) revealed that government-linked companies do non hold an impact on CSER revelation. The survey of Khan et Al ( 2012 ) showed that GOVO in the context of Bangladesh may non hold good degree of CSER revelations but he reveal that GOVO, foreign ownership ( FORO ) and board independency ( BI ) have positive influence on CSER revelations.

Corporate Social Responsibility and Environmental Reporting ( CSER )

Corporate societal duty has been defined by different writers in assorted ways. Mohr and KEJ ( 2001 ) has defined CSR as “ a company ‘s committedness to minimising or extinguishing any harmful effects and maximising its long-term good impact on society ” . Noyer ( 2008 ) defined the corporate societal duty as:

“ CSR is a construct whereby fiscal establishments non merely see their profitableness and growing, but besides the involvements of society and the environment by taking duty for the impact of their activities on stakeholders, employees, stockholders, clients, providers, and civil society represented by NGOs ” ( Azim, Ahmed, & A ; DaˆYNetto, 2011 ) .

Harmonizing to Manakkalathil and Rudolf ( 1995 ) and Oppewal et Al ( 2006 ) , CSR is defined as the responsibility of the companies to esteem human rights and raise human public assistance in its plans. However, the chief kernel of these definitions is similar what the associations are set abouting CSR activities for making healthy merchandises, consciousness for improved environment, societal consciousness of most of import issues, take attention of employees and philanthropic activities to make sustainability in the concern markets ( Imran Ali, Kashif Ur Rehman, Ayse Kucuk Yilmaz, Nazir, & A ; Jawaria Fatima Ali, 2010 ) .

Gray et Al ( 1996 ) showed that CSR as a manner by which a company can public presentation what they need for societal duty. Gray and Bebbington ( 2001 ) says that CSR has been received more attending of academic surveies for more than 30 old ages. Particularly the concern community, the media, and academe are paying more attending to CSR issues. On the other manus, that could be seen CSR as supportive to legitimacy theory, that: CSR is a type of corporate societal receptivity by the managers of a company and the directors so try to impact the societal environment. The revelation in one-year study form portion of the corporate societal reactivity within the economic activity ( Mangos & A ; Lewis, 1995 ) .

Elasrag ( 2011 ) pointed out that Global CSR, a planetary enterprise of the United Nations, released in 1999 and the Charter is divided into four groups, which is explained below: human rights, criterions of work, saving of the environment and anti-corruption. Harmonizing to McWilliams and Siegel ( 2000 ) and Castka et Al ( 2004 ) , one of the chief concerns on managers unwillingness to unwrap CSR information is to accomplish a balance between the require for optimising gaining from unwraping CSR information while meet the petition for this information from multiple stakeholders.

Gray ( 1995 ) revealed that in relation to the CSR, stakeholders groups and community force per unit area companies to disclosure and they try to convey more control to bear upon a company, and reflected in unwraping information about societal and environmental issues. Harmonizing to John et Al. ( 2009 ) the nature of CSER becomes clear, companies require doing a net income, but they must demo to act in a moral manner, and are responsible for their actions toward a society. The houses should presented societal information relate to their activities in the workplace, the community, the environment and the consumer. Their actions should be acceptable to all stakeholders.

CSR coverage and ‘transparency enterprises ‘ drama a cardinal function in impacting the media and public sentiment because they help to portray companies as responsible citizens that care about people and the environment more than about net incomes ( Frynas, 2010 ) . This rise in attending is demonstrated by the several of academic research workers who interested in this country, and by the increased dressed ore being used by authoritiess, accounting organic structures, association organic structures, mill, and concern endeavors to different related issues.

It is now agreed that CSR revelation should demo how a company interact its stakeholders and would normally consist environment related revelation ; community engagement related revelation ; merchandise and consumer dealingss ( Deegan, 2002 ; Epstein & A ; Freedman, 1994 ; Gray, et al. , 1995 ; Hackston & A ; Milne, 1996 ; Ng, 1985 ; S. M. a. P. Williams, C.H.W. , 1999 ) . Therefore, CSR may be regarded as ”the proviso of fiscal and non-financial information associating to an organisation ‘s interaction with its physical and societal environment ” ( Guthrie & A ; Mathews, 1985 ) .

Guthrie and Parker ( 1989 ) show that environmental and societal accounting revelations ”appeared to reflect public societal precedences, respond to authorities force per unit area, accommodate environmental force per unit areas and sectional involvements and protect corporate privileges and jutting corporate images ” . However, really few surveies are available on the CSR patterns in the development states. The bulk of these surveies were undertaken in the context of late fabricating states such as Malaysia, Singapore and some African states such as South Africa, Nigeria and Uganda ( R. Belal, 2001 ; Tsang, 1998 ) .

CSER associate the societal and environmental facets in practising concern ( Imran Ali, et al. , 2010 ) . Radebauh and Gray ( 2002 ) revealed that CSR refers to “ answerability to society as a whole with regard to affairs of public involvement such as community public assistance, public safety, and the environment ” . CSR has grown to consist environmental issues over the recent old ages as environmental concerns such as environmental pollution. Environmental judicial proceedings have become more of import for economic, societal and political jobs throughout the universe. These have pushed the companies to come in into environmental duty including environmental revelation and describing affairs as argued by Margolis and Walsh ( 2003 ) .

Unfortunately a batch of companies are non recognizing the significance of CSR and non puting in this country, nevertheless academe is back uping the significance of CSR. The media every bit good as print media are frequently non speak on the importance of CSR. Very few plans or interviews have been seen on some telecasting channels and the focal point is frequently limited to issues like employee ‘s rights or environmental jobs. A few issues related to this subject like CSR best patterns largely focus on the corporate activities and studies on environmental and society. Several companies take the issue of environment under the corporate societal duty. This is due to environmental coverage patterns which are besides one country. ( Imran Ali, et al. , 2010 ) .

The anterior surveies on the environmental coverage in developing states are still few and the consequences showed varied consequences. This might be due to the deficiency of compulsory ER criterions ( Buniamin, et al. , 2008 ; R. Gray & A ; Bebbington, 2001 ) . There are several definitions in the literature about the ER. Wilmshurst and Frost ( 2000 ) define environmental coverage as “ those revelations that relate to the impact company activities have on the physical or natural environment in which they operate ” p.16. Berthelot, Cormier and Magnan ( 2003 ) define environmental coverage:

“ … the set of information points that relate to a house ‘s yesteryear, current and future environmental direction activities and public presentation. The environmental coverage besides comprises information about the yesteryear, current and future fiscal deductions ensuing from a house ‘s environmental direction determinations or actions. ” p. 2.

The environmental coverage may be used to heightening the community ‘s perceptual experience to environmental issues, or alternatively to deviate attending from inauspicious environmental situations. ( C. Deegan & A ; M. Rankin, 1996 ; D. M. Patten, 1992 ) . Harmonizing to Romlah et Al. ( 2002 ) , the mark of the ER is to cut down the possible cost that can be imposed on the companies and this is true for companies that pollute the environment. The usage of one-year studies as the major informations beginning because of one-year study is the most of import beginning of environmental information due to its legal conformity ( Deegan & A ; Rankin, 1996 ; Hughes, A. Anderson, & A ; et Al, 2001 ; Tilt, 1994 ) .

In add-on, the increasing of ER in one-year study and specific subdivision in one-year study to direct the environmental importance to a wider group of stakeholders ( Crowther, 2002 ) . In survey conducted by Rankin and Voght ( 2000 ) showed that one-year study and societal revelations are a helpful tool to cut down the effects on the company activities that are supposed to be inauspicious to a company ‘s image.

Corporate Social Responsibility and Environmental Reporting ( CSER ) in Libya

CSR patterns in most developing states still rather undeveloped and relatively few researches have focused on the CSR patterns in developing states In recent old ages and more attending by research workers has been given to CSR. Mainly it is an issue that touches assorted important facets which concern us. This become a discussion issue in many developed states ( Samuel & A ; Walter, 2009 ) . ER was the noticeable focal point issue in CSR surveies during the latter portion of the 1981-1990,

Although, there are several surveies show that one-year studies unwrap information related to the CSR ( C. Adams, Hill, & A ; Roberts, 1998 ; Mathews, 1997 ) , the surveies are few in this country, even in developed states where pattern is altering quickly, and it is really limited in developing states ( Abu-Baker & A ; Nase, 2000 ) . Within the Arab universe context, in which Libya constitutes an of import portion, there is still a deficiency of practical surveies on CSR patterns ( Abu-Baker & A ; Nase, 2000 ; Al-Khater & A ; Naser, 2003 ; Jahamani, 2003 ) . Interestingly, the Libyan Tax Law encourages companies runing in Libya to be involved in some societal activities. For illustration, stipulates that companies will be granted a revenue enhancement privilege for contributions to officially recognized charity establishments ( A Mashat, et al. , 2005 ) .

The survey of Elmogla ( 2009 ) showed that Libyan companies by and large unwrap a some information related to societal duty. However, the sum of information is low. Employee information and society engagement are the elements that companies unwrap largely. Harmonizing to the study for John et Al. ( 2009 ) all of the professional comptrollers and faculty members in Libya agreed that companies should pay attending for their societal duties, particularly on environmental and society issues.. Few of the professional comptrollers and faculty members believed that environmental revelation will take to protect to the environment in Libya, the directors and hearers support this line strongly. For them, pollution would be a concern.

However, they felt that revelation was hindered by the absence of legal demands, administrative jobs and the failure of direction to accomplish its societal duties. While most agreed that all stakeholders, proprietors and investors were considered as more of import than clients. And hence, the accounting sectors of Libya show mostly united in their positions on the nature of CSR and the intent of revelations. Community and environmental issues are significance, but the client has small importance.

Harmonizing to John et Al. ( 2009 ) the Torahs would be needed to progress the extent of CSR.

Therefore, a position of the Libyan attacks has emerged. So the measure and quality information related to CSR was limited. Furthermore, the revelations were frequently in the signifier of narrative, with small in quantitative signifier. It is clear that more research should be undertaken, utilizing more modern studies and distributing to a wider scope of companies, to happen out if CSR in Libya conserves to its ain individuality and developing human resources would be the aid to distributing societal duty information.

Corporate environmental revelation as defined by Libyan, Environmental Protection Law no. 13 of 2003, Industrial Security and Employees Health and Safety Law of 1976, was summarized into protecting the environment, damaging the environment, wellness and safety, security statue and grounds ( pecuniary, quantitative and qualitative ) and the type of revelation ( bad, impersonal and good ) ( Ahmad & A ; Mohamed, 2004 ) . Although Libya established the Public Organization of Environment ( POE ) in 2000, Libyan companies showed the lower degree of environmental revelation than more developed states.

The societal studies in Libya Included the employee information and some community revelation ( John, et al. , 2009 ) . Ahmad and Gao ( 2005 ) examined corporate environmental coverage in Libyan companies, the survey showed that no grounds of the being of ER but found `health and safety ‘ revelations with 70 per centum of their sample showing such information. In add-on, Ahmad ( 2004 ) by analyzing in the period of 1998-2001, found that there is no being of environmental revelation measure or quality, in peculiar if the wellness and safety class is excluded.

Some alterations occurred in Libya such as set up Libyan Stock Market and the Libyan environmental jurisprudence no. 15 of 2003. These alterations may force ER in Libya frontward. The findings of the survey of Mashat et Al ( 2005 ) showed that environmental revelation is non published decently in the one-year studies of Libyan companies, and the survey revealed that the degree of ER in Libya is low and general, and the information revealed besides lacks uniformity and has really small revelation value.

On the other manus, Ahmad and Mousa ( 2010 ) investigated Corporate Environmental Disclosure ( CED ) patterns by the 18 largest industrial companies. The findings of their survey showed that CED in Libya increased between 2001 and 2007 both in term of its measure and quality, This attack was derived from an extended reappraisal of the past literature in general and the choice of largest companies is based on the usual statements that the environmental sensitiveness of industrial companies influences the degree of environmental revelation and that big companies are more likely to react to the environmental docket than little or moderate-sized companies.

In the Libyan context, CED information used to make large and little determinations or to execute modus operandis in the companies ( N. Ahmad & A ; Mousa, 2010 ) .

Corporate Governance ( CG )

In recent old ages, there has been involvement in the significance of CG and its influence on the many facets of economic, legal, political and societal systems. Corporate administration has been a turning involvement in its importance as a consequence of the fiscal prostrations of a figure of outstanding companies in a figure of states ( A. Zagoub, 2011 ) . In add-on, Monks and Minow ( 2004 ) pointed out that the importance of CG became clear after increasing the economic crises in many states.

The importance of CG for economic development in many states identified Claessens ( 2003 ) , foremost, the increasing of denationalization and investing procedures particularly in the passage states. Second is the influence of globalisation. The Modern engineering and the gap up of markets, trade liberalisation and the structural reforms in many states have led to a rise in foreign investings. This makes good CG more of import to emerging economic, particularly developing states.

The construction, footing and model of administration have been chiefly provided by the company jurisprudence itself. It has evolved over the past 160 old ages into its present signifier it allows companies to go on their concerns within the model which benefits non merely companies but besides stockholders and stakeholders and makes their part to the economic growing within the system of free trade which is embraced today. In other words, CG is a system which the jurisprudence established and developed in consonant rhyme with the development of companies. Therefore, this is non a new system but has been created a long clip ago. However, over clip, it need to reexamine on the system is indispensable to guarantee that it suits the present demands and fortunes ( Che Haat, 2006 ) .

Koh ( 2001 ) defined CG as:

“ aˆ¦the procedure and construction used to direct and pull off the concern and personal businesss of the corporation with the aim of heightening long-run value for stockholders and fiscal viability of the concern. ” p. 23.

The definition that was provided by the Malayan High Level Finance Committee for corporate administration ( Committee, 1999 ) :

“ Corporate administration is the procedure and construction used to direct and pull off the concern and personal businesss of the company towards heightening concern prosperity and corporate answerability with the ultimate aim of recognizing long-run stockholders value, whilst taking into history the involvements of other stakeholders ” p. 52.

Huther and Shah ( 1998 ) , administration is defined as the exercising of economic,

“ It is practiced through mechanisms, procedures and establishments, through which citizens and groups articulate their involvements, exercise legal rights, run into their duties and intercede their differences ” .

CG may be loosely defined as ”the mode in which companies are controlled and in which those responsible for the way of companies are accountable to the stakeholders of these companies ” ( Dahya, Lonie, & A ; Power, 1996 ) p. 71. CG can besides be defined as a general theory that trades with relationships, duties and balances between direction and stockholder involvement ( Grant, 2003 ; K. Schipper, 2004 ) . Sethi ( 2002 ) defined corporate administration as

“ Corporate administration processs determine every facet of the function for direction of the house and seek to maintain in balance and to develop control mechanisms in order to increase both stockholder value and the satisfaction of other stakeholders. In other words, corporate administration is concerned with making a balance between the economic and societal ends of a company including such facets as the efficient usage of resources, answerability in the usage of its power, and the behaviour of the corporation in its societal environment ”

Solomon ( 2007 ) defined CG from a wider answerability position as:

“ The system of cheques and balance, both internal and external to companies, which guarantee that companies discharge their answerability to all stakeholders and act in a socially responsible manner in all countries of their concern activity ” ( p.14 ) .

Sir Adrian Cadbury ( 2002 ) provided a wide definition as follows:

“ Corporate administration is concerned with keeping the balance between economic and societal ends and between single and communal ends. The administration model is at that place to promote the efficient usage of resources and every bit to necessitate answerability for the stewardship of those resources. The purpose is to aline every bit about as possible the involvements of persons, corporations, and society. ” ( )

The Organization for Economic and Development ( OECD, 2004 ) developed a wider definition of CG to widen the relationships with other stakeholders as follows:

“ Corporate administration involves a set of relationships between a company ‘s direction, its board, its stockholders and other stakeholders. Corporate administration besides provides the construction through which the aims of the company are set, and the agencies of achieving those aims and monitoring public presentation are determined. ” ( p.11 ) .

Corporate Administration in Libya

Corporate administration in Libya was established in 2007 through the set up Libyan Stock Market. The government-owned companies listed for illustration Libyan Central Bank and General Post and Telecommunication Company were the first companies to follow the usage of CG in Libya. The survey of Larbsh ( 2010 ) showed that the CG system in Libya is less-evolved and Libya has lagged behind its neighbours. Besides, the survey revealed that the absence of criterions of CG has led to the deficiency of answerability and duty procedures.

The consequence of the legal system and consequence of civilization and societal, political intervention, deficiency of accounting professionalism the failing of the instruction system and were other factors in the CG model were besides clear. Harmonizing to Elmogla ( 2009 ) the Libyan authorities controlled and oversee the companies. But after the passage from a old system to a market-based system which started a few old ages ago, some companies are going private and others are reconstituting and under the control of the General Board of Ownership Transfer of Public Companies and Economic Units ( the purpose of this board is to accomplish the plan of reassigning public companies to the private sector ) .

In recent old ages, an increasing involvement on administration as a critical underpinning of companies success by and large and environment more specifically ( Mizan & A ; Alamgir Hossain, Year Unknown ) . Libya still has a long manner to travel in order to achieve the degree achieved by their opposite numbers in developed states. In footings of CG in Libya, most government-owned companies have a ten-member board of managers. The company ‘s senior direction direct the studies to this board, which send these studies to a authorities curate, the high-ranking authorities functionaries made most of import determinations who instruct the senior direction ( Report, 2011 ) .

The Relationship between CG and CSER

There are attempts to distributing societal and environment duty of companies and a turning consciousness that environmental and societal effects can hold existent fiscal cost. There is argue sing to the degree and nature of convergence between CG and CSER ( Strandberg, 2005 ) . The UN Global Compact ‘s 2004 study ( Who Cares Wins, 2004 ) which concerned with the CSER and administration issues that can hold a material consequence on company fiscal public presentation, this is one of many recent studies analyzing the dealingss between CSER and administration patterns.

CSER can be improved through CG mechanism, companies responsibility towards a society and environment demands can be enhanced during the suited revelation of CSER, which is accomplished by strong directors characterized in effectual CG ( Shahin & A ; Zairi, 2007 ; Zairi, 2000 ) . In add-on, Social and environmental revelation is progressively showed as an component of good corporate administration ( Organization, 2002 ) .

This is besides agreed in the Cadbury ( 1992 ) which pointed out that a higher quality of CG could be reflected during development in the quality of CSER. Most of the investigates which showed the relation between CSER and CG have been conducted in developed states such as USA, Hong Kong and UK, therefore presenting a inquiry whether the consequences of these surveies can be applied in Libyan context. In malice of significance of CG and its possible impact on houses to take part in CSER, the surveies in this country are still missing. On the other manus, Elmogla ( 2009 ) said, no grounds decisions can be drawn about the relationship between the administration and environmental results.

The Influence of CG on CSER

Harmonizing to Buniamin et Al. ( 2008 ) , there is a possible relationship between the CG construction and the sensitivity for companies to take part in CSER. In fact, CG is described as a one of important component influencing in the societal duty sphere and can be a beginning of competitory advantage for companies in its ain right. On the other manus, the survey of Mizan & A ; Alamgir ( Year Unknown ) concluded that no unequivocal decisions about the relationship between the administration procedure and environmental issues.

Apart from the traditional attack to answerability in the context of CG, sustainability coverage has besides appeared, even though it is largely on a voluntary footing refering the societal and environmental influences ( Kolk, 2006 ) . Disclosure on environmental issues has the possible to increase stockholder ‘s wealth and can be regarded as one of the elements of good CG ( Organization, 2002 ) . However, the effectivity of ordinance on environmental hazard, which emphasizes consciousness of stockholders, basically depends on the quality and measure of the environmental revelation ( Sinclair-Desgagne & A ; Gozlan, 2003 ) .

The increasing of planetary environmental consciousness is clear with the debut of different describing guidelines by parties like Global Reporting Initiative ( GRI ) , the International Organization for Standardization ( ISO ) , Canadian Institute of Chartered Accountants ( CICA ) , The Association of Chartered Certified Accountants ( ACCA ) . Environmental costs and duties will go on to lift in line with the consciousness of society, authorities ordinance and corporations towards environmental concerns ( Rezaee, Szendi, & A ; Aggarwal, 1995 ) .

Indeed, the increasing involvement and the grow in prominence of corporate environmental and societal coverage for making corporate answerability, is the measure for the new administration ordinance theoretical account ( D. Hess, 2007 ) . This state of affairs has besides been closely linked to the acknowledgment that good CG needs to consideration of the influence a company on the community and the environment ( Andrew, 2003 ) . Despite the importance of CG and its possible impact on CSER for the companies, research in this country is still missing ( Buniamin, et al. , 2008 ) .

However, most of the old surveies that examined the relationship between CG and company voluntary revelation found that board independency, Chief Executive Officer, CEO dichotomy and direction ownership are among the important variables ( Cheng & A ; Courtenay, 2004 ; Haniffa & A ; Cooke, 2005 ; Ho & A ; Wong, 2001 ; Norita & A ; Shamsul-Nahar, 2004 ) . In add-on, Halme and Morten ( 1997 ) revealed that companies in industries that are environmentally sensitive reported most on the environment. However, non found the consequence of the figure of board members and the proportion of stock owned by the largest stockholder.

In the other word, Haniffa and Cooke ( 2002 ) revealed that the per centum of independent managers did non impact the extent of CSER in the thick Malayan companies. McKendall et Al ( 1999 ) discovered that: there are several grounds to expect a relationship between CG and corporate environmental coverage. First, one of the maps of managers is to guarantee companies ‘ conformity to any statute law, including environmental statute law and Torahs. Second, if the protection of the involvements of other stakeholders is a administration issue, this means that pull offing environmental influences is a administration and public presentation issue. Third, environmental conformity ever includes hard determinations and needs big disbursals, which can impact short term profitableness.

Therefore, the board should detect and back up environmental determinations. By and large The relationship between the environment and administration systems has been discovered from assorted positions ( Mizan & A ; Alamgir Hossain, Year Unknown ) .

Theoretical Model

Figure 2 depicts the theoretical model examined in this survey. The model is based on legitimacy theory. Mentioning to the model, the survey examines the consequence of the CG ( as independent variable ) on the corporate societal duty and environmental coverage ( as dependant variable ) . The company size ( COMS ) , company age ( COMA ) and type of industry ( TOI ) ( as control variable ) . The model efforts to depict that legitimacy theory has been used by many research workers ( Ahmad & A ; Mohamed, 2004 ; Deegan, 2002 ; Deegan & A ; Rankin, 1996 ) . All of them examined this theory applied to companies which are considered as ‘sensitive ‘ companies toward societal and environmental issues.

Deegan and Rankin ( 1996 ) stated that legitimacy theory besides posits that CSER revelation patterns are antiphonal to political, societal and economic force per unit areas. The most normally cited theory in societal and environmental coverage surveies is the legitimacy theory ( Gray, et al. , 1995 ) . Therefore, legitimacy theory has become one of the most cited theories within the societal and environmental accounting country. ( Tilling, 2004 ) . Tilling believes that legitimacy theory does supply a powerful mechanism for understanding voluntary societal and environmental revelations made by companies. The theory is based on the impression of ‘social contract ‘ , which limits the activities of a company within the restrictions set by the society.

Gray et Al ( 1996 ) show that the company will derive support from the stakeholders and go on in being in so far as its activities give benefits, or at least are non harmful to society. ‘Legitimacy ‘ is said to be as there is congruity between the activities of the company and social outlooks.

Therefore, in the absence of any compulsory coverage, a company should describe on the environment voluntarily to dispatch its environmental answerability to the populace. The following chapter discusses how this survey is conducted and explains the development of the hypotheses derived from the theoretical model.

Corporate Governance ( CG ) Figure: Model

Government Ownership ( GOVO )

Foreign Ownership ( FAMO )

Family Ownership

( FORO )

Managerial Ownership

( MANO )

Board Independence

( BI )

CEO Duality

( Chief executive officer )

Corporate Social Responsibility and Environmental Reporting

( CSER )

Employee Qualifications

( EQ )

Employee Policy

( EP )

Employee Health and


( EHS )

Trade Unions

( TU )








Company Size

( COMS )

Company Age ( COMA )

Type of Industry

( TOI )


Control Dependent Variable


Control Variables

Control Variables

Chapter 3



The intent of this chapter is to analyze the different methods and steps, chosen and employed in this survey in order to run into the research objectives. There are assorted methods that can be used in deciding research jobs in socie