Abstract

This study examines the association between cooperative social and environmental disclosure (CSED) and financial performance of deposit-taking savings and credit cooperatives (SACCOs) in Kenya. Using data comprising of 1272 observations for 212 deposit-taking SACCOs in Kenya over the period 2008–۲۰۱۳, panel OLS analyses are performed to establish the association between SACCOs’ CSED levels and financial performance. The results reveal a relatively low level of CSED by deposit-taking SACCOs in Kenya at 29.3%. As a departure from findings in mainstream studies, the study reveals a negative association between CSED and financial performance. We argue that the negative association could be due to changed regulatory landscape or a signal that Kenyan SACCOs are transitioning to financially (profit) oriented goals. The results are useful to regulators and policy makers in designing an optimal disclosure policy for SACCOs.

Introduction

There has been increased disclosure of corporate social engagement by organizations in many developed economies in the last 15 years (Bebbington, Larrinaga, & Moneya, 2008; Branco & Rodrigues, 2006, 2008; Islam, 2010; Kent & Zunker, 2013; Luethge & Han, 2012; Maali, Casson, & Napier, 2006; Magness, 2006; McGrath, 2008; Menassa, 2010; Najah & Jarboui, 2013). However, limited studies on social and environmental disclosure exist in developing economies (Abdul Hamid, 2004; Barako & Brown, 2008; Ghazali, 2007; Guidara, Khlif, & Souissi, 2015; Ibrahim & Hanefah, 2014). Social and environmental disclosures include disclosures regarding an organization and its physical and social environment (Gray, Owen, & Adams, 2009; Guidara et al., 2015; Luethge & Han, 2012). They are largely voluntary and include disclosures that focus on community, environment, employees, customers and products (Barako & Brown, 2008; Guidara et al., 2015; Ibrahim & Hanefah, 2014; Kent & Zunker, 2013; Luethge & Han, 2012; McGrath, 2008; Menassa, 2010).