Descriptive statistics

Table 6 provides the descriptive statistics of the dependent and independent variables for the entire sample. In order to reduce skewness and to ensure that data is normally distributed, outliers have been detected by using the outlier labeling rule technique (Hoaglin & Iglewicz, 1987) and then omitted. According to this technique, the interquartile range (IQR), which is the difference between the upper quartile (Q3) and the lower quartile (Q1) of a data distribution, is multiplied by a factor of 2.2. The resulting number is then deducted from Q1 (added to Q3) and the values lower (higher) than the result are considered outliers. In this respect, the numbers of observations of the independent variables vary from 38 to 51 cases due to the omission of outliers or missing data, as in the case of LEV. As shown in Table 6, the total level of CSR disclosure (CSRTOT) of Bulgarian listed companies varies between a minimum of 1 mention of a CSR-related keyword up to a maximum of 66 mentions, with an average level of 17.88 mentions. The median value is 13 and thus lower than the mean, which indicates that the data is skewed to the right. The minimum scores of environmental (CSRENV) and social disclosure (CSRSOC) are both zero, which means that some companies have disclosed information only on environmental issues, while others have provided information only on social issues. In addition, Bulgarian companies tend to report on average somewhat less on environmental topics, with an average score of ca. 8 and maximum score of 39, than on social topics with ca. 10 mentions on average and a maximum of 46. The median values of CSRENV (6) and CSRSOC (8) are also lower than the means, which again shows that the data is skewed. Therefore, the natural logarithms for the three levels of CSR disclosure will be used in the regression analysеs.

The independent variables referring to measures of firm performance reveal that ROA has a mean value of .03, indicating that for each invested USD in assets Bulgarian companies generate 3 cents of profits. With .06, ROCE has a higher average value, which means that companies utilize their invested capital on average more efficiently than their assets. The negative values for both ROA (-.14) and ROCE (-.26) show that some firms even incur financial losses. Compared to the ROA values of companies in other developing countries such as Thailand with a mean score of .082 (Jitaree, 2015), Brazil with an average of .052 (Ching et al., 2017) and Ghana with .069 (Welbeck et al., 2017), Bulgarian listed companies are somewhat less profitable despite the favorable economic conditions in the country. In terms of leverage, the average level of DEBT_A is .1, and of DEBT_E it is .08. These values are again considerably lower in comparison to the debt levels of companies in other

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developing countries (e.g. Chiu & Wang, 2014; Elfeky, 2017; Juhmani, 2014; Naser et al., 2006; Wuttichindanon, 2017). Taken together, Bulgarian companies are characterized by low profitability as well as low degree of debt financing. Based on the notions of stakeholder theory, companies that are less profitable and indebted would have fewer incentives to disclose CSR information to meet demands of their stakeholders.

Table 6 Descriptive statistics

Variable N Minimum Maximum Mean Median SD

CSRTOT 51 1 66 17.88 13 14.72 CSRENV 51 .00 39 8.02 6 8.02 CSRSOC 51 .00 46 10.04 8 9.92 ROA 48 -.14 .18 .03 .02 .07 ROCE 50 -.26 .4 .06 .05 .12 DEBT_A 46 .00 .4 .1 .06 .11 DEBT_Е 38 .00 .43 .08 .03 .1 ASSETS ($ million) 46 .82 172.52 47.36 26.13 48.64 ASSETSa _{46 14.28 19.95 17.17 17.18 1.25} SALES ($ million) 46 .01 184.76 33.34 11.93 47.43 SALESa _{46 9.21 19.97 16.17 16.38 2.13} MED 50 .00 93 19.12 7.5 24.47 MED_D 46 .00 503 77.56 8 130.03 FOWN 51 .00 1 .41 .00 .49 FBOARD 47 .00 .83 .14 .00 .24 IND 51 .00 1 0.53 1 0.5 AGE 47 9 102 37.57 25 24.46

Notes: a_{Log transformed variable. For description of variables see Table4.}

With regards to firm size, the descriptive statistics reveal that the average amount of total assets is USD 47.36 million, with a range from USD .82 million to USD 172.52 million, while that of total sales is USD 33.34 million, ranging from a minimum of USD .01 million to a maximum of USD 184.76 million. The minimum and maximum values of both size variables indicate a wide variability in sales and assets, which is also shown by the high standard deviations, namely USD 40.15 million for total assets and USD 31.56 for total sales. Therefore, the natural logarithms of both measures are used in the regression analysis.

The average company visibility (MED), as measured by media exposure in Bulgarian newspapers, was 19 articles in 2016. This is much lower compared to the media visibility of companies in Spain (Reverte, 2009), Germany (Gamerschlag et al., 2011) or Portugal (Branco & Rodrigues, 2008), which are measured with the same approach. The other measure of company visibility (MED_D), which presents the number of hits when searching for the firms’ names on the database LexisNexis, shows much higher visibility of Bulgarian listed companies, as the average number of articles is 90.8. This discrepancy in results may be mainly due to the fact that the database detects mentions in a much wider variety of news

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sources. However, both measures of visibility have high standard deviations (24.47 for MED and 130.03 for MED_D) and minimum and maximum values of .00 and 93 (MED) or 503 (MED_D), which indicate a wide spread of the values in the distributions. Moreover, the medians of 7.5 (MED) and 8 (MED_D) articles reveal that half of the companies have a relatively low level of media visibility and that the data distribution is highly skewed to the right. Thus, here again log transformations of both variables will be conducted.

The descriptive statistics further show that the foreign ownership dummy variable FOWN has a mean of .41 and a median of .00, which reveal that less than half of companies have foreign investors, as already presented in Table 5. The high standard deviation (.49) presents here as well a very high variability in the values. The other measure of foreign ownership (FBOARD) indicates that on average 14% of firms’ board members are foreigners, which again demonstrates a very low presence of foreign involvement. The average age (AGE) of Bulgarian companies until the reference period is 37.57 years, ranging from a minimum of 9 years to a maximum of 102 years. Thus, Bulgarian companies are on average older compared to companies in other developing countries such as Bahrain with a mean age of 29 years (Juhmani, 2014) and China with ca. 12 years (Li et al., 2013). On the other hand, the results are similar to these of companies operating in Sri Lanka with an average of 38 years (Dissanayake et al., 2016) and Ghana with 41.6 years (Welbeck et al., 2017). Since the data is skewed to the right, with a median (25) lower than the mean (37.5), the natural logarithm of age will be used in the regression analysis.

The industry dummy variable (IND) with a mean of .53 indicates that CSR firms are almost equally presented in both sensitive and non-sensitive industries. Moreover, since it is assumed that companies operating in industries that are more sensitive tend to disclose more on CSR issues than those operating in less sensitive sectors, descriptive statistics for these two sub- sample groups have been provided in Appendix III (Panels A and B). The results confirm that in fact Bulgarian companies from sensitive industries have a slightly higher level of CSRTOT with a mean of 18.59 than firms from non-sensitive industries (17.08). This applies also to the levels of CSRENV and CSRSOC, which are again higher for sensitive (8.59 and 10.33) than for less sensitive industries (7.38 and 9.77).

Further, Figure 2 displays the coverage of CSR topics by Bulgarian companies in their

websites or reports by means of a bar chart. This would allow us to better apprehend the nature of CSR disclosure in Bulgaria, and, in particular, to discover on which issues do companies put more emphasis in their reporting and which topics are less popular across firms. The first ten bars from above relate to CSRENV, while the remaining 19 bars pertain to

issues of CSRSOC. As it can be seen, environmental protection is the most covered topic by

the companies in this sample, with 63% of them reporting on it. This corresponds to the findings of Bankova (2014) and Slavova (2015a), according to which the CSR business practices of Bulgarian firms are aimed primarily at protecting the environment, mostly through improving the efficiency of the production processes, which in turn leads to less

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emissions and waste. In support of these claims, Figure 2 shows that waste is the second most

covered environmental issue with coverage of ca. 41%, followed by emissions with 33% of

and recycling with 31%. In addition, environmental impact is considered by 39% of firms in

their reports or websites, and energy efficiency is covered by almost one-third of companies.

Less attention receive the issues effluents and biodiversity, which are considered only by ca.

12% and 4% of the companies. On average, the environmental topics are covered by ca. 30%of firms, while social issues are considered by just 19% of the sample companies. These results are also in line with the conclusion of Alpha Research (2006) that caring for the environment is becoming a popular CSR activity, as a result of which companies receive more publicity and better image. Although the relatively high engagement of Bulgarian firms into environmental activities may be mainly the result of their reputational concerns (Dimitrov, 2010), it may be also attributable to some extent to state initiatives aiming to

promote CSR, such as proclaiming good CSR practices or awarding companies (Bakardjieva,

2015). In addition, environmental protection, along with accountability of CSR practices, constitutes one of the five major goals of the National Strategy for CSR 2009 - 2013. The cultural context of the country may also be somewhat decisive. Since Bulgaria is a state with a feminine society, which has a collectivistic as well as long-term oriented culture with pragmatic approach, companies operating there are expected to attach importance to the environment (Gray, 1988;) and to disclose more information about their practices in this field (Gallego-Alvarez & Ortas, 2017). Overall, preserving the environment is recognised by a substantial part of Bulgarian companies as one of their responsibilities and as a key task related to CSR, which is also noted by Spassova et al. (2007).

With regards to subjects of social disclosure, Figure 2 displays that 43% of companies report

about their compliance with laws or various CSR standards, which confirms Bakardjieva’s

(2015) statement that a growing number of Bulgarian firms start to comply with еthical norms and standards. Other legal responsibilities, when following Carroll’s (2016) definition of CSR, about which Bulgarian companies report to a much lower degree include measures

against child labor (12%), forced labor (10%), discrimination (12%) and corruption (6%), as

well as recognizing employees’ rights of collective bargaining (6%) and freedom of

association (10%). What is noteworthy about these results is that despite the high levels of corruption, which is recognized as the major challenge for the companies in Bulgaria, very few firms openly state in their reports or websites that they take measures against it and thus follow the anti-corruption principle of the UN Global Compact. Reason behind this could be that corruption is so widespread in all levels of state administration, that the business sees itself unable to fight it on its own. Besides, the business itself is sometimes forced to participate in corruption practices by state administration in order to be allowed to operate. According to a study by the Bulgarian Chamber of Commerce and Industry (2016), 46% of firms in Bulgaria have been subjected to bribery pressure from the state structure.

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Figure 2: CSR coverage by Bulgarian companies

Other topics of disclosure, which receive relatively much attention, are related to the ethical responsibilities of firms and especially to the care for employees. This is not surprising, since most businesses in Bulgaria understand by CSR above all caring for the staff and their families (Alpha Research, 2006). Accordingly, 43% of studied firms report about their

commitment to employees’ health and safety, 41% reveal information about offering and

conducting employees’ trainings and ca. 22% of firms report about providing some employee

benefits. Consistent with these results, Spassova et al. (2007) note that the concern of Bulgarian companies towards the social conditions of employees is growing in the increasingly globalized economy. The results are also in line with Bakardjieva’s (2015)

findings. Further, 16% of companies inform about supporting educational and training

programs aimed at non-employees. Given the high youth unemployment rate in the country, programs that would facilitate the inclusion of unemployed young people in the labor market are of great importance to the society but also to the business. The relatively low commitment of Bulgarian companies in this area of CSR could be explained to some extent by the minor role of the non-governmental sector in stimulating businesses to channel resources, efforts

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and funds to such programs (Alpha Research, 2006). In addition, the study by Alpha Research (2006) reveals that mostly large foreign companies with developed corporate corporate policy and strategy invest in educational and training programs. Little consideration is also given to

employment of minorities, which is reported by only 4% of firms. With respect to the

philanthropic responsibilities of Bulgarian companies, Figure 2 shows that 33% of them

report about participation in charitable activities or about donations made to different causes,

ca. 26% disclose that they have contributed to the funding and/or organization of cultural or

sports events, 16% inform about CSR activities oriented towards local communities, and only

14% report about investments in the local community. Although philanthropy has a long

history in Bulgarian society, the reported philanthropic engagement of companies ranks behind caring for the environment and for the employees. This may indicate a small shift in values of companies, driven by the expectations of different stakeholders. Overall, about 30% of companies report about participating in some kind of social initiative.