Effects on Voluntary Disclosure Following Chinese Foreign Direct Investment in Australian Public Corporations
This thesis is motivated by the speed and extent of Chinese foreign direct investment (FDI) in Australia. The polarisation of political and social opinion prompts an exploration of management attitudes and corporate accountability towards Australian stakeholders following Chinese FDI. The three papers in the thesis provide the opportunity to examine the issue of corporate social responsibility (CSR) reporting and stakeholder effects using theoretical triangulation. Each of the three papers represents a different layer of organisational change related to Chinese FDI. This starts with a broad consideration of the external institutional pressures experienced by Chinese investors in Paper 1. The internal CSR reporting choices of Chinese-acquired organisations in response to those institutional pressures is then explored in Paper 2. Finally, the effect of company reporting choices on individual stakeholder behaviour is considered in Paper 3. Different theoretical and methodological approaches are taken to address and critically evaluate the three organisational layers to provide a clear account of the causes and effects of CSR disclosures in this setting.
Paper 1 examines institutional effects on employee-related disclosures of Australian mining companies. It considers the effect of competing home and host institutional influences in the management of employees, finding a greater disclosure of Chinese-style commitment and control factors after Chinese acquisition. The strength of the acquirer’s ties to the Chinese state is found to affect the extent to which western-style high involvement/high commitment practices are disclosed. Chinese state-owned enterprises (SOEs) adhere more closely to home rather than host institutions in employee-related disclosures after acquisition.
Paper 2 considers the salience of minority shareholders of Australian mining companies where there is Chinese controlling ownership in contrast to Australian controlling ownership. A comparison is made between shareholder CSR information needs and their perceptions of the adequacy of CSR reporting, as identified in a survey of 202 shareholders. This identifies a perceived information gap. A comparison is also made between shareholder CSR information needs and the company’s CSR reporting via content analysis of CSR reports to identify an actual information gap. Using a material legitimacy model (Dumay et al, 2015) based on Suchman’s (1995) concepts of strategic and institutional legitimacy, it is found that Chinese-owned company CSR disclosures prioritise the needs of minority shareholders to a lesser degree than those of Australian owned companies.
Paper 3 investigates the extent of shareholder engagement and satisfaction with corporate social responsibility (CSR) reports of a Chinese SOE-owned company compared to an 3 Australian-owned company in the Australian mining industry. It is based on a survey of minority shareholders of two Australian mining companies, one of which has a Chinese majority shareholder, and the other an Australian majority shareholder. It is found that, contrary to decision-usefulness theory which posits that users will read CSR reports only if they are deemed to be reliable, that perceptions of poor credibility actually result in a higher propensity to read the reports.
Higher readership of CSR reports generated by Chinese-owned companies compared to Australian-owned companies is linked to shareholder concerns about accountability, which stem from company responses to host and home institutional pressures. Practical implications are outlined for the Organisation for Economic Co-operation and Development as well as the Australian Foreign Investment Review Board in their consideration of the impact of Chinese FDI on the national interest.
