Board characteristics and integrated reporting quality: evidence from ESG European companies

Chouaibi, Salim; Chouaibi, Yamina; Zouari, Ghazi

doi:10.1108/emjb-11-2020-0121

Cited by 54 publications

(64 citation statements)

References 116 publications

(136 reference statements)

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“…From the agency theory perspective, a large board may enhance governance practices by reducing information asymmetry (Fasan and Mio, 2017). It could also mitigate the distributional conflicts between insider and minority outsider owners (Chouaibi et al , 2021). Large boards may also enhance the board’s ability to control management actions, thus increasing transparency and the disclosure of non-financial information (Oba et al , 2014; Kachouri and Jarboui, 2017).…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…Large board size allows companies to diversify their boards in terms of financial expertise and boosts the capacity of their management to exercise oversight (Fasan and Mio, 2017; Chouaibi et al , 2021). However, large boards may suffer from mis-coordination problems and slower decision-making (Merendino and Melville, 2019; Chouaibi et al , 2021). However, Lipton and Lorsch (1992) indicate that the benefits of increased monitoring capacities associated with large size boards outweigh any supposed deficiencies.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…Moreover, they can represent ownership better and be more prone to disclose information about strategic goals and other useful information to stakeholders. Large board size allows companies to diversify their boards in terms of financial expertise and boosts the capacity of their management to exercise oversight (Fasan and Mio, 2017; Chouaibi et al , 2021). However, large boards may suffer from mis-coordination problems and slower decision-making (Merendino and Melville, 2019; Chouaibi et al , 2021).…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

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Attributes of corporate boards and assurance of corporate social responsibility reporting: evidence from the UK

Aladwey¹,

Elgharbawy²,

Ganna³

2021

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Purpose This study aims to investigate the relationship between the attributes of corporate boards in UK companies and their tendency to assure their corporate social responsibility (CSR) reports. Design/methodology/approach From the agency theory perspective, the authors examine the impact of board attributes on the assurance of CSR reports for the Financial Times Stock Exchange (FTSE) 350 during 2016–2019. The authors used annual integrated reports, companies’ websites and Thomson Reuters Eikon database for data collection and the logistic regression for data analysis. Findings The results confirm that some board attributes significantly influence a company’s decision to assure its CSR reports. While board size, board tenure, the presence of female board members and female executive directors and Chief Executive Officers (CEOs)’ global working experience positively contribute to CSR assurance (CSRA) decisions, the chairman’s independence negatively contributes to it. However, board independence, board meetings and board financial expertise demonstrate no effect on the CSRA decision. Research limitations/implications The authors focus on some attributes of board members, but the authors did not consider board diversity in its broader meaning. Moreover, the effect of board committees and their attributes on CSRA was not addressed. The authors also did not consider the impact of scope, the quality level of assurance service and the differences between assurance providers on companies’ decisions to neither undertake CSRA nor choose between assurance providers. Practical implications The study provides insights into the increasing demand on voluntary assurance to boost the credibility of CSR reports and the role of the board of directors (BOD) in taking this initiative. The findings highlight the importance of board diversity (e.g. gender) in improving transparency and sustainability reporting, which can help policymakers and regulators in shaping future governance policies. Additionally, the findings refer to a drawback in the UK Corporate Governance Code regarding the chairman’s independence, which requires corrective actions from the Financial Reporting Council. The findings raise concern over the small share of audit firms in the assurance service market, despite the growing demand for these services in the UK, which may require more attention to these services from the audit firms. Social implications Companies are increasingly pressurized, especially after the COVID-19 pandemic, to discharge their accountability to stakeholders and to act in a socially responsible manner in their business activities. CSR reporting is one of the main tools that companies use to communicate their social activities. Understanding the determinants of voluntary CSRA helps to increase the credibility of CSR reports and the favorable response to social pressure. Originality/value The authors add empirical evidence to the limited literature on CSRA about the role of the BOD in undertaking companies’ social responsibility, improving CSR reporting and reducing information asymmetry. It also highlights the significance of maintaining a balanced BOD in terms of gender, experience and tenure, in minimizing the risk of perpetuating non-transparent integrated reporting.

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Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

See 1 more Smart Citation

Attributes of corporate boards and assurance of corporate social responsibility reporting: evidence from the UK

Aladwey¹,

Elgharbawy²,

Ganna³

2021

View full text Add to dashboard Cite

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“…To ensure such evolution, solid and long-term commitment should be demonstrated by the board and executives with support from internal control bodies such as (1) an audit committee (e.g., Bravo & Reguera-Alvarado, 2019;Arif, Sajjad, Farooq, Abrar, & Joyo, 2020;Chouaibi, Chouaibi, & Zouari, 2021) and (2) internal audit (e.g., Bonrath, Eulerich, & Lopez-Kasper, 2022;Soh & Martinov-Bennie, 2015). Moreover, PWC (2021, p. 4) proposes the audit committee's framework for overseeing ESG, which consists of three steps and questions: (1) Disclosures: Are the ESG disclosures investor grade?…”

Section: Esg and Implications For An Audit Clientmentioning

confidence: 99%

The Importance of the ESG Factors and Their Potential Impact on an Audit of a Financial Statement

Indyk¹

2022

IBES

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This review paper aims to determine the potential impact of Environmental, Social, and Corporate Governance (ESG) factors on an audit of a financial statement. For this reason, a triangle of implications has been proposed, i.e., for: (1) audit clients whose business activity is reflected in a financial statement; (2) a financial statement; and (3) audit firms which perform an audit. The evidence represents a collection of a) scientific articles, b) publications offered by professional accounting bodies and consulting firms, and c) relevant standards and legal regulations. The paper finds that ESG has become a factor which must be considered, and the financial world will face multiple changes. For audit clients, the critical aspect will be ESG integration with a business model. Financial reporting will evolve under Exposure Drafts IFRS S1 and IFRS S2. A financial statement will require in-depth knowledge about existing accounting standards to reflect the financial implications of ESG-related products and transactions. Moreover, there is a distinction between “financial audit” and “ESG assurance” in audit and assurance services. However, some ESG-related risks and matters may be considered in the financial audit cycle. The paper’s findings are significant from the scientific research perspective as only a few studies contribute to ESG and auditing. The article also provides some practical implications that might be important for audit clients, firms, and regulators.

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“…Literature review and formulation of hypotheses 2.1 Cost of equity and performance of banks within framework of integrated reporting quality IRQ is a new reporting tool that covers both financial and nonfinancial data, and it represents a natural progression in the corporate reporting movement. Although this technique has received increased attention in recent years, both academically and professionally, the quality of the reports remains a significant feature due to inadequate examination (Vitolla et al, 2019;Chouaibi et al, 2021c).…”

Section: Introductionmentioning

confidence: 99%

The integrated reporting quality, cost of equity and financial performance in Islamic banks

Chouaibi

Belhouchet

Chouaibi

et al. 2022

JGR

Self Cite

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Purpose The purpose of this paper is to examine the effect of integrated reporting quality (IRQ) on the cost of equity and financial performance of Islamic banks (IBs) in the Middle East and North Africa (MENA) region. Design/methodology/approach This study examines 67 IBs in the MENA region over a period of six years (2015–2020). This paper is motivated by the use of the method of ordinary least on square panel data. A multiple regression model is used to analyze the impact of the quality of integrated reporting, on the one hand, on the cost of equity and, on the other hand, on the financial performance of IBs in the MENA region. Similarly, as an extension of the research, the authors exploited the dynamic effect of the data set through the generalized method of moments and estimated the impact of the one-year lagged value of the cost of equity. Findings The empirical results obtained do indicate that the quality of integrated reporting seems to have a significant negative effect on the cost of equity capital. It is also interesting to note that IRQ has a positive and significant impact on the financial performance of IBs. Research limitations/implications Current research can help and encourage IBs to provide quality information to reduce the cost of equity. Furthermore, this research could be a valuable source of information for policymakers, regulators and stakeholders on IB governance practices and disclosure. Finally, integrated reporting is very important for the progress and development of the Islamic banking sector. Originality/value This paper is motivated by the limited research on integrated reporting and financial performance of IBs. It makes an important contribution to the academic literature by adding to the limited body of research on the cost of equity, performance and quality of integrated reporting in the MENA region. This study is also important for the investors seeking to reduce the cost of equity to improve financial performance.

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Board characteristics and integrated reporting quality: evidence from ESG European companies

Cited by 54 publications

References 116 publications

Attributes of corporate boards and assurance of corporate social responsibility reporting: evidence from the UK

Attributes of corporate boards and assurance of corporate social responsibility reporting: evidence from the UK

The Importance of the ESG Factors and Their Potential Impact on an Audit of a Financial Statement

The integrated reporting quality, cost of equity and financial performance in Islamic banks

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