Board governance mechanisms and sustainability reporting quality: A theoretical framework

Moses, Elaigwu; Ahmad, Ayoib Che; Abdulmalik, Salau Olarinoye

doi:10.1080/23311975.2020.1771075

Cited by 30 publications

(45 citation statements)

References 153 publications

(313 reference statements)

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“…Almaqtari et al (2020) recently reviewed 161 published articles related to CG in India, their recommendation that the next agenda for research includes the impact of corporate governance on environmental disclosure. Moses et al (2020) concluded that in most developed countries, effective board governance can improve sustainability performance and the quality of the sustainability report, there are mixed conclusions. The decision to make an environmental disclosure needs to consider the cost aspects and the company's financial condition.…”

Section: Corporate Governance Principlesmentioning

confidence: 99%

Factors influencing environment disclosure quality and the moderating role of corporate governance

Solikhah

Maulina

2021

Cogent Business & Management

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This present study aims to investigate the quality and scope of environmental disclosure (ED) in environmentally sensitive manufactures. It also analyzes the effect of media coverage, environmental award, and financial performance on the quality of environmental disclosure and the extent to which the implementation of corporate governance (CG) principles in moderating these factors. This study used 135 manufacturing companies listed in the Indonesian Stock Exchange during 2012-2016. Partial least squares-structural equation modeling (PLS-SEM) has been employed to test the research hypothesis. The results point out that media coverage and awards associated with the quality of environmental disclosure. The media coverage and environmental awards can improve the quality of environmental disclosure and the correlation will increase if the company pays attention to the implementation of CG principles. This finding supports a comprehensive view of corporate governance which includes disclosure. Empirical findings indicate that Badingatus Solikhah

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Section: Corporate Governance Principlesmentioning

confidence: 99%

Factors influencing environment disclosure quality and the moderating role of corporate governance

Solikhah

Maulina

2021

Cogent Business & Management

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“…The CEO compensation has been used by many public companies and some private companies to reduce the cost of equity (Dhole et al, 2015;Moses et al, 2020). Executive compensation and equity incentives payment seems to present a paradox in terms of giving a contribution to firms.…”

Section: 23mentioning

confidence: 99%

“…Executive compensation and equity incentives payment seems to present a paradox in terms of giving a contribution to firms. In addition, Moses et al (2020) suggest that the directors decide on executive compensation schemes on behalf of the shareholders. Therefore, managers are unlikely to be motivated to make decisions in the interest of creditors, and it is difficult for creditors to participate in the managerial decision-making process.…”

Section: 23mentioning

confidence: 99%

“…Moreover, executives can use these investments in business ethics to expand their discretionary power and manipulate the accounting results. In this regard, chief executive officer (CEO) compensation has been used by many public companies and some private companies to reduce the cost of equity (Dhole et al, 2015;Moses et al, 2020). A recent study by Cooper et al (2016) finds that higher CEO incentive compensation is associated with higher realized future returns.…”

Section: Introductionmentioning

confidence: 99%

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Corporate ethical behavior and the cost of equity capital: evidence from the world’s most ethical companies

Zouari‐Hadiji

Chouaibi

2021

JFRA

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Purpose This paper aims to examine the effect of the corporate ethical approach on the cost of equity capital. This study is conducted on a large international sample on behalf of the world’s most engaged firms from an ethical point of view in 2015. Design/methodology/approach The multivariate linear regression model is used to meet the purpose of this study and research hypotheses are also examined using a sample of 80 of most ethical firms in the world during the year 2015. Moreover, three variables (i.e. business ethics, corporate social responsibility and executive compensation based on the achievement of sustainable development goals) are used to reflect the corporate ethical approach and the implied cost of equity capital is used for estimating the cost of equity. In this regard, equity cost estimation is the most appropriate approach to test the effect of business ethics on the cost of financing firms. Findings Based on a sample of 80 firms emerging as the world’s most ethical firms in 2015, the results revealed that firms with better ethics scores are significantly associated with a reduced cost of equity capital. This paper also demonstrates that the executive incentive pays that are based on the objectives of sustainable development are able to explain different outcomes regarding the relation between corporate ethical behaviors and the cost of equity. These findings support arguments in the literature that firms with socially responsible practices have a higher valuation and lower risk. Originality/value This study provides implications for global regulators and policymakers when setting social reporting standards, suggesting that corporate ethical engagement reduces the cost of equity capital by decreasing the information asymmetry and thereby reducing the firms’ risk. Therefore, the findings may be informative to international managers and investors when considering the effect of business ethics on the firm’s ex-ante cost of equity. In this perspective, the voluntary disclosure of information makes it possible to mitigate the problems of asymmetry of information and conflict of interest between the firm and its main providers of capital, which could reduce the cost of equity.

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“…Executive compensation based on SD has been employed by many public and a few private companies to scale back the cost of equity capital [26][27][28]. For instance, Li and Liu [29] suggest that the adoption of executive compensation schemes is on behalf of shareholders and not creditors.…”

Section: Executive Compensation Based On Sustainable Development and The Cost Of Equitymentioning

confidence: 99%

The Effect of Corporate Social Responsibility and the Executive Compensation on Implicit Cost of Equity: Evidence from French ESG Data

2021

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This research aimed to evaluate the effect of corporate social responsibility (CSR) and executive incentive compensation based on the achievement of sustainability goals on the implicit cost of equity. To test the study’s hypotheses, the authors applied linear regressions on panel data using the Thomson Reuters ASSET4 and Thompson Institutional Brokers Earnings Services (I/B/E/S) database of a sample of 154 French ESG firms over the 2015–2020 period. Our results show that CSR activities lower the cost of equity capital; hence, these activities are important to shareholders’ investment and financing decisions. The results have practical implications for investors and other partners interested in the business. Thus, using the implicit cost of equity is a better estimate of shareholder requirements in the context of socially responsible businesses. The results of this work could attract the attention of socially responsible investors and, especially, corporate citizens.

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Board governance mechanisms and sustainability reporting quality: A theoretical framework

Cited by 30 publications

References 153 publications

Factors influencing environment disclosure quality and the moderating role of corporate governance

Factors influencing environment disclosure quality and the moderating role of corporate governance

Corporate ethical behavior and the cost of equity capital: evidence from the world’s most ethical companies

The Effect of Corporate Social Responsibility and the Executive Compensation on Implicit Cost of Equity: Evidence from French ESG Data

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