Board’s financial expertise and corporate social responsibility disclosure in China

Abstract

Purpose This study aims to investigate the impact of the board’s financial expertise (BFE) on corporate social responsibility (CSR) disclosure in China. Design/methodology/approach Using a sample of Chinese listed firms from 2009-2016 (making 3272 firm-year observations), this study uses the generalized method of moments (GMM) and panel data estimation techniques. Findings Using the resource dependence theory, the findings of this study are twofold. First, the is positively associated with the disclosure level of CSR. Second, this positive impact is more pronounced in firms with female CEO and state ownership. The findings are robust to the potential issues of endogeneity and sensitivity analyses. Practical implications Practically, the findings hold value for the senior management of Chinese firms to ensure the presence of financial experts in boards to yield both financial and non-financial outcomes. Social implications This study points out how financial experts on boards influence the societal outcomes via disclosure of CSR. Financial experts encourage participation in social and sustainable practices which creates a positive image of the firm not only in the eyes of society but also for investors. Originality/value This study is unique and contributes to the extant literature by examining the impact of a new attribute, i.e. the BFE on the level of CSR disclosure in China.

Impact of corporate social responsibility on financial expert CEOs' turnover in heavily polluting companies in Bangladesh

“…In companies with majority shareholders ownership, CSR information is more likely to be disclosed when the board, audit committee and the ownership concentration are all positive factors (Fallah & Mojarrad, 2019). Thus, by replacing financial background executives, the previous company will be unable to make the same strategic decisions, while the new executives may be less familiar with financial information, capital markets operations, and long-term strategies than the previous executives (Naheed et al, 2021). As a result, the focus may be on short-term performance for the sake of winning the trust of short-term shareholders and investors and reducing investments in CSR after a change of senior management (Rashid et al, 2020;Rokhayati et al, 2021).…”

“…In a variety of studies (Cao et al, 2006;Cust odio & Metzger, 2014;Dwekat et al, 2020;Fallah & Mojarrad, 2019;Naheed et al, 2021;Qa'dan & Suwaidan, 2019;Rashid et al, 2020;Shen et al, 2017), it has been found that changes of top management in the organization not only cause major strategic changes, but also distress the association between the company and its internal and external stakeholders.…”

Integrated reporting, textual risk disclosure and market value

“…The existing evidence (e.g., Kothari et al, 2009;Cormier and Magnan, 2014;Leuz and Wysocki, 2016;Dyer et al, 2017;El-Diftar et al, 2017;Naheed et al, 2021) suggests that corporate disclosure, which covers several topics including, for example, forward-looking, corporate social responsibility, and risk, benefits companies as it improves corporate transparency and thus reduces information asymmetries. Based on prior literature (e.g., Linsley and Shrives, 2005), risk disclosure practises should result in improving corporate transparency.…”

The jinx of real earnings management: evidence from inefficient investments and debt maturity structure in Pakistan

“…The impact of corporate governance on firms' fundamentals is also debated among researchers. The board characteristics across different countries also impact the fundamental characteristics of the firm (Muhammad et al, 2020;Naheed et al, 2021;Ullah et al, 2021). Compliance with the corporate governance mechanism enhances the monitoring of managerial activities and reduces the conflict between agent and principal.…”

“…Accordingly, as per the institutional settings, managers deviate from the best operating practices to engage in REM. The general outlook is that as accounting regulations are stricter after the implementation of the Sarbanes-Oxley Act, firms are more involved in REM activities (Naheed et al, 2021). The literature on REM is evolving and studies from different institutional settings present mixed results.…”