Corporate social responsibility reporting and corporate governance mechanisms: An international outlook from emerging countries

Abstract

Within corporate governance, the board of directors plays a major role in improving corporate transparency by increasing the disclosure of corporate social responsibility (CSR) information. In this paper, we analyse the effect of board composition, particularly board independence, board gender diversity, CEO duality, and the presence of a CSR board committee on CSR reporting. Evidence of this effect is still scarce when it concerns the effect of corporate governance mechanisms and CSR disclosure in firms pertaining to emerging market economies, and for this reason, our study focuses on this type of country. Our sample comprises 934 international firm‐year observations from the following 10 countries with emerging markets: Brazil, Chile, China, Czech Republic, Egypt, India, Mexico, Russia, South Africa, and Thailand for the period 2004–2015. This classification of countries with emerging markets is based on the Morgan Stanley Capital International (MSCI) Emerging Markets Index. Drawing on agency and stakeholder approaches, we posit four hypotheses: board independence and CSR board committees positively affect CSR disclosure, whereas board gender diversity and CEO duality have a negative effect. The results obtained reveal that in emerging market economies, the presence of women on boards of directors is quite limited and, therefore, their participation in decision‐making is minimal. Furthermore, CEO duality discourages the disclosure of CSR information, which may be justified for the family orientation of most firms in these countries, where the CEO is usually also the chairperson of the board.

Sustainability performance indicators: Definition, interaction, and influence of contextual characteristics

“…Similarly, Joyce and Paquin (2016) conclude that sustainability practices contribute to environmental, social, governance, and economic value creation, despite being assessed differently by diverse cultures. Gallego‐Álvarez and Pucheta‐Martínez (2020) obtain the same conclusion for sustainability reporting. Our results support these conclusions for the different types of SPI.…”

The link among board characteristics, corporate social responsibility performance, and financial performance: Evidence from the hospitality and tourism industry

“…With the growing importance of CSR, recent studies proposed that independent directors may also align the interests of firms with those of stakeholders (Gallego-Álvarez & Pucheta-Martínez, 2020), and tested this proposition by incorporating board independence in CSR studies. However, the findings are inconclusive; some studies found that board independence improves CSR engagement (Arayssi et al, 2019;Gallego-Álvarez & Pucheta-Martínez, 2020), others found that it decreases (Adel, Hussain, Mohamed, & Basuony, 2019), and still others found a neutral effect (Michelon & Parbonetti, 2012). Therefore, our study provides additional evidence of the influence of independent directors on CSRP.…”

“…the authors attribute this situation to the immaturity or small proportion of CSR committees in the sampled firms (Michelon & Parbonetti, 2012). Past evidence also indicated that CSR committees are influential in fostering CSR practices of firms in emerging countries (Arayssi et al, 2019;Gallego-Álvarez & Pucheta-Martínez, 2020). As sectoral evidence, Uyar et al (2020) proved that logistics firms with CSR committees are more likely to publish a higher number of CSR reports over the years.…”

“…The evidence concerning the association between board gender diversity and CSRP or reporting is mixed in the literature depending on the context. While some studies conducted in developed countries found a positive relationship between the proportion of females on boards and CSRP(García Martín & Herrero, 2020;Mallin & Michelon, 2011), other studies implemented in emerging countries found a negative relationship(Gallego-Álvarez & Pucheta-Martínez, 2020;Muttakin, Khan, & Subramaniam, 2015). The contrasting evidence might arise from the empowerment or skills of female directors in these two types of countries.…”

Corporate governance reform and overstatement of compliance: Illustrations from an emerging economy

“…Reform initiatives such as appointing more IDs onto boards are expected to uncover corporate deception (Bhagat, Brickley, & Coles, 1987). Since enhanced board independence instils an independent and competent view of the board (Gallego‐Álvarez & Pucheta‐Martínez, 2020), it may work as a catalyst to minimise window dressing of statements. Beasley's (1996) study in a developed country context shows that more corporate fraud takes place in firms where insider directors are appointed, and the extent of fraud lessens significantly with the appointment of IDs.…”