Empirical investigations on boards, business characteristics, human capital and environmental reporting

Abstract

Purpose – The objectives of this paper are to examine the level of environmental disclosure in annual reports made by Malaysian public listed companies for the year ended 2009, and to investigate whether there are any relationships between board characteristics (board size and board independence), firm characteristics (business type) and human capital characteristics (age, knowledge background and proportion of female directors) and environmental disclosure in Malaysian public listed companies' annual reports for the year ended 2009. Design/methodology/approach – The study constructs the environmental disclosure index with 11 disclosure themes based on research by Sharifah et al. to determine the environmental disclosure level. The study uses content analysis to find the environmental disclosure items and constructs an environmental disclosure index from the companies' annual reports. Hierarchical regression analysis is used to examine the relationships between the environmental disclosure index and board characteristics (board size and board independence), firm characteristics (business type) and human capital characteristics (age, knowledge background and proportion of female directors). Findings – The results of the study reveal that there is a significant relationship between the existence of an independent non-executive chairman, the chairperson's age, the existence of a CEO with a law background and the industry type with the extent of environmental disclosure. The industry type is found to be the most significant variable that influences the level of environmental disclosure in Malaysian public listed companies for the year ended 2009. Research limitations/implications – The findings are limited to Malaysian public listed companies for the year January to December 2009. The source of the data used in this study is companies' annual reports only. This study has several implications that may apply in many countries, irrespective of whether they are developing or developed countries. First, it provides strong evidence to show that boards of directors and human capital are significant variables in the extent of disclosure. Second, it is useful to managers, especially to boards of directors in Malaysia, in identifying board characteristics and human capital characteristics that could improve companies' environmental activities; these could be disclosed in the interest of stakeholders and the public's environmental concern. Third, this study can also be used as an initial step for companies in to be involved in environmental activities. Prior studies have proved that these activities could enhance companies' image and reputation and could offer financial benefits to the business. Originality/value – The study extends the previous studies by the inclusion of human capital characteristics as a factor that influences environmental reporting in Malaysia. This study has demonstrated that to mitigate the agency problems between firms and shareholders, society and stakeholders, and particularly environmental impact, the inclusion of human capital characteristics as an indicator may help to reduce expected costs and negative impacts on firm value, and may also demonstrate to society and the company's stakeholders that individual firms are doing their part to help solve society's social and environmental problems through additional disclosures.

Board Attributes and Corporate Social Responsibility Disclosure: A Meta-Analysis

“…Nevertheless, despite the findings mentioned above, other studies did not find that CSR disclosure had any relationship with the presence of women on director boards [68,72,[136][137][138]. All in all, the literature review produced diverging findings regarding the influence of women's board presence on CSRD.…”

Hedging Activities Information and Risk Management Committee Effectiveness: Malaysian evidence

“…Australian Journal of Basic and Applied Sciences 9(37), 211-219. DOI 10.17605/OSF.IO/3PRWB Cerbioni and Parbonetti, 2007;Htay et al, 2011;Raheja 2005;Said et al, 2013). In view of these studies, the number of members in RMC seems related to the quality of risk management as well as to disclosure of hedge activities information.…”

Review of the Relationship between Board Attributes and Firm Performance

“…Again, there is a positive relationship between the disclosures of the frequency of board meetings and firm performance (Brown & Caylor, 2004). In this effect, attending board meetings by members ought to produce important resources to directors in enhancing the adequacy of the board (Said, Omar, & Abdullah, 2012).…”