Is corporate governance relevant to the quality of corporate social responsibility disclosure in large European companies?

Abstract

Purpose This paper aims to report on the quality of corporate social responsibility (CSR) disclosure in S&P Europe 350 companies. The paper also examines the impact of corporate governance structure and other firm-specific characteristics on the quality of CSR disclosure in European companies. Design/methodology/approach The paper uses a disclosure index adopted from Jizi et al. (2014). Moreover, the paper contributes to the CSR disclosure literature by developing a new index that includes all the aspects introduced by the Global Reporting Initiative version 4.The data of CSR reporting are manually collected from the firms’ reports. The population and sample of this study are related to 350 companies operating in 16 European countries. Tobit regression analysis is used to test the hypotheses. Findings The results reveal that directors’ ownership, the presence of a CSR committee and firm size positively affect the quality of CSR reporting. Further testing of the independent variables on each CSR sub-category is made. The CSR sub-categories used are, namely, community involvement, employees, environment, social product and service quality, supply chain sustainability and business ethics. The presence of a sustainability committee inside the company is the only factor that shows a strong positive effect on the disclosure of every CSR sub-category and the CSR inclusive index. Research limitations/implications The limitations of this research are that it focuses exclusively on the effect of the internal corporate mechanisms on the quality of CSR reporting; disregarding the economic, institutional, political and cultural factors that can play a role in influencing sustainability reporting of the companies. Practical implications Better CSR disclosure leads to the firm having a better image in the society; this, in turn, has implications on firm performance, attracting funds, as well as recruiting and retaining high profile employees. Stakeholders are placing cumulative significance to corporate transparency particularly in the area of CSR. Managers should exert more efforts into not only improving the disclosure of the various facts of CSR but also into using the various media available for disclosure. Companies should take the initiative of establishing a CSR committee to ensure effective formation and implementation of CSR policies and disclosure of CSR activities. Social implications The CRS research itself bears the merit of social implications. Moreover, the findings of this research pave the way for future researches to examine the effect of the adoption of global CSR initiatives and frameworks on the quality of CSR reporting. Originality/value This paper contributes to the CSR disclosure literature by developing a new index that includes all the aspects of CSR and exploring the relation between the rarely explored “presence of sustainability committee” and CSR disclosure, as well as testing a vast number of CSR sub-categories that is not extensively covered in previous studies. Moreover, the paper covers a large sample of companies across 16 European countries, in terms of their stand-alone sustainability reports, dedicated chapters of CSR in annual reports, integrated reports, website CSR information and any attachments/links provided on the websites for further CSR documents, brochures or data sheets.

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.…”

“…Moreover, the findings of prior studies regarding the association between CSR committees and CSRP or reporting largely proved the existence of a positive relationship between the two variables, regardless of context, although there are some exceptions. While some European studies found a positive association between CSR committee and CSRP (Adel et al, 2019;García Martín & Herrero, 2020), another study sampling European and US firms found only a weak association between CSR committee and the social dimension of CSR disclosure, but not other dimensions;…”

Do chief sustainability officers and CSR committees influence CSR-related outcomes? A structured literature review based on empirical-quantitative research findings

“…However, no CSO study has been conducted yet. Most found a positive impact from CSR committees on CSR reporting, using cross-country samples (Adel et al 2019;Amran et al 2014; Gallego-Alvarez and Pucheta-Martinez 2020; Kend 2015; Michelon 2011; Pucheta-Martinez and Gallego-Alvarez 2019) and different countries: Italy (Cucari et al 2018;Rossi and Tarquinio 2017); the US (Hussain et al 2018); Pakistan (Mahmood et al 2018); and Spain (Fuente et al 2017). Moreover, CSR committee expertise (Rossi and Tarquinio 2017) and CSR committee duration (Garcia-Torea et al 2016) were related positively to CSR reporting.…”

CSR Committees and Their Effect on ESG Performance in UK, France, Germany, and Spain

“…In the academic literature, the study of CSR or sustainability committees has been closely linked to their relationship with corporate governance, especially its role in the board of directors and its interaction with other types of variables (diversity and independence of the board of directors). Therefore, in most cases, research has focused on CSR committees as a corporate governance variable for larger models [1,[9][10][11][12][13], mainly related to the disclosure of CSR or ESG information [1,[14][15][16][17][18][19]. In this regard, CSR committees have shown an influence on the volume and quality of CSR information issued by the company, showing its ability to act and decide on sustainability reporting.…”