Moderating Effect of Financial Strength on the Relationship Between Board Characteristics and Environmental Sustainability Disclosures

Abstract

The study examines the moderating effect of financial strength on the relationship between board characteristics (board independence and qualification) and ecological sustainability disclosures on firms listed at the Nairobi Securities Exchange. The study period was (5) years (from 2013 to 2017). It employed a correlational survey research design covering the period of five (5) years (2013-2017). The target population was sixty-five (65) firms listed at the NSE, with a sample size of 56 firms. Data was utilised from firms' annual reports, stand-alone reports, and website. Pearson's correlation, Ordinary Least Square regression model and Environmental Disclosure Index were used in analysis. The results showed that financial strength strengthen the relationship between environmental sustainability disclosure and board independence (β = .23, ρ<.01). A negative and significant moderating effect of financial strength on the relationship between board meetings and environmental sustainability disclosure (β =-.16, ρ<.05) was found. For the board qualification, positive and insignificant effect of financial strength was observed (β = .13, ρ>.05). The study concluded that financial strength has significant moderating effect on the relationship between board characteristics and environmental sustainability disclosure. It recommends enactment of policies addressing corporate environmental reporting by firms as a result of different asset base. Future studies need to focus on; specific dimensions such as directors' experience, age, and nationality, use of more measures of firms financial strength such as risk analysis, cross listing and profitability.

The Impact of Adherence to Sustainable Development, as Defined by the Global Reporting Initiative (GRI-G4), on the Financial Performance Indicators of Banks: A Comparative Study of the UAE and Iraq

“…Bank Size (SIZE): This is measured in terms of the log of total asset value as used in the work of Paul et al (2019) and Dan Perbankan (2021). Large firms could potentially leverage economies of scale to allocate resources toward environmental and social activities.…”