Sustainable development disclosure: Environmental,social, and governance reporting and gender diversity in the audit committee

This paper analyzes the link between female representation on audit committees (ACs) and specific information attributes of environmental, social, and governance (ESG) disclosures. We also examine whether the role of women is moderated by the busyness and intensity of the committee. Our results reveal a positive association between gender diversity in the AC and the quality of voluntary ESG reporting, which results in greater comprehensiveness and relevance. These findings extend the academic debate concerning the role of female directors on sustainability policies. Moreover, given the importance of ESG information in capital markets and its potential benefits for firms, this evidence may help regulators and owners to implement adequate corporate governance mechanisms. In addition, the busyness of the AC negatively moderates the influence of female AC members. Therefore, we highlight the need to consider the context in which women work in order to understand their influence on sustainability reporting.     

What have we learnt about board gender diversity as a business strategy? The appointment of board subcommittees

This paper explores whether a board's gender diversity influences the voluntary formation of its board subcommittees. Female board directorship may become a business strategy for firms if it affects the appointment of board subcommittees. We hypothesize that the voluntary creation of board subcommittees is affected by the presence of female directors on boards; the presence of independent, executive, and institutional female directors; and the proportion of shares held by female directors on boards. Board gender diversity has been measured as a proportion and with Blau's index. The results show that independent female directors are positively associated with the likelihood of voluntarily setting up all or some of the committees and a supervision and control committee. The presence of executive female directors negatively influences the probability of forming all or some of the committees, an executive committee and a supervision and control committee. The percentage of shares held by female directors has a positive effect on the voluntary creation of an executive committee. The findings also report that women directors and institutional female directors do not contribute to the voluntary creation of board subcommittees. Our evidence shows that female board directorship impacts the demand of internal control mechanisms such as board subcommittees, suggesting that firms should take it into account as a business strategy. The main implications derived from this research are relevant for Spanish policymakers and researchers because board gender diversity may play a significant role in the decision‐making processes of firms and may influence firms' outcomes.     

Board gender diversity and transparency of environmental,social and governance disclosure: Evidence from Malaysia

This study aims to investigate the effect of board gender diversity on the transparency of environmental, social, and governance (ESG) disclosures in an emerging market such as Malaysia. Dataset is comprised of 568 firm-year observations from 78 firms listed on the Bursa Malaysia. Ordinary least squares regression analysis of the data shows that ESG disclosure scores are significantly improved with the increasing presence of women directors on corporate boards. However, when the individual components are studied, the impact of board gender diversity varies. This study contributes to the limited but growing literature on ESG reporting quality and board gender diversity especially in emerging economies.     

Gender Diversity on Boards and Firms’ Environmental Policy

This paper tests the relationship between gender diversity on boards and firms’ environmental policy. Based on prior research, we predict that gender diversity on boards of directors should have a positive relationship with firms’ environmental policy. Moreover, firm character in terms of pollution creation likelihood moderates the relationship between gender diversity on boards and firms’ environmental policy. Analyzing data from 865 publicly listed firms in the United States, we found direct and significant empirical evidence for our predictions. According to the findings, we highlight the importance of gender diversity for the development of good firm environmental policy as well as for the improvement of corporate governance. Moreover, the more likely firms in a given industry are to cause environmental pollution, the more salient will be the beneficial effect of gender diversity on boards on firms’ environmental policy in the industry. Copyright © 2016 John Wiley & Sons, Ltd and ERP Environment     

Factors influencing the quality of corporate environmental disclosure

Many firms choose to communicate their environmental strategies through voluntary environmental disclosures. This paper examines patterns in the quality of voluntary environmental disclosures made by a sample of around 450 large UK companies drawn from a diverse range of industrial sectors. The analysis distinguishes between five facets of quality, including the disclosure of group‐wide environmental policies, environmental impact targets and an environmental audit. We examine how the decisions firms face regarding each facet of quality are determined by firm and industry characteristics, and find the quality of disclosure to be determined by a firm's size and the nature of its business activities. Specifically, we find high quality disclosure to be primarily associated with larger firms and those in sectors most closely related to environmental concerns. In contrast to several recent contributions, we find that the media exposure of companies plays no role in stimulating voluntary disclosures. Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment.     

Global Warming Disclosures: Impact of Kyoto Protocol Across Countries

The Kyoto Protocol that went into effect in February 2005 set limits on the amount of greenhouse gas (GHG) emissions. We document in this study that firms from countries ratifying the Protocol and setting limits on GHG emissions (i.e., European Union [EU] countries, Canada and Japan) are associated with higher GHG disclosures compared with firms in the United States, which has not ratified the Protocol. Additionally, we document that firms from India, which has not set any limits on GHG emissions, make even less GHG disclosures than firms from all other countries covered in this study. Our findings also show that GHG disclosures are greater for Canadian and Japanese firms compared with firms from the EU countries and that they also differ somewhat across EU firms. These findings suggest that ratification of the Protocol and limits on emissions improve pollution disclosures. In the absence of Protocol ratification, mandatory disclosure requirements may be needed to ensure adequate and reliable pollution disclosures.     

Environmental Policy,Sustainable Development,Governance Mechanisms and Environmental Performance

We investigate the effects of environmental policy (Climate Change Act – CCA), sustainable development frameworks (Global Reporting Initiative – GRI; UN Global Compact – UNGC) and corporate governance (CG) mechanisms on environmental performance (carbon reduction initiatives – CRIs; actual carbon performance – GHG emissions) of UK listed firms. We use the generalized method of moments (GMM) estimation technique to analyse data consisting of 2245 UK firm‐year observations over the 2002–2014 period. First, we find that the CCA has a positive effect on CRIs, and this effect is stronger in better‐governed firms. Second, we find that the GRI‐based framework is positively associated with CRIs. Third, we find that firms with poor CG structures have lower actual carbon performance compared with their better‐governed counterparts. Overall, our evidence suggests that firms can symbolically conform to environmental policy (CCA) and sustainable development frameworks (GRI, UNGC) by engaging in CRIs without necessarily improving actual environmental performance (GHG emissions) substantively. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment     

Sustainability reporting in Norway – an assessment of performance in the context of legal demands and socio‐political drivers

This article explores the influence of societal, political and regulatory characteristics and developments on the quality of corporate sustainability disclosures in Norway. The paper presents an assessment both of mandatory reporting under the Norwegian Accounting Act, and of voluntary reporting in annual and separate non‐financial reports, by the 100 largest firms in Norway. Our results reveal that only 10% of the companies comply with the legal requirements on environmental reporting, while only half of the firms comply with the legal reporting provisions on working environment and gender equality. The vast majority of firms also report unsatisfactorily on non‐financial issues in the voluntary disclosures assessed. Analysing the causes of these results, we contend that the situation is characterized by (1) an apparent lack of political and social drivers for sustainability reporting in Norway and (2) an absence of sufficient monitoring and enforcement of the environmental reporting legislation on the part of Norwegian authorities. Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment.     

The impact of sustainability (environmental,social, and governance) disclosure and board diversity on firm value: The moderating role of industry sensitivity

Using a large panel data set comprising 812 listed European firms, this study investigates whether sustainability disclosure (environmental, social, and governance) and female representation on boards affect firm value. We observe a positive impact of sustainability disclosure and board gender diversity on firm value, suggesting that the best management practices, enhanced stakeholder trust, and female representation on boards improve firm value. We observe that the firms in sensitive industries achieve superior social and governance performance. We also observe that the firms with higher female representation on their boards present significantly superior environmental, social, and governance performance. Our results are robust to different firm and country specific control variables and to year‐ and country‐fixed effects.     

Board gender diversity and environmental,social, and economic value creation: Does family ownership matter?

Prior literature on firm value creation for stakeholders has oversimplified and narrowed the concept of value down to “economic returns.” Although economic returns are fundamental to a firm's core stakeholders (i.e., shareholders), other legitimate stakeholders want “value” beyond economic returns. We define stakeholder value as the financial and nonfinancial returns a firm can offer to its legitimate stakeholders, and empirically investigate whether board gender diversity (BGD) improves our multidimensional measure of value. Using Thomson Reuters' ASSET4 data for U.K.‐listed firms available from Eikon for the period 2007–2017, we report a significant positive relationship between BGD and stakeholder value creation. In particular, BGD increases social and environmental value creation in addition to economic returns. Furthermore, our results suggest that even though gender‐diverse boards are associated with stakeholder value creation in family firms, this is only conspicuous for environmental value creation. The findings suggest that although female directors cater to the interests of broader stakeholder groups, family ownership causes them to mainly focus on environmental stakeholders. The study provides important implications for regulators, stakeholders, and academic scholars.     

Setting its own standards and meeting those standards: voluntarism versus regulation in environmental reporting

It is often asserted that a voluntary approach to environmental issues is preferable to regulation. Supporters of voluntary environmental reporting claim that businesses will produce reports that meet the requirements of their stakeholders without the need for government intervention. This argument is currently being deployed in the UK to oppose the setting of mandatory reporting requirements. This present paper considers the use of ‘stakeholder theory’ in support of the voluntary approach and evaluates the claim that businesses will choose to make adequate environmental disclosures. Alternatives to a voluntary regime are discussed.© 1997 John Wiley & Sons, Ltd and ERP Environment.     

Litigation Risk and Corporate Voluntary Disclosure: Evidence from Two Quasi-Natural Experiments

Abstract

We examine the effect of litigation risk on corporate voluntary disclosure using two quasi-natural experiments, which have substantial and opposing impacts on the litigation risk of firms headquartered in the Ninth Circuit. We find that firms in the Ninth Circuit decrease (increase) the quantity and quality of their voluntary disclosure, relative to control firms, when their litigation risk is lowered (elevated). The pre-treatment test shows an indistinguishable trend between treatment and control firms. A battery of robustness checks indicates that our results are not driven by alternative explanations. We hypothesize and find that the impact of litigation risk is more pronounced when firms have bad news and that firms are more likely to preempt bad news through voluntary disclosures when litigation risk is elevated. Overall, results from both experiments suggest that litigation risk causally increases corporate voluntary disclosure.     

Communicating environmental management certification: Signaling without signals?

This article analyzes how organizations communicate their voluntary environmental management certification. Previous research suggests that firms use certification to signal and to create a better public image as one of their main objectives in adopting environmental management standards. How organizations communicate their certification to their stakeholders has not been fully researched. To fill this gap, this work focuses on the hospitality industry, one of the most relevant sectors for environmental certification, and Eco‐Management and Audit Scheme, one of the most demanding certification schemes. On the basis of the analysis of the communication practices of 201 certified European hotels and 37 interviews with managers from certified hotels, the findings are surprising. The great majority of organizations included in the study engage in no significant communication activity. The results cast doubt in the idea that improving corporate image is one of the main drivers to adopt third‐party voluntary certification.     

Voluntary Disclosures of Emissions by US Firms

This paper examines voluntary disclosures about greenhouse gas emissions by the US S&P 500 firms to the Carbon Disclosure Project (CDP). Trends in three disclosures (answering the questionnaire, disclosing emissions and disclosing accounting methodology for emissions) are examined from 2006 to 2008. The frequencies of all three disclosures increased over this period. The finding that many firms answer the questionnaire, but do not disclose their emission amounts or how they account for them, is consistent with a prediction from the legitimacy theory literature that firms will disclose the minimum to avoid scrutiny. Disclosure patterns are routine since previous disclosures are the most significant variable in explaining subsequent ones. The research contributes to the understanding of emission disclosures, in particular, and voluntary disclosures, in general, by highlighting the importance of considering previous disclosures in understanding subsequent ones. Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment     

Can environmental governance lower toxic emissions? A panel study of U.S. high‐polluting industries

Firms have increasingly adopted environmental governance mechanisms in the form of environmental compensation and environmental board committees. The current study examines the argument that such environmental governance mechanisms contribute to lower toxic emissions in high‐polluting industries. The sample comprises firms that were part of the S&P 500 from the years 2006 to 2011 and were mandated to report toxic emissions to the U.S. Environmental Protection Agency under the Toxic Release Inventory program. A panel regression model with propensity score matching was employed to minimize endogeneity bias. The results indicate that environmental compensation is a compelling incentive to motivate managers to invest in long‐term and highly uncertain environmental projects. Likewise, the presence of an environmental board committee appears to be significant, suggesting that directors contribute to a firm's strategy with their expertise and political influence. This research also found evidence supporting the cumulative adoption of both environmental governance mechanisms in enhancing environmental performance and the firm's legitimacy.     

Determinants and Economic Consequences of Non-financial Disclosure Quality

This paper examines the determinants and economic consequences of non-financial disclosure quality, which is measured according to the ratings of corporate social responsibility (CSR) disclosure provided by the Ministry of Economic Affairs in the Netherlands. We find that firms with better CSR performance, greater external financing needs, and stronger corporate governance tend to provide higher quality CSR disclosures. In return, these firms gain greater analyst coverage, higher levels of institutional ownership, greater stock liquidity, higher valuations in SEOs, and lower yields to maturity in bond issuances. These benefits apply largely to firms with strong CSR performance. Collectively, our findings suggest that higher quality CSR disclosures deliver economic benefits.     

Corporate climate-related voluntary disclosures: Does potential greenwash exist among Australian high emitters reports?

This study examines the issue of greenwashing among corporate high emitters subject to government scrutiny. To do so, we investigate the relationship between the actual environmental performance, measured as carbon emissions, of companies subject to the Australian National Greenhouse Energy Reporting Act 2007 (NGER) and their climate-related voluntary disclosures. To measure climate-related disclosure, we construct a climate-related disclosure index based on four prominent frameworks and score corporate report content against that Index. Using a sample of 150 companies with NGER emissions data for Years 2016 and 2017, a period that precedes the issuance of recommendations for disclosure by the Task Force on Climate-Related Financial Disclosure (TCFD), our regression results show a disappointingly low level of climate-related disclosure by most companies. We also find a negative relationship between climate-related disclosure and 1-year lagged environmental performance among companies exhibiting a year-on-year rise in carbon emissions. That is, our findings provide evidence of potential greenwashing by poor environmental performers, presumably to change negative perceptions by stakeholders, as predicted by socio-political theories. In contrast, we find no evidence of greenwashing among companies experiencing a year-on-year decrease in emissions.     

Board gender diversity and environmental performance: An industries perspective

This study investigates whether gender diversity on the board of directors in the United States is associated with firms' environmental performance. Under the theoretical framework of resource dependence theory, we argue that gender diversity brings a greater variety of skills to the board. Diversity allows for a healthy mix of knowledge and experience to improve the decision‐making process of the board. Using propensity score matching and controlling for endogeneity, this study uses a more rigorous statistical model than previous work. It also uses content analysis of directors' biographies to provide evidence of the role that gender diversity plays. We find gender diversity is positively associated with firms' environmental performance scores primarily in the more environmentally impacting industries. Therefore, our research provides valuable direction for those firms working to improve both their boards' gender diversity and their environmental performance. Our findings also offer insight into the mixed results of previous studies.     

Relationship between Corporate Climate Change Disclosures and Firm Factors

As carbon regulation evolves and becomes specialized in addressing carbon reduction issues, stakeholders will demand that firms provide increased information regarding corporate climate change practices. This paper contributes to the international research that examines the relationship between environmental information disclosures and additional firm factors. To do so, we have conducted an empirical analysis of the relationship between the corporate climate change disclosure practices of firms listed in the Athens Stock Exchange and firm factors, such as size, profitability, leverage and activity sector. Our results indicate there is a significant positive relationship between size and increased corporate disclosures regarding climate change practices. However, no significant relationship is detected between profitability or leverage and corporate climate change disclosures. Copyright © 2014 John Wiley & Sons, Ltd and ERP Environment     

Environmental,social and governance initiatives and wealth creation for firms: An empirical examination

This study examines the effect of environmental, social, and governance (ESG) activities on firm performance of 4,887 global companies. Mean difference test shows that firms with a high level of ESG activities are different from their low-ESG counterparts. The two-stage least square results suggest that ESG activities on (a) the welfare for internal stakeholders and best corporate governance practices are beneficial for firm performance and (b) antitakeover mechanisms (pollution control) adopted by firms are negatively (positively) valued by market players. Overall, this is the first study to examine the effects of ESG on the market-based and accounting-based performance of global firms.