Abstract
There is a dearth of research on corporate governance and total sustainability disclosure (economic, environmental, and social) in developing, particularly South Asian, countries. This is unique cross-country research on South Asian countries’ corporate governance elements and total sustainability disclosure practices. The study considers a set of insightful theories, namely, the signaling and agency theories of understanding the motives and drivers of sustainability reporting. Based on data from the Global Reporting Initiative database, the study analyzes Bangladesh, India, and Pakistan. We have collected annual report and sustainability reports from the GRI database for the period between 2009 and 2016. Based on the signaling and agency theories, the study investigates how board and shareholding structures convey signals to the market and different stakeholders. Our empirical results find that total sustainability disclosure has a positive and significant relationship with foreign shareholding, institutional shareholding, board independence, and board size. On the other hand, we document that director shareholding is negatively but significantly associated with total sustainability disclosure. Therefore, we conclude that corporate governance elements have very strong influential power to send positive signals to the market that lead to reduced information asymmetry and ensuring honest signals from different stakeholders.
Highlights
A substantial amount of research has been documented in the area of sustainability disclosure and corporate governance in developed countries, such as Korea [1,2], Spain [3,4], Australia [5], the United States [6], England [7], Italy [8], France [9], Sweden [10], and developing countries, such as Malaysia [11,12], China [13], South Africa [14], and Turkey [15]
We find a single study performed by Naeem and Welford [32] on corporate sustainability reporting (CSR) between Bangladesh and Pakistan; they do not consider corporate governance
We empirically examine the relationship between corporate governance elements and total sustainability disclosure using ordinary least square (OLS) regression analysis to test the hypotheses
Summary
A substantial amount of research has been documented in the area of sustainability disclosure and corporate governance in developed countries, such as Korea [1,2], Spain [3,4], Australia [5], the United States [6], England [7], Italy [8], France [9], Sweden [10], and developing countries, such as Malaysia [11,12], China [13], South Africa [14], and Turkey [15]. Limited research has been documented on South Asian (SA) countries’ corporate governance and sustainability disclosure, such as Pakistan [16,17], Bangladesh [18,19,20,21], Sri Lanka [22], and India [23,24]. Our argument is consistent with Ali et al.’s [33] recent CSR literature review on developed and developing countries They find that in the SA region only Bangladesh and India have very limited research on CSR motivation. Our study shows the importance of performing a cross-country analysis of SA countries’ corporate governance and total sustainability disclosure (economic, environmental, and social). The region is treated as an emerging economic region as five out of the eight countries were listed in the inclusive development index in 2018 prepared annually by the World Economic Forum (WEF) [37]
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