Abstract
This paper aims to investigate the relationship between board governance and sustainability disclosure in Singapore. Regression analysis is performed using cross-sectional data of Singapore-listed companies to examine the relationship between sustainability disclosure and various board governance factors, including board capacity, board independence, and board incentive. The findings show the presence of significant associations between board governance and sustainability disclosure. In terms of board capacity, companies with larger board sizes and a higher number of board meetings are more likely to practice sustainability reporting, and their reporting qualities are higher. For board independence, the percentage of independent directors positively impacts the firm’s reporting probability and quality on sustainability in Singapore. For board incentives, the practice of long-term incentives for executive directors can significantly improve both the probability and quality of sustainability reporting. The study adds to the literature on corporate governance and sustainability disclosure. It provides empirical evidence and guidance for firms and policy-makers in Singapore and beyond on how sustainability disclosure can be improved through robust board governance.
Highlights
The awareness of sustainability raises among stakeholders significantly over the last decades, especially in the aftermath of environmental disasters and episodes of market turmoil
Our results suggest that the practice of long-term incentives for executive directors can significantly improve both the probability and quality of sustainability reporting, while short-term incentives are insignificant in driving sustainability reporting
This study examines the relationship between board governance and sustainability disclosure in Singapore
Summary
The awareness of sustainability raises among stakeholders significantly over the last decades, especially in the aftermath of environmental disasters and episodes of market turmoil. Companies start to face mounting pressure to report non-financial information on their operations [1], giving rise to a growing attention on sustainability disclosure [2]. Since sustainability disclosure forms a strategic part of stakeholder engagement process, it is naturally related to boards of directors who actively direct the development and change of companies’ strategies [4,5]. Boards are undeniably heavily involved in the communication process with stakeholders, where material information about companies are shared. This is because boards connect the investors with the managers, as well as the enterprise with the wider community in which it operates; they have to balance the demands of various interested parties [6]
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