Corporate Board Diversity Effect on Environmental Sustainability Disclosure Evidence from Nigeria

Abstract

The board of directors is responsible for making important decisions relating to corporate climate strategy. However, there is a possibility that their focus on minimizing agency costs may lead them to compromise environmental policies. This study aims to examine the impact of board diversity on the tendency that consumer goods firms listed in Nigeria will report on their environmental sustainability activities with a focus on a ten-year period (2011 to 2020). This study adopts ex-post facto research design using a population of twenty (20) consumer goods firms listed on the Nigerian Exchange Group's (NGX). A sample of 16 firms were selected through purposive sampling techniques and the data set which were sourced from published audited annual report were analysed using binary logistic regression analyses approach. The result reveal that CEO nationality have a positive significant effect on environmental disclosure suggesting that engaging the services of a foreign CEO can be leveraged upon in the determination of corporate goals that are associated with reducing the adverse effect of firm’s operation on the environment. The outcome is consistent with the stakeholders’ theory and reflects a sign of CEOs commitment to the demands and interests of stakeholders. In view of the foregoing, the study advocate for policies that that will accommodate hiring CEOs from different nationality. Such policies when implemented will give support to environmentally friendly discussions and deliberations which can translate to improved value for the firm. Such policy actions will be fundamental to maintaining good relationships with powerful stakeholders hence help avoid undue pressure from stakeholders.