Abstract
Sub-Saharan Africa (SSA) has the highest prevalence rate of HIV/AIDS in the world, with negative effects on productivity, profitability, economic growth, and development. The social responsibility role of public companies in contributing towards reducing the negative effects of HIV/AIDS is priceless. This paper investigates the impact of corporate governance (CG) on social and environmental accounting (SEA) with specific focus on corporate health accounting (CHA) and, consequently, examines whether CG can moderate the link between CHA and firm value (FV), with particular focus on HIV/AIDS disclosures. First, employing one of the most extensive data on CG, CHA, and FV from a sample of listed SSA companies to date, our results suggest that companies that are better-governed tend to engage in increased CHA disclosures. Second, we find that the combined effects of CG and CHA on FV are stronger than CHA alone, meaning that the quality of firm-level CG moderates the link between CHA and FV. Our econometric specifications are robust to different traditional firm-level characteristics, endogeneities, and alternative CG (corporate board and shareholding structure variables), FV, and CHA proxies. We interpret our findings within a framework that attempts to combine Suchman's (1995) legitimacy theoretical perspective with Ashforth and Gibbs' (1990) substantive and symbolic legitimacy management strategies.
Highlights
We respond to recent calls and debates within the broader social and environmental accounting (SEA) literature (e.g., Barbu, Dumontier, Feleagă, & Feleagă, 2014a, 2014b; Crifo & Forget, 2015; Filatotchev & Nakajima, 2014; Van Cranenburgh & Arenas, 2014; Wilkins, 2014) to make two new contributions to the extant literature by: (i) assessing the impact of corporate governance (CG) on corporate health accounting (CHA),1 and (ii) examining the extent to which CG can moderate the link between CHA and firm value (FV), with particular focus on HIV/AIDS in Sub-Saharan Africa (SSA)
In stage 1, informed by prior theoretical and empirical studies (Adams, 2002; Fifka, 2013; Gray et al, 1995; Harjoto & Jo, 2011), we predict that the CHA disclosure index (CHADI) is likely to be determined by the seven CG variables and 12 control variables
The findings contained in Model 7 of Table 7 relating to the predicted CHA disclosure index (P_CHADI) and CHA disclosure index interacted with the CG index (M ∗ CGI) indicate that the CHA disclosure index (CHADI) remains positively and significantly related to FV (TBQ), implying that our evidence appears to be insensitive to possible endogeneity problems that may be due to omitted variables
Summary
We respond to recent calls and debates within the broader social and environmental accounting (SEA) literature (e.g., Barbu, Dumontier, Feleagă, & Feleagă, 2014a, 2014b; Crifo & Forget, 2015; Filatotchev & Nakajima, 2014; Van Cranenburgh & Arenas, 2014; Wilkins, 2014) to make two new contributions to the extant literature by: (i) assessing the impact of corporate governance (CG) on corporate health accounting (CHA), and (ii) examining the extent to which CG can moderate the link between CHA and firm value (FV), with particular focus on HIV/AIDS in Sub-Saharan Africa (SSA). With specific respect to existing HIV/AIDS studies, they are mainly normative instead of empirical in orientation (Dickinson, 2004; Fig, 2005; Saguier, 2007; Whellams, 2008), descriptive/qualitative instead of quantitative in nature (Dawkins & Ngunjiri, 2008; Rahaman et al, 2010), one-year cross-sectional rather than longitudinal data analyses (Barako & Brown, 2008; Barako et al, 2010), and single-country instead of cross-country focused (Du Bruyn, 2008; Du Bruyn & Venter, 2006; Lawrence & Samkin, 2005; Soobaroyen & Ntim, 2013) These weaknesses within the extant literature limit current international understanding of why and how a corporation's internal CG arrangements might enhance or hinder its CHA orientation, and whether CG can moderate the CHA–FV nexus (e.g., Barbu et al, 2014a, 2014b; Crifo & Forget, 2015; Filatotchev & Nakajima, 2014; Wilkins, 2014). The central aim of this study is to examine the impact of CG on CHA, and to ascertain whether the CHA–FV nexus can be moderated by CG
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