Abstract
This study investigates the relationship between disclosure level of GRI-compliant non-financial statements, provided to conform with the Directive 2014/95/EU, and cross-country societal variables (Hofstede’s cultural dimensions, political and civil systems, legal system and level of economic development) of the European listed banks, using the political economic theory. It analyzes the banks listed in the stock markets of 18 European countries for 2016-2018. The data was collected from the BvD BankFocus database, selecting 134 bank-year observations. A disclosure index based on the GRI framework compliant to the Directive was determined to measure the non-financial reporting disclosure. The findings, partially consistent with the previous literature, show for the banks a significant negative influence of power distance, masculinity, indulgence, the legal system, and level of economic development on the non-financial disclosure. Moreover, the results evidence a significant positive association between individualism, long-term orientation, indulgence, and political and civil system on the non-financial disclosure level. This study contributes to the international debate on how the socio-cultural-economic institutional factors affect non-financial disclosure expectations in the banking sector. Furthermore, understanding the effect of cross-country societal factors on NFR disclosure under EUD might benefit managers when implementing social and environmental strategies in all socio-cultural institutional settings. It might help regulators and policy-makers when adopting new legislation and making reforms dealing with social and environmental laws.
Highlights
Nowadays, companies are facing intense pressure to take into account non-financial dimensions in their corporate reporting
This study investigates the relationship between disclosure level of Global Reporting Initiative (GRI)-compliant non-financial statements, provided to conform with the Directive 2014/95/EU, and cross-country societal variables (Hofstede’s cultural dimensions, political and civil systems, legal system and level of economic development) of the European listed banks, using the political economic theory
The corporate social responsibility (CSR) disclosure practices by banks in anchored to a set of non-financial information directed to increase their credibility in the environment in which they survive, guaranteeing the stakeholder engagement and CSR principles (Sannino et al, 2020)
Summary
Companies are facing intense pressure to take into account non-financial dimensions in their corporate reporting. To facilitate the EU Directive adoption, the GRI issued a reporting framework to employ to be compliant with it, defined in the document Linking the GRI Standards and the European Directive on non-financial and diversity disclosure (GRI, 2017) In this way, it is possible to identify the main checklist of the CSR information required by the EUD provided through the framework GRI. Our study aims to investigate the relationship between the NFD level of European listed banks that use GRI framework to be compliant to EU Directive and cross-country societal variables (Hofstede’s cultural dimensions, political and civil systems, legal system and level of economic development). We developed the following research question: RQ: Is there a relationship between the NFD levels (compliant with GRI framework) of European listed banks and the socio-cultural and economic institutional factors dimensions?
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