Abstract
Our paper provides a valuable contribution by exploring the following complex phenomenon: Do board gender diversity and reputational incentives of non-executive directors affect corporate social responsibility(CSR) reporting? To this end, we use panel data regression (fixed effect) to examine the above relationship by using data from the 2009 to 2019 timeperiod, by using data from non-financial firms listed on the Shanghai Stock Exchange. To deal with the possibility of an endogeneity problem, we have used the two-stage least square (2SLS) regression model. Our empirical results suggest that board gender diversity positively affects CSR reporting. Our study has found that the reputational incentives of non-executive directors improve the CSR reporting. Furthermore, reputational incentives of non-executive directors (NEDs) and CSR reporting are moderated by firm size, this effect being stronger for large firms. Our findings also show that the firm size positively moderates the relationship between gender diversity in boards and CSR reporting. The control variables, namely board size, board member average tenure, leverage, “big 4” and return on assets, have an impact on the firm’s CSR reporting. Therefore, our results contribute towards new aspects in respect to the emerging literature concerning the system of non-executive directors, protection of stakeholder’s interests, and CSR reporting, especially as regards China. Furthermore, our results are robust as concerns alternative measures of variables under consideration.
Highlights
And from an organizational point of view, Corporate Social Responsibility (CSR) has gained more importance, as it is considered as a source of competitive advantage [1]
We focus on firm size considering that this feature can play a moderating effect on the relationship between board gender diversity and CSR reporting because more creative boards are associated with more diversity in their structures, have improved board’s decision-making skills, and make problem-solving more effective, especially regarding the complex one [17]
Model 2 reports the regression results for testing H2, and our results suggest that reputational incentives of non-executive directors is significant and has a positive effect on CSR reporting (β = 0.9261, p < 0.05)
Summary
From an organizational point of view, Corporate Social Responsibility (CSR) has gained more importance, as it is considered as a source of competitive advantage [1]. The main motivational factor behind board members’ gender diversity and the non-executive directors’ reputational incentives is to promote CSR activities. In this regard, Fama [3] argues that the main incentive for such directors is the reputation that they would gain from supporting and implementing such CSR activities, because an increase in reputation would raise the power and influence within the board of the company in which they operate; what is more, CSR activities would result in enhanced career opportunities, together with other future beneficial prospects as well [4]. The existing research related to corporate governance (board gender diversity and non-executive directors’ reputational incentives) and CSR reporting is still very limited and is only related to already developed markets [5,6]
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