Abstract
The board of directors’ role is paramount in businesses because it reflects the organisation’s ability to earn investor confidence and improve financial performance. This paper aims to examine the relationship between environmental and social (ES) information disclosure and firm financial performance and the interaction effects of board meetings on the relationship between ES and firm performance in Malaysian publicly traded firms from 2013 to 2017. This article contributes to the theoretical foundations of the agency theory as it relates to the corporate governance function. The agency theory framework is used to capture the inherent interrelationships between the board of directors and firm performance. The study’s findings indicate that a firm’s relationship between ES and financial performance, measured by Tobin Q and return on equity, may be significantly affected by board meetings.
Highlights
IntroductionInvestors rely on information disclosure in the business world since it depicts the actual firm performance and the return and risk of investment
Investors rely on information disclosure in the business world since it depicts the actual firm performance and the return and risk of investment. Fama (1970) emphasised the importance of information in the Efficient Market Hypothesis (EMH), stating that a market is efficient when the stock price reacts instantly to the arrival of new information.As such, adequate disclosure or reporting enables investors to comprehend the precise state of businesses, their associated risks, and the expected return on their investment (Gackowski 2017)
Due to company directors having a direct relationship with the management and shareholders, this study focuses on board meetings as a corporate governance mechanism
Summary
Investors rely on information disclosure in the business world since it depicts the actual firm performance and the return and risk of investment. Adequate disclosure or reporting enables investors to comprehend the precise state of businesses, their associated risks, and the expected return on their investment (Gackowski 2017). There is a widespread belief among academics that effective disclosure and sound corporate governance result in superior financial performance for businesses (Chung et al 2015; Ghani et al 2016). Numerous studies have been conducted to determine the primary factors contributing to the incident. Scholars believe it may have been caused by corporate governance malpractice and inadequate information disclosure (Rahman and Haniffa 2005)
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