The effects of corporate governance mechanisms on voluntary corporate carbon disclosures: evidence from the emerging economy

Abstract

PurposeThis study examines the effects of corporate governance mechanisms on voluntary corporate carbon disclosure in Bangladeshi firms.Design/methodology/approachTo investigate the association between corporate governance mechanisms and corporate carbon disclosures, this study employs ordinary least square (OLS) methods. To mitigate the potential endogeneity concerns, the authors also introduce firm fixed effect (FE) and random effect (RE). Primarily, the study sample includes 250 firm-year observations over the period 2015–2019 for listed companies on the Dhaka Stock Exchange (DSE) in Bangladesh. Subsequently, corporate governance mechanisms that influence voluntary carbon disclosure were examined using both univariate and OLS models.FindingsThe findings of this study suggest that firms with a larger board size and more independent directors have a positive impact on the firm's intensity to disclose carbon-related information. However, no evidence has been found of the existence of an environmental committee, and the presence of female directors on the board tends to be associated with a higher level of voluntary corporate carbon disclosure.Originality/valueThe study offers necessary evidence of the determinants of corporate carbon disclosures, which will be useful for managers, senior executives, policymakers and regulatory bodies. To improve corporate governance practices and formulate separate sets of regulations and reporting criteria, disclosing extensive and holistic carbon-related information obligatory. Further, the outcomes of this study based on Bangladeshi firms can be comprehensive for other developing countries to take precautions to tackle the effect of global climate change.