Abstract
As one of the ways for multinational companies to obtain the advantages of sustainable development, corporate social responsibility (CSR) has been widely recognized by the academic community. Research featuring the influence of corporate governance (CG) on the environmental information disclosure of multinational corporations (MNCs) have gained much attention, but there is a lack of research into the empirical examination of cross-national samples. Drawing on Agency Theory, this study fills the gap by making a theoretical exploration and empirical test on relationships between CG and MNCs’s environmental disclosure. Board independence, board size, board meeting frequency and their relationships to the environmental disclosure of MNCs are observed in this study. In order to examine the aforementioned relationships, this study incorporates measurement techniques used by Van Staden and Hooks (2007) [1] and Global Reporting Initiative 4.0 guideline (GRI4.0) and develops a set of comprehensive, systematic measurement standards to appraise the environmental information disclosure of corporations. The content analysis method is used to assess the environmental disclosure of 151 companies from China, the United States, Japan, and the United Kingdom, according to Forbes Global 2000 Ranking in 2019. We find that board independence, the board size, and the frequency of board meetings are all positively associated with the environmental disclosure of MNCs. This finding indicates that more independent boards of directors, larger boards, and more frequent board meetings are CG mechanisms which lower the likelihood for an opportunistic behaviour and increase information transparency and voluntary implementation of the disclosure, effectively enhancing the environmental disclosure of MNCs. This impact of CG on corporations’ environmental information disclosure exists across country contexts.
Highlights
Over the past two decades, corporate social responsibility (CSR) has gradually become the focus of academic debate [2-5], and research scope is gradually expanding to corporate governance (CG) along with the change of the world and people’s understanding
Research featuring the influence of corporate governance (CG) on the environmental information disclosure of multinational corporations (MNCs) have gained much attention, but there is a lack of research into the empirical examination of cross-national samples
We find that board independence, the board size, and the frequency of board meetings are all positively associated with the environmental disclosure of MNCs
Summary
Over the past two decades, corporate social responsibility (CSR) has gradually become the focus of academic debate [2-5], and research scope is gradually expanding to corporate governance (CG) along with the change of the world and people’s understanding. Agency theory holds that in addition to coordinating the relationship between shareholders and administrators [6], the responsibilities of the board of directors should be extended to a wide range of stakeholders. The effective governance structure will enhance the legitimacy of a corporation [9] and improve its financial performance [10]. As the core of CG, the board plays a decisive role in overseeing business decisions and determines the level of corporate transparency and information disclosure [11]. The board with more independent directors tends to show greater interest in carrying out and disclosing corporate social responsibility [12,13], and a higher level of disclosure [11]. As the number of board members increases, the possibility of having asymmetric information will be reduced [14] while the environmental performance will be improved [15]. Corporate Governance Index (P), CEO Duality (P), Board Independence (P), Board Size (I), CEO as Chairman of Committee (I) Board Independence (P), Ratio of Female on Board (I), Board Composition (I)
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