Governance Disclosure Research Articles

Does corporate governance influence environmental, social and governance disclosure practices of state‐owned enterprises? An international study

AbstractThis paper provides fresh insights into the impact of corporate governance mechanisms on environmental, social and governance (ESG) disclosure practices of state‐owned enterprises (SOEs). To accomplish this study's research objective, we collected ESG and corporate governance data from Refinitiv Eikon's database on a balanced sample of 253 SOEs from 37 worldwide countries over 5 years (2018–2022), obtaining a total of 1265 observations. A battery of fixed and random effects panel regression models has been estimated to test the impact of board characteristics, like board size, board independence, board gender diversity, number of board meetings, Chief Executive Officer (CEO) duality and the presence of a corporate social responsibility (CSR) committee, on overall and individual ESG disclosure scores of sampled SOEs. Results show that while board size and CEO duality negatively affect SOE ESG disclosure, board independence and gender diversity, as well as the number of board meetings and the existence of a CSR committee, exert a positive influence.

Mandatory ESG disclosure, information asymmetry, and litigation risk: Evidence from initial public offerings

AbstractI use the staggered adoption of mandatory environmental, social, and governance (ESG) disclosure regulations around the world to explore the impact of ESG disclosure on initial public offering (IPO) underpricing. I find robust evidence that underpricing is substantially lower in countries with ESG disclosure mandates. High‐quality disclosure environments moderate and tougher liability standards amplify the negative association between ESG disclosure mandates and underpricing, which suggests that ESG disclosure mandates reduce information asymmetry and litigation risk. The impact of ESG disclosure mandates on underpricing is stronger in countries with more pronounced environmental, social, and governance concerns.

ESG Disclosure dan Dewan Komisaris Independen terhadap Nilai Perusahaan dengan Kualitas Audit sebagai Variabel Moderasi

This research aims to evaluate the impact of environmental disclosure, social disclosure, governance disclosure, and the existence of an independent board of commissioners on company value, by considering the role of audit quality as a moderating variable. The research method used is a quantitative causality approach using secondary data. The research results show that environmental disclosure, social disclosure and governance disclosure have a positive influence on company value. However, no significant influence was found from the existence of an independent board of commissioners on company value in the context of this research. In addition, audit quality is proven to strengthen the influence of environmental disclosure on firm value, but does not strengthen the influence of social disclosure and governance disclosure on firm value. The conclusion is that corporate transparency and accountability have a significant role in determining company value. Keywords: Independent Board of Commissioners, Environmental Disclosure, Governance Disclosure, Audit Quality, Company Value, Social Disclosure

Board Gender Diversity, Governance, and Firm Value: An International Evidence

Using firms across 95 countries, the paper finds that a higher percentage of females on the boards is associated with better corporate governance practices concerning the proportion of independent directors, governance disclosure, employee Corporate Social Responsibility (CSR) training, existence of a CSR committee, and board age diversity. Propensity score matching finds that a higher representation of females on the boards can improve board independence, disclosure, CSR training, and firm value. Based on instrumental variable analysis, the findings show that more female directors positively and significantly affect the board age diversity, independent directors, governance disclosure (with GDI annual), and market value.

Corporate Sustainability and Capital Costs: A Panel Evidence from BRICS Countries

Global sustainability challenges have triggered a sense of accountability in society, culminating in the growing incorporation of sustainability into corporate operations. This article aims to investigate the influence of environmental, social and governance (ESG) disclosure on a company’s cost of financing in emerging markets. Furthermore, the article examines the criticality of separate pillars of ESG in determining the companies’ capital costs using a panel dataset of 192 non-financial companies drawn from the equity indices from the BRICS countries for 10 years, spanning 2011–2020. Pooled Ordinary Least Square and fixed-effect panel regressions are used to test the hypothesised relationships. The robustness of our findings is validated by the application of the System Generalised Methods of Moments approach. The results show that ESG disclosure scores and their individual component scores are positively associated with the cost of equity and weighted average cost of capital. In contrast, there is a negative relationship with the cost of debt. Results demonstrate the apprehensions of equity providers and the reception of debt providers towards the companies’ ESG adoption. The governance pillar has the most significant influence on capital costs. The study enables managers to evaluate the economically ideal capital structure for ESG-compliant enterprises strategically.

Corporate governance disclosure in a South African public pension fund

Corporate governance disclosure in a South African public pension fund

Indonesia Shariah Stock Index (ISSI) firms and environmental, social, and governance (ESG) disclosure in Indonesia

Purpose This study aims to examine the relationship of Indonesia’s Sharia Stock Index (ISSI) firms on environmental, social and governance (ESG) disclosure. This study is interesting because ISSI firms are supposed to comply with Islamic values as this has been reflected in good corporate governance activities, demonstrating responsibility to others and participating in preserving nature/environmental activities. Design/methodology/approach The authors use sample firms that are listed on the Indonesia Shariah-compliant Stock Index (ISSI) from 2011 to 2020, which also published sustainability reports. Findings The study found that sharia firms are positively related to ESG disclosure. The authors also found that ESG disclosure of sharia firms is more pronounced in the reporting section of general, economic, environmental and social. Other findings suggest differences in the segments reported in the COVID and pre-COVID periods. This result is also robust by conducting a self-selection bias test with Heckman’s two-stage regression and Coarsened Exact Matching regression. Practical implications For policymakers, these results indicate that different characteristics of firms can affect ESG disclosure, and economic conditions will determine which sectors are disclosed the most. Originality/value This study provides empirical evidence that Indonesian Shariah-compliant stock index firms carried out their mission to disclose more information about their environmental and social responsibilities and governance issues.

Does voluntary environmental, social, and governance disclosure impact initial public offer withdrawal risk?

AbstractDespite much research now being published on Environmental, Social, and Governance (ESG) investments and Initial Public Offerings (IPOs) withdrawal risk, there appears to be a lack of evidence on the prospective IPO withdrawal risk associated with voluntary disclosure of ESG policies. This paper investigates the influence of ESG disclosure on IPO withdrawal by comparing voluntary ESG disclosure to conventional IPOs in the international market. A large data set is employed here, containing 33,535 failed and successful IPOs from 1995 to 2019 from several nations with their own legal systems, cultural norms, and economic systems. The findings reveal that voluntary disclosure of ESG practices does significantly reduce the likelihood of an IPO withdrawal, by as much as 48%. These findings strongly suggest that organizations engaged in ESG activities perceive voluntary disclosure as an incentive, to adhere to social expectations. Consequently, reducing the asymmetry of information between IPO participants minimizes the withdrawal risk these companies face, hence diminishing doubts about their legitimacy. The results have consequences for IPO businesses, investors, researchers, and regulators.

Gender of firm leadership and environmental, social and governance (ESG) reporting: evidence from banks listed on Ghana Stock Exchange

PurposeThis study aims to examine how woman corporate leadership indicators and environmental, social and governance (ESG) disclosure in listed banks on Ghana Stock Exchange are related.Design/methodology/approachData was obtained from the audited annual reports of the banks for the period 2006–2020. Empirical result estimation was achieved using Panel Corrected Standard Errors.FindingsThe result revealed that female chief executive officer (CEO), female board chairperson and board gender diversity are associated with higher disclosure of ESG issues in listed banks in Ghana in overall terms. However, in terms of individual disclosures, female board chairperson positively impacts social disclosure, whereas both female CEO and female board chairperson affect governance disclosure positively.Research limitations/implicationsIn this era of business where there is much emphasis on green business and investment by various stakeholders for purposes of ensuring business legitimacy, the result implies that banks must consider females to occupy the positions of CEO and board chairperson since that can help to improve ESG performance of banks.Practical implicationsIn this era of business where there is much emphasis on green business, socially responsible investment and impact investment by various stakeholders, the result implies that banks must consider improving the representation of women in leadership since that can help to improve ESG performance of banks and hence ability to attract more investors.Originality/valueTo the best of the authors’ knowledge, this is the first study to provide empirical evidence from a developing country perspective in Sub-Saharan Africa that gender of bank leadership has implications for ESG disclosure.

Imitation behavior in environmental, social, and governance disclosure: Textual analysis evidence from Chinese listed enterprises

AbstractThe era of sustainable transformation has witnessed an increase in corporate environmental, social, and governance (ESG) disclosure waves. Using Chinese A‐share listed companies from 2016 to 2021 as a sample, this study adopted textual analysis and machine‐learning techniques to analyze ESG reports and explore the imitation behavior of ESG disclosures in emerging Chinese markets for the first time. The results show imitation behavior exists in corporate ESG disclosures from the perspective of group association. Regarding the imitation object, enterprises tend to choose the peer average level as a reference rather than the best enterprise in the same industry, which reveals the inherent law that enterprises' ESG disclosures are satisfied with compliance rather than championship. In terms of effects, the ESG‐mimetic isomorphic pressure has no incremental information effect but has an efficiency optimization effect. Furthermore, the imitation intensity and impact effects of ESG disclosure behavior exhibit heterogeneity owing to differences in properties, sales growth rates, and external attention. This study expands the motivation for corporate ESG disclosure behavior and enriches the empirical evidence for institutional isomorphism.

ESG disclosure and corporate cost stickiness: Evidence from supply-chain relationships

We investigate the effect of Environmental, social, and governance (ESG) disclosures by customer firms on suppliers’ cost stickiness in a supply-chain setting. Our findings indicate that ESG disclosures can mitigate suppliers' cost stickiness, mainly due to reduced optimistic expectations from suppliers' management. Further analysis reveals that the negative relationship intensifies with increased geographical and social distance between suppliers and customers, and when they belong to different industries.

Pengaruh Pengungkapan Informasi Lingkungan, Sosial, Tata Kelola, Ekonomi, dan Pendekatan Manajemen Terhadap Kebijakan Dividen

This research aims to determine the influence of Environmental, Social, Governance (ESG) disclosure, Economic disclosure, and Management Approach on Dividend Policy proxied by Dividend Payout Ratio and Dividend Yield. The study incorporates five control variables: company size, age, leverage, profitability, and liquidity. The data used in this research are secondary data obtained from the financial and sustainability reports of companies listed on the Indonesia Stock Exchange in the IDX ESG Leaders Index for the period 2020-2022. The results indicate that the disclosure of environmental, governance, and management information does not have a significant influence on dividend policy, both in terms of Dividend Payout Ratio and Dividend Yield measurements. This finding suggests that environmental, governance, and management disclosures cannot be used as a basis for decision-making for stakeholders. Social disclosure has no significant influence on Dividend Payout Ratio, but it has a significant negative impact on Dividend Yield, indicating that social disclosure affects dividend policy negatively. On the other hand, economic disclosure shows a significant influence on dividend policy, both in terms of Dividend Payout Ratio and Dividend Yield measurements.

SHOULD ESG DISCLOSURE BE MANDATORY? AN OVERVIEW

This review paper aims to outline the nature and key features of environmental, social and governance (ESG) disclosure and identify the real outcomes associated with the transition to mandatory ESG disclosure. In addition, it highlights the challenges surrounding mandatory ESG disclosure and provides beneficial recommendations to improve the compulsory ESG disclosure environment. This review is guided by analysing 63 Web of Science (WoS) and Scopus-indexed articles between 2012 and 2022. Findings show that mandatory ESG disclosure combined with specified ESG reporting standards and an appropriate enforcement and assurance regime can have beneficial informational and real effects. This paper highlights those critical yet beneficial implications for regulators, policymakers and researchers based on the importance of mandatory ESG disclosure involvement in the business environment.

Assessing the effect of core and expanded ESG on corporate financial performance: COVID-19’s moderating role

PurposeThis study aims to investigate the influence of disclosing environmental, social and governance (ESG) factors on financial performance, taking into account the moderating effect of the COVID-19 pandemic.Design/methodology/approachA sample of the top 100 non-financial firms listed on the Bombay Stock Exchange, for the years 2019–2022, has been considered. Suitable panel regression models have been used to assess the impact of non-financial disclosure on accounting and market measures of firm performance. In addition, a panel data moderating effect model is used to assess the moderating impact.FindingsThe outcomes of the study partially favour the value-creation role of ESG disclosure. Specifically, the disclosure of already established ESG metrics, particularly social and governance aspects, positively impacts the market performance while environmental transparency negatively impacts the accounting performance. Of the three ESG components, only extended governance disclosure adds to market value. Results of the moderation effect reveal a significant impact of the pandemic on the ESG disclosure–financial performance relation. However, a more pronounced effect before the pandemic is observed. The results are robust to endogeneity.Originality/valueThis study sheds light on the financial consequences of ESG disclosure within the context of an emerging nation. This is done by using a novel holistic ESG reporting framework to obtain more accurate results. Furthermore, the study distinguishes itself by examining the long-term moderating influence of the unexpected COVID-19 crisis on the ESG disclosure–financial performance relation.

ESG Accountability Made Easy: DocQA at Your Service

We present Deep Search DocQA. This application enables information extraction from documents via a question-answering conversational assistant. The system integrates several technologies from different AI disciplines consisting of document conversion to machine-readable format (via computer vision), finding relevant data (via natural language processing), and formulating an eloquent response (via large language models). Users can explore over 10,000 Environmental, Social, and Governance (ESG) disclosure reports from over 2000 corporations. The Deep Search platform can be accessed at: https://ds4sd.github.io.

ESG disclosure and financial performance: Empirical study of Vietnamese commercial banks

Environmental, social, and governance (ESG) disclosure becomes vital for banks to be transparent and accountable for their investments and lending decisions to shareholders, regulators, and society. The potential enhancement of shareholder value through ESG disclosure is still inconsistent. Empirical studies on the association between ESG disclosure and financial performance are mixed and limited in emerging economies. This study aims to examine whether ESG disclosure impacts the financial performance of 24 Vietnamese commercial banks in terms of return on assets (ROA), return on equity (ROE), and net interest margin (NIM). The study uses the feasible generalized least squares estimation method based on panel data from 2018 to 2022. The study employs content analysis on 12 themes related to environmental, social, and governance pillars to score policy disclosure based on the Fair Finance Guide Methodology. The results highlight the positive effects of ESG policy disclosure, individual environment disclosure (E), and individual governance disclosure (G) on bank financial performance. Notably, ESG, E, and G have the largest influence on ROE, with coefficients of 0.051, 0.036, and 0.027, respectively, at a 5% significance level. However, the study does not provide evidence of a statistically significant association between social disclosure and financial performance. These results provide empirical evidence for regulators and bank managers to shape ESG policies and practices aligning with international standards. AcknowledgmentESG disclosure score of 11 banks as primary data in this study is conducted under the project coordinated by the Fair Finance Vietnam coalition, as part of Fair Finance International.

The effect of Islamic Social Reporting and Return On Asset on Firm Value with disclosure of Good Corporate Governance as a Moderating

Penelitian ini dilakukan dengan tujuan untuk mengetahui pengaruh pelaporan sosial islam dan Return on asset terhadap nilai perusahaan dengan tata kelola perusahaan yang baik sebagai variabel moderasi pada perusahaan yang terdaftar di jakarta islamic index (JII) periode 2018 – 2020. Jenis penelitian ini adalah kuantitatif dengan menggunakan data regresi panel dan Moderated Regression Analysis (MRA) sebagai analisis data. Data yang digunakan pada penelitian ini yaitu data sekunder yang bersumber dari laporan keuangan tahunan pada perusahaan yang tercatat di jakarta islamic index (JII)periode 2018 – 2020. Setelah memperoleh data dari Laporan Tahunan kemudian dianalisis menggunakan Software Eviews 12. Populasi pada penelitian ini yaitu seluruh perusahaan yang tercatat di jakarta islamic index (JII) periode 2018 – 2020. Untuk pengambilan sampel menggunakan metode purposive sampling dengan beberapa kriteria untuk mendapatkan sampel penelitian. Dan didapatkan 15 perusahaan untuk digunakan sebagai sampel penelitian. Hasil analisis data regresi menunjukkan bahwa pelaporan sosial islam dan tata kelola perusahaan yang baik tidak berpengaruh terhadap nilai perusahaan. Namun , aset berpengaruh terhadap nilai perusahaan. Dan hasil analisis Moderated Regression Analysis terhadap menunjukkan bahwa good corporate governance mampu memoderasi hubungan ISR terhadap nilai perusahaan kearah positif. Dan hubungan tata kelola perusahaan yang baik mampu memoderasi ROA terhadap nilai perusahaan kearah negatif. Kata kunci : Islamic Social Reporting (ISR), Return on assets (ROA), Nilai Perusahaan, Good Coporate Governance (GCG)

Role of environmental, social and governance disclosure in business profitability and cost of debt: An analysis of small Southern Italian agri‐food businesses

AbstractThis article investigates the environmental, social, and governance (ESG) commitment of small agri‐food businesses disclosed by 279 Italians using Thomson Reuters Eikon ESG indicators and its relationship with their financial dimensions, that is, the corporate profitability indexes (ROE and EBITDA) and cost of debt, used as a proxy of the ability to access credit. Findings showed the absence of social reporting and the disclosure of business governance, including sustainability strategy, and the poor reporting of the environmental and social pillars, except for product innovation, product quality, and responsible marketing themes. The capability of ESG disclosure to predict corporate profitability and access to credit is limited. Moreover, investments in product responsibility are negatively related to the cost of debt, while commitment toward the internal and external companies' community appears to predict their ability to access credit positively. In light of the new institutional pressures requiring small agri‐food businesses to change and combine intrinsic and extrinsic motivation for CSR, the study extends the literature on the sustainability of small agri‐food businesses, which is mostly limited, and provides significant practical and political contributions to foster the paradigm shift toward sustainability [EconLit Citations: M21, Q01, Q13].

Can ESG disclosures promote firms going concern? Evidence from BRICS countries

AbstractThis study examines the moderating role of managerial ownership on environmental, social and governance (ESG) disclosures and the going concern of chemical manufacturing firms in Brazil, Russia, India, China, and South Africa (BRICS) countries. We employed a quantitative research methodology, using panel data from 236 listed firms operating in the chemical manufacturing sector between 2007 and 2022. For the analysis, we utilized the Augmented Mean Group and the Common Correlated Effects Mean Group estimators. The results showed that ESG disclosures significantly impact the continued existence of chemical manufacturing companies in BRICS nations. Additionally, high managerial ownership exerts a significant positive influence on the association between ESG disclosures and the going concern of chemical manufacturing firms. The findings affirm the need for businesses to disclose their ESG issues to stakeholders to ensure carbon neutrality goals for BRICS. Hence, it is recommended that policymakers and business owners promote and incentivize managerial ownership, recognizing its pivotal role in enhancing the positive relationship between ESG disclosure and firms' continuity, thereby contributing to the realization of carbon neutrality goals in the BRICS region.

Empirical Study of the Effect of Sustainability Accounting Disclosures on Financial Performance of Brewery Firms in Nigeria: Evidence from Nigerian Breweries PLC

The main motivation of this study stemmed from the dearth of empirical evidence of the effect of sustainability accounting disclosure on financial performance of Brewery firms in Nigeria and also to provide empirical proof on “governance disclosure” as one of the explanatory variables of sustainability accounting disclosure. Consequently, this study ascertained the effect of sustainability accounting disclosure on financial performance of Brewery firms in Nigeria. An ex–post facto research design approach was adopted for the study. The population of this study comprised five (5) Brewery firms quoted on the floor of the Nigeria exchange group (NGX), and Nigerian Breweries Plc was purposively used as the sample size of this study. Secondary data were carefully sourced from the financial statement/annual reports and sustainability reports from 2013 to 2022 of the Brewery firms quoted on the Nigeria exchange group (NGX). Least regression analysis by aid of E-views 10.0 software was used to test for statistical significance of the effect of sustainability accounting disclosure on financial performance of Brewery firms in Nigeria. The results showed that Economic Sustainability disclosure indexes do not significantly affect Net Profit Margin of Brewery firms in Nigeria. The findings further revealed that Environmental Sustainability disclosure indexes significantly affect Net Profit Margin of Brewery firms in Nigeria. More so, results showed that Social Sustainability disclosure indexes do not significantly affect Net Profit Margin of Brewery firms in Nigeria. Finally, the result established also that Governance Sustainability disclosure indexes do not significantly affect Net Profit Margin of Brewery firms in Nigeria, this study recommends among others; that managers of Brewers in Nigeria should improve and sustain full disclosure practices on economic, environmental, social and governance disclosures following the guidelines of the Global Reporting Index(GRI) as they are capable of exerting significant effect on financial performance of firms in Nigeria.