Attributes of corporate boards and assurance of corporate social responsibility reporting: evidence from the UK

Abstract

Purpose This study aims to investigate the relationship between the attributes of corporate boards in UK companies and their tendency to assure their corporate social responsibility (CSR) reports. Design/methodology/approach From the agency theory perspective, the authors examine the impact of board attributes on the assurance of CSR reports for the Financial Times Stock Exchange (FTSE) 350 during 2016–2019. The authors used annual integrated reports, companies’ websites and Thomson Reuters Eikon database for data collection and the logistic regression for data analysis. Findings The results confirm that some board attributes significantly influence a company’s decision to assure its CSR reports. While board size, board tenure, the presence of female board members and female executive directors and Chief Executive Officers (CEOs)’ global working experience positively contribute to CSR assurance (CSRA) decisions, the chairman’s independence negatively contributes to it. However, board independence, board meetings and board financial expertise demonstrate no effect on the CSRA decision. Research limitations/implications The authors focus on some attributes of board members, but the authors did not consider board diversity in its broader meaning. Moreover, the effect of board committees and their attributes on CSRA was not addressed. The authors also did not consider the impact of scope, the quality level of assurance service and the differences between assurance providers on companies’ decisions to neither undertake CSRA nor choose between assurance providers. Practical implications The study provides insights into the increasing demand on voluntary assurance to boost the credibility of CSR reports and the role of the board of directors (BOD) in taking this initiative. The findings highlight the importance of board diversity (e.g. gender) in improving transparency and sustainability reporting, which can help policymakers and regulators in shaping future governance policies. Additionally, the findings refer to a drawback in the UK Corporate Governance Code regarding the chairman’s independence, which requires corrective actions from the Financial Reporting Council. The findings raise concern over the small share of audit firms in the assurance service market, despite the growing demand for these services in the UK, which may require more attention to these services from the audit firms. Social implications Companies are increasingly pressurized, especially after the COVID-19 pandemic, to discharge their accountability to stakeholders and to act in a socially responsible manner in their business activities. CSR reporting is one of the main tools that companies use to communicate their social activities. Understanding the determinants of voluntary CSRA helps to increase the credibility of CSR reports and the favorable response to social pressure. Originality/value The authors add empirical evidence to the limited literature on CSRA about the role of the BOD in undertaking companies’ social responsibility, improving CSR reporting and reducing information asymmetry. It also highlights the significance of maintaining a balanced BOD in terms of gender, experience and tenure, in minimizing the risk of perpetuating non-transparent integrated reporting.

Does sustainable board governance drive corporate social responsibility? A structured literature review on European archival research

“…This included France (Dakhli, 2021;Beji et al, 2021), Germany (Dienes and Velte, 2016), Italy (Provasi and Harasheh, 2021;Harjoto and Rossi, 2019) and Spain (Pucheta-Martinez et al, 2020 (gender diversity as institutional directors); Bravo and Reguera-Alvarado, 2019 (audit committee gender); Martinez et al, 2019;Pucheta-Martinez et al, 2019a;2019b (independent female directors); Cabeza-Garcia et al, 2018;Fuente et al, 2017;Garcia-Torea et al, 2017;Larrieta-Rubín de Celis et al, 2015) as mandatory regimes. The voluntary UK setting shows similar results (Jizi, 2017;Al-Shaer and Zaman, 2016;Arayssi et al, 2016;Shaukat et al, 2016;Aladwey et al (2021)…”

Sustainable governance and climate-change disclosure in European banking: the role of the corporate social responsibility committee

“…This result is consistent with recent studies, according to which gender diversity among the board has a positive influence on the quality of reporting on GHG emissions and the risks of CC (Ben-Amar et al , 2017). According to such studies, females are more focused on stakeholders than males and more inclined to combine the interests of the various parties with those of the stakeholders (Aladwey et al , 2021; Jouber, 2021). Gender diversity can therefore, it is argued, guarantee a greater sensitivity to ethical issues (Tingbani et al , 2020).…”

“…The relationship between corporate governance and ESG disclosure is not a new topic among accounting scholars (Aladwey et al , 2021; Khan et al , 2019). Recent studies have focused on the relationship between corporate governance and CC or carbon disclosure (Chithambo and Tauringana, 2017; Velte et al , 2020).…”

Corporate governance and risk disclosure: evidence from integrated reporting adopters

“…The independent variables of this study are: board size (BSIZE), calculated as the number of directors on the board (Assenga et al , 2018; Vairavan and Zhang, 2020; Vitolla et al , 2020b; Aladwey et al , 2021; Khan, 2022); board gender diversity (BGD), calculated as the percentage of female directors on the board (Assenga et al , 2018; Vitolla et al , 2020b; García-Sánchez et al , 2021b); board independence (BIND), calculated as the percentage of non-executive directors with the board (Vitolla et al , 2020b; Aladwey et al , 2021); and board meeting frequency (BMF), calculated as the number of annual meetings of the board (Vitolla et al , 2020b).…”