Diversity of Board of Directors and Environmental Social Governance: Evidence from Italian Listed Companies

Abstract

This study investigates the association between environmental, social, and governance (ESG) disclosure and diversity of the board of directors (BoD) in Italian listed companies. Diversity of BoD in terms of gender diversity, CSR committees, board average, and independent directors are examined as to their influence on voluntary ESG disclosure. This rating is highly relevant to managers and investors considering ESG issues in their decision‐making process. The factors that drive or hinder ESG disclosure are gaining importance. Despite the relevance of the topic, in Italy there is a scarce amount of literature regarding diversity in the BoD. The data set includes ESG data for more than 54 Italian companies for the period 2011–2014. The results indicate that firm's CSR disclosure is associated with independent director and committee CSR. In addition, women on BoDs is negatively correlated while the age of the board is not significant. Based on this study, shareholders and policymakers will have a deeper knowledge on the significant roles that board diversity is playing as a determinant of ESG disclosure. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment

Corporate governance and sustainable business conduct—Effects of board monitoring effectiveness and stakeholder engagement on corporate sustainability performance and disclosure choices

“…Previous literature also shows that more board expertise on sustainability issues may positively affect the implementation of companies' sustainability strategy and enhance CSP (Shaukat et al, 2016). Moreover, sustainability expertise, for example, in the form of a sustainability committee, may also positively affect SRQ (Cucari, Esposito De Falco, & Orlando, 2018;Hahn & Kühnen, 2013;Helfaya & Moussa, 2017;Liao et al, 2015;Michelon & Parbonetti, 2012). Finally, previous literature supports the notion that board diversity and, in particular, gender diversity are positively associated with CSP and SRQ.…”

“…Board independence was measured by the ratio of nonexecutive directors to total board size (Hussain et al, 2018;Lim, Matolcsy, & Chow, 2007). The proxy for sustainability expertise is a dummy variable that was equal to 1 if the respective firm had a sustainability committee or a CSR expert, and 0 otherwise (Cucari et al, 2018;Liao et al, 2015). Board diversity was measured by the ratio of female board members to total board size (Liao et al,6 The scoring criteria of the Transparency Benchmark "are in line with the latest international guidelines and developments, such as the Global Reporting Initiative (GRI), the framework for integrated reporting of the International Integrated Reporting Council (IIRC), […] and the EU directive concerning reporting on nonfinancial information and diversity for PIEs (Public Interest Entity) with more than 500 employees."…”

Business contribution to the Sustainable Development Agenda: Organizational factors related to early adoption of SDG reporting

“…Post et al (2011) also find a positive and significant correlation between having three or more female directors on a board and higher ratings of corporate environmental, social, and governance actions. Conversely, Cucari et al (2018) show that gender diversity on boards is negatively correlated with CSR disclosure, and Khan (2010) does not find any significant effect. However, the general opinion in the literature is that women demand higher levels of sustainability (Calabrese, Costa, & Rosati, 2016;Lämsä, Vehkaperä, Puttonen, & Pesonen, 2008;Rosati, Costa, Calabrese, & Pedersen, 2018) and are more prone to use moral reasoning and to behave ethically, especially in situations where behavior is not delineated by any clear organizational policy (Smith & Rogers, 2000).…”

“…The literature on this theme presents contrasting evidence (Cucari et al, 2018;Post et al, 2011). The literature on this theme presents contrasting evidence (Cucari et al, 2018;Post et al, 2011).…”

Environmental, social, and governance and company profitability: Are financial intermediaries different?

“…It is perceived as a particular topic of the instrumental stakeholder theory and the resource-based view of the firm. Actually, the disclosure of ESG practices is included in the voluntary information provided by companies (Cucari, Esposito De Falco, & Orlando, 2018), and Directive 2014/95/EU requires that approximately 6,000 large companies in the EU-namely, large public interest companies, such as listed companies, and banks and insurance companies with more than 500 employees-include nonfinancial and diversity information in their annual reports from 2018 onwards. Indeed, the disclosure of ESG practices is important because investors recognize it as a measure of companies' opportunities and risks (Limkriangkrai, Koh, & Durand, 2017).…”