Female directors on boards. The impact of faultlines on CSR reporting

Abstract

Purpose This paper aims to analyze the role of female directors on CSR disclosure. It assumes the existence of faultlines when studying gender diversity and classifies female directors into three categories: industry experts, advisors and community leaders. It also examines the influence of the power of female directors as a moderator on the association between female director categories and CSR disclosure. Design/methodology/approach The paper bases on a dynamic generalized method of moments panel estimator which allows controlling for the unobservable heterogeneity and endogeneity and reduces the estimation bias. Findings Results confirm the double-sided nature of gender diversity, noting different behavior among female directors according to their experience and backgrounds. Moreover, the dominating owner position of female directors can balance and moderate the effect of female directors appointed for their technical knowledge or political and social ties. The results also confirm the necessity to not consider all women directors as a homogeneous group and explore the influence and interrelations of female faultlines on CSR disclosure. Practical implications The paper highlights the need to consider the specific skills, expertise, and connections of female board members when analyzing the effect of board composition, and supports the view that firms should emphasize the unique human and social capital of directors to understand how boards impact on firm strategies. Specifically, the authors support the recommendations of the European Commission (2011) regarding the need to increase skills and expertise when selecting new non-executive female board members. Social implications At a time when most governments are introducing active policies that require firms to nominate women to boards, the understanding of the consequences of women’s presence on boards and the interrelations between female power and the diverse categories of female directors is timely and important. Originality/value To the best of the authors’ knowledge, this is the first paper that provides empirical evidence to the scarcely studied area of the human and social capital of female directors’ roles in CSR disclosure, providing an alternative view of the role of women in corporate board effectiveness.

Sustainable corporate governance and non-financial disclosure in Europe: does the gender diversity matter?

“…Future research may evaluate the possibility to investigate other dimensions of board gender diversity such as education, political orientation and nationality, testing their potential association with ESG transparency. Lastly, prior literature (Rramon-Llorens et al , 2020; Amorelli and García‐Sánchez, 2021; Fernandez-Feijoo et al , 2014) investigated whether third factors influence the strength or direction of the relationship between CSR disclosure and the presence of women on boards. Nevertheless, this paper does not consider the presence of any interaction effects.…”

Trends in the dynamic evolution of board gender diversity and corporate social responsibility

“…Specifically, 65% of the articles analyse the impact of gender diversity on CSR performance compared to 35% that do so in the information disclosures. This trend is changing, however, and the number of published academic articles that associate board gender 2020Investigates the association between board diversity characteristics and the level of disclosure of GHG information (UK) Positive Atif, Alam, and Hossain (2020) Examine the impact of female directors on firm sustainable investment (USA) Positive Beji, Yousfi, Loukil, and Omri (2020) Analyzes how the board's characteristics could be associated with CSR Positive Cordeiro, Profumo, and Tutore (2020) Study the relationship between ownership control and female board diversity in influencing corporate environmental performance (USA) Positive García-Sánchez, Oliveira, and Martínez-Ferrero (2020) Examine how female directors on boards behave towards gender issues reporting (International) Positive Orazalin and Baydauletov (2020) Examine the effects of CSR strategy and board gender diversity on environmental and social performance (Europe) Positive Pucheta-Martínez, Olcina-Sempere, and López-Zamora 2020Explore whether board gender diversity (female institutional directors) improves CSR disclosure (Spain) Positive Ramon-Llorens, Garcia-Meca, and Pucheta-Martínez (2020) Analyze the role of the socialand human capital of female directors on CSR disclosure (Spain)…”

“…The previous divergences that are also identified in the research on the relationship between the gender diversity of the board and the CSR disclosure practices, in this regard see Figure 3. Among other approaches, authors use dependent variables such as CSR disclosure/reporting as social and environmental reporting, or sustainability disclosures, to determine the disclosure of a stand‐alone report or a report prepared according to an international standard (Amorelli & García‐Sánchez, 2019; Helfaya & Moussa, 2017; Mahmood et al, 2018; Mallin et al, 2013; Pucheta‐Martínez, Bel‐Oms, & Nekhili, 2019; Pucheta‐Martínez, Bel‐Oms, & Olcina‐Sempere, 2019; Ramon‐Llorens et al, 2020; Rodríguez‐Ariza et al, 2014; Zahid et al, 2020), compared to other studies that use scores such as the ESG variable from Thomson Reuters (Arayssi et al, 2016; Tamimi & Sebastianelli, 2017), or the Carbon Disclosure Project disclosure index (Ben‐Amar et al, 2015; Hollindale et al, 2019; Kılıç & Kuzey, 2019; Liao et al, 2015; Prado‐Lorenzo & Garcia‐Sanchez, 2010; Tingbani et al, 2020).…”

“…Similar results were obtained by García‐Sánchez et al (2019) who incorporated the moderating effect of stakeholder orientation, and Byron and Post (2016) who considered various characteristics at the country level. Additionally, Ramon‐Llorens et al (2020) suggest that the role of the dominating owner position of female directors can balance and moderate the effects.…”

The mediating effect of sustainability strategy between sustainability committees and business performance: can persistent assessment condition this effect?

“…The previous literature has tested the positive interaction between the presence of a sustainability committee and the levels of sustainability performance (Biswas et al , 2018; Danvila et al , 2019; Peters et al , 2019; Orazalin, 2020; Orazalin and Mahmood, 2021; Uyar et al , 2021) [3]. This positive effect increases with a diversified composition of this committee (Hillman et al , 2002; Carter et al , 2010; Ramon-Llorens et al , 2021). More recently, Eberhardt-Toth (2017) and Danvila et al (2019) empirically evidenced that the sustainability committee’s independence is also associated with higher levels of corporate social performance.…”