The impact of board composition on the level of ESG disclosures in GCC countries

Abstract

Purpose This paper aims to investigate the impact of board composition on environmental, social and governance (ESG) reporting in the Gulf countries. Despite the vast literature on the significance of ESG disclosure on firms’ performance, trust and reputation, there are relatively few studies on the influence of board structure on ESG disclosure in the Gulf Cooperation Council (GCC) countries. Gulf countries are witnessing a fast growing capital markets and having serious efforts to attract foreign investments to divert their economies from the oil and gas reliance. This could be facilitated by illustrating firms’ good citizenship and communicating the fulfillment of their social obligation. Design/methodology/approach The study examines publically listed companies between 2008 and 2017. Thomson Reuter’s database is used to collect the ESG disclosure scores and governance information. The authors apply multiple panel data regressions and sensitivity testing to ensure the robustness of the results. Findings Examining publically listed companies for a 10-year period shows that higher board independence and female board participation facilitate the transmission of a firm’s positive image by improving social responsibility. Independent boards of directors and participation among women serve as catalysts to strike an effective balance between firms’ financial targets and social responsibilities. In contrast, boards chaired by chief executive officers are less supportive in executing a social agenda and consequently reporting their ESG activities. Practical implications The results suggest that firms that appoint a sustainability and/or governance committee tend to engage in more impactful social and environmental activities and communicate their societal engagements more effectively. Social implications The paper recommends that policymakers, executives and shareholders in the GCC countries support board participation among women, independent directors and formation of sustainability committees to facilitate engaging in effectual social activities. Originality/value Empirical evidence regarding the relationship between board composition and ESG disclosure in the Gulf countries is limited. Prior literature mainly provides results on developed countries in which the governance system is mature and well structured. This study provides useful evidence regarding the Gulf countries that lack privatization and where corporate boards tend to be dominated by families and governments.

The link among board characteristics, corporate social responsibility performance, and financial performance: Evidence from the hospitality and tourism industry

“…With the growing importance of CSR, recent studies proposed that independent directors may also align the interests of firms with those of stakeholders (Gallego-Álvarez & Pucheta-Martínez, 2020), and tested this proposition by incorporating board independence in CSR studies. However, the findings are inconclusive; some studies found that board independence improves CSR engagement (Arayssi et al, 2019;Gallego-Álvarez & Pucheta-Martínez, 2020), others found that it decreases (Adel, Hussain, Mohamed, & Basuony, 2019), and still others found a neutral effect (Michelon & Parbonetti, 2012). Therefore, our study provides additional evidence of the influence of independent directors on CSRP.…”

“…the authors attribute this situation to the immaturity or small proportion of CSR committees in the sampled firms (Michelon & Parbonetti, 2012). Past evidence also indicated that CSR committees are influential in fostering CSR practices of firms in emerging countries (Arayssi et al, 2019;Gallego-Álvarez & Pucheta-Martínez, 2020). As sectoral evidence, Uyar et al (2020) proved that logistics firms with CSR committees are more likely to publish a higher number of CSR reports over the years.…”

Board gender diversity and environmental, social and governance performance of US banks: moderating role of environmental, social and corporate governance controversies

“…However, the moderating role of ESG controversies on the relationship between board gender diversity and ESG performance is not evident. This study contributes to the literature of gender diversity (Birindelli et al, 2019;Manita et al, 2018) and ESG by postulating empirical evidence (Arayssi et al, 2020;Cucari et al, 2018) that the participation of female members on the board considerably affects the ESG performance of banks. The positive association between gender diversity and ESG performance support the resource dependence theory by exhibiting women's background, psychological characteristics and experience as critical resources for banks (Kyaw et al, 2017); and these intellectual and interpersonal attributes of women directors assist them to achieve the legitimate performance in ESG (Jizi, 2017).…”

“…In general, board members take the strategic decision like ESG. Female board members are concerned than their male counterparts regarding ESG welfare (Arayssi et al, 2020), and they consider ESG controversies seriously.…”

Corporate Governance Configurations and Corporate Social Responsibility Disclosure: Qualitative Comparative Analysis of Audit Committee and Board characteristics

“…Thomson Reuters Eikon database, which is commonly used in the literature (Arayssi, Jizi, & Tabaja, 2020). Ragin (2000Ragin ( , 2008, traditional statistical methods such as regression propose that the impacts found are necessary and enough to predict the outcome, while most of the actual relationships are asymmetrical.…”