The focus of stakeholders is shifting from the growth of profits and maximizing shareholders’ wealth towards more sustainable growth. The stakeholders are carefully emphasizing various environmental, social and governance issues, such as low carbon economy, climate change adaptation, social impact, transparency in governance etc. This, in turn, is increasing investors’ attention and interest in environment, social and governance (ESG) factors. Many investors are integrating ESG considerations into their mainstream portfolios. This article aims to study the impact of board factors on the ESG disclosure score of Indian listed companies. Using panel data for 327 firms listed on NSE and BSE over 7 years, this study examines the impact of board characteristics on the ESG disclosure score of a firm. We apply two-way fixed effect panel regression for analysis and find that board size and board gender diversity are the two significant factors playing a positive influence on the ESG disclosure score for the sample companies. CEO duality is a consistent factor across all the tested models impacting the ESG disclosure score.
AkisikO., & GalG. (2017). The impact of corporate social responsibility and internal controls on stakeholders’ view of the firm and financial performance. Sustainability Accounting, Management and Policy Journal, 8(3), 246–280.
2.
AlareeniB. A., & HamdanA. (2020), ESG impact on performance of US S&P 500-listed firms. Corporate Governance, 20(7), 1409–1428.
3.
Al-HiyariA., & KolsiM. C. (2021). How do stock market participants value ESG performance? Evidence from Middle Eastern and North African Countries. Global Business Review, 09721509211001511. https://doi.org/10.1177/09721509211001511
4.
ArayssiM., DahM., & JiziM. (2016). Women on boards, sustainability reporting and firm performance. Sustainability Accounting, Management and Policy Journal, 7(3), 376–401.
5.
ArayssiM., & JiziM. I. (2018). Does corporate governance spillover firm performance? A study of valuation of MENA companies. Social Responsibility Journal, 15(5), 597–620.
6.
ArayssiM., JiziM., & TabajaH. H. (2020). The impact of board composition on the level of ESG disclosures in GCC countries. Sustainability Accounting, Management and Policy Journal, 11(1), 137–161.
7.
AroraP., & DharwadkarR. (2011). Corporate governance and corporate social responsibility (CSR): The moderating roles of attainment discrepancy and organization slack. Corporate Governance: An International Review, 19(2), 136–152.
8.
ArvidssonS. (2010). Communication of corporate social responsibility: A study of the views of management teams in large companies. Journal of Business Ethics, 96(3), 339–354.
9.
AuerB. R., & SchuhmacherF. (2016). Do socially (ir) responsible investments pay? New evidence from international ESG data. The Quarterly Review of Economics and Finance, 59, 51–62.
10.
BearS., RahmanN., & PostC. (2010). The impact of board diversity and gender composition on corporate social responsibility and firm reputation. Journal of Business Ethics, 97(2), 207–221.
11.
Ben-AmarW., & McIlkennyP. (2015). Board effectiveness and the voluntary disclosure of climate change information. Business Strategy and the Environment, 24(8), 704–719.
12.
BeurdenP., & GosslingT. (2008). The worth of values – A literature review on the relation between corporate social and financial performance. Journal of Business Ethics, 82(2), 407–424.
13.
Bhagat. (2022). An inconvenient truth about ESG investing by Sanjai Bhagat. https://hbr.org/2022/03/an-inconvenient-truth-about-esg-investing#:~:text=As%20of%20December%202021%2C%20assets,13%25%20in%20U.S.%20based%20funds
14.
Bloomberg. (2022). Global environmental, social & governance – ESG Data. https://www.bloomberg.com/professional/dataset/global-environmental-social-governance-data/
15.
BofingerY., HeydenK. J., & RockB. (2022). Corporate social responsibility and market efficiency: Evidence from ESG and misvaluation measures. Journal of Banking & Finance, 134, 106322.
16.
BollenN. P. B. (2007). Mutual fund attributes and investor behavior. Journal of Financial and Quantitative Analysis, 42(3), 683–708.
17.
CamilleriM. A. (2015). Environmental, social and governance disclosures in Europe. Sustainability Accounting, Management and Policy Journal, 6(2), 224–242.
18.
CaoJ., TitmanS., ZhanX., & ZhangW. E. (2019). ESG preference and market efficiency: Evidence from mispricing and institutional trading. SSRN Electronic Journal. https://wrds-www.wharton.upenn.edu/documents/1117/CTZZ_March12__2019.pdf
19.
CaoJ., LiW., & XiaoS. (2022). Does mixed ownership reform affect private firms’ ESG practices? Evidence from a quasi-natural experiment in China. Financial Markets, Institutions & Instruments, 31(2–3), 47–86.
20.
CuiJ., JoH., & NaH. (2018). Does corporate social responsibility affect information asymmetry?Journal of Business Ethics, 148(3), 549–572.
21.
DahM., & JiziM. (2017). Board independence and the efficacy of social reporting. Journal of International Accounting Research, 17(1), 25–45.
22.
DhaliwalD. S., LiO. Z., TsangA., & YangY. G. (2011). Voluntary nonfinancial disclosure and the cost of equity capital: The initiation of corporate social responsibility reporting. The Accounting Review, 86(1), 59–100.
23.
DonnellyR., & MulcahyM. (2008). Board structure, ownership, and voluntary disclosure in Ireland. Corporate Governance: An International Review, 16(5), 416–429.
24.
GhoulS. E., & KarouiA. (2017). Does corporate social responsibility affect mutual fund performance and flows?Journal of Banking & Finance, 77, 53–63.
25.
GlassC., CookA., & IngersollA. R. (2016). Do women leaders promote sustainability? Analyzing the effect of corporate governance composition on environmental performance. Business Strategy and the Environment, 25(7), 495–511.
26.
GutscheG., & ZieglerA. (2019). Which private investors are willing to pay for sustain- able investments? Empirical evidence from stated choice experiments. Journal of Banking & Finance, 102, 193–214.
27.
HealyP. M., HuttonA. P., & PalepuK. G. (1999). Stock performance and intermediation changes surrounding sustained increases in disclosure. Contemporary accounting research, 16(3), 485–520.
28.
HillmanA. J., CannellaA. A.Jr, & HarrisI. C. (2002). Women and racial minorities in the boardroom: How do directors differ?Journal of management, 28(6), 747–763.
29.
HoltzL., & Sarlo NetoA. (2014). Effects of board of directors’ characteristics on the quality of accounting information in Brazil. Revista Contabilidade & Finanças, 25, 255–266.
30.
JiziM. (2017). The influence of board composition on sustainable development disclosure. Business Strategy and the Environment, 26(5), 640–655.
31.
JiziM. I., SalamaA., DixonR., & StratlingR. (2014). Corporate governance and corporate social responsibility disclosure: Evidence from the US banking sector, Journal of Business Ethics, 125(4), 601–615.
32.
LeuzC., & VerrecchiaR. E. (2000). The economic consequences of increased disclosure. Journal of Accounting Research, 38(Supplement2000), 91–124.
33.
MichelsonG., WailesN., Van Der LaanS., & FrostG. (2004). Ethical investment processes and outcomes. Journal of Business Ethics, 52(1), 1–10.
34.
StanleyMorgan. (2019). Sustainable signals: Individual investor interest driven by impact, conviction and choice. Morgan Stanley Institute for Sustainable Investing. https://www.morganstanley.com/pub/content/dam/msdotcom/infographics/sustainable-investing/Sustainable_Signals_Individual_Investor_White_Paper_Final.pdf
35.
NaseemM. A., RehmanR. U., IkramA., & MalikF. (2017). Impact of board characteristics on corporate social responsibility disclosure. Journal of Applied Business Research (JABR), 33(4), 801–810.
36.
PimpleM. (2012). Business ethics and corporate social responsibility. International Journal of Management Research and Review, 2(5), 761–765.
37.
ReebD. M., & ZhaoW. (2013). Director capital and corporate disclosure quality. Journal of Accounting and Public Policy, 32(4), 191–212.
38.
RevelliC. (2017). Socially responsible investing (SRI): From mainstream to margin?Research in International Business and Finance, 39, 711–717.
39.
RhoadesD. L., RechnerP. L., & SundaramurthyC. (2000). Board composition and financial performance: A meta-analysis of the influence of outside directors. Journal of Managerial Issues, 12(1), 76–91.
40.
RiedlA., & SmeetsP. (2017). Why do investors hold socially responsible mutual funds?Journal of Finance, 72(6), 2505–2550.
41.
RoufD. (2011). The relationship between corporate governance and value of the firm in developing countries: Evidence from Bangladesh. The International Journal of Applied Economics and Finance, 5, 237–244.
42.
SciarelliM., CosimatoS., LandiG., & IandoloF. (2021). Socially responsible investment strategies for the transition towards sustainable development: The importance of integrating and communicating ESG. The TQM Journal, 33(7), 39–56.
43.
ShackletonM., YanJ., & YaoY. (2022). What drives a firm’s ES performance? Evidence from stock returns. Journal of Banking & Finance, 136, 106304.
44.
SinghV., TerjesenS., & VinnicombeS. (2008). Newly appointed directors in the boardroom: How do women and men differ?European management journal, 26(1), 48–58.
45.
SrivastavaA., & BhatiaS. (2022). Influence of family ownership and governance on performance: Evidence from India. Global Business Review, 23(5), 1135–1153.
46.
SundarasenS. D. D., Je-YenT., & RajangamN. (2016). Board composition and corporate social responsibility in an emerging market. Corporate Governance: The International Journal of Business in Society.
47.
TakamatsuK. (2021). ESG disclosures gain traction in APAC. Bloomberg Professional Services. 09 November 2021–19 September 2022. https://www.bloomberg.com/professional/blog/esg-disclosures-gain-traction-in-apac/
48.
TsuiJ., & GulF. A. (2000). Corporate governance and financial transparencies in the Hong Kong-special administrative region of The People’s Republic of China. In Proceedings of the 2nd Asian Roundtable on Corporate Governance. http://www.oecd.org/dataoecd/57/58/33919929.pdf
49.
YadavP., HanS. and RhoJ. (2016). Impact of environmental performance on firm value for sustainable investment: Evidence from large US firms. Business Strategy and the Environment, 25(6), 402–420.
