The impact of corporate governance on sustainability reporting

Abstract

The current thesis seeks to enhance our understanding and the existing knowledge of the impact of corporate governance (CG) on sustainability reporting (SR) around the world. This is achieved by carrying out three distinctive, but intimately connected papers. These are: (i) an up-to-date systematic review of the current empirical research investigating the relationship between CG and SR; (ii) an examination of the influence of CG on total SR and separately on its three dimensions, and whether the influence differs between developed and developing countries; and (iii) whether the efficacy of the CG-SR nexus depends on sampling decision, and whether this relationship is significantly different between the financial and non-financial sectors.
The first paper conducts a systematic literature review (SLR) of the relationship between CG and SR. The final sample includes 117 empirical studies conducted in over 50 countries from 2000 to 2019 and published in 72 scholarly journals. The paper finds that very few articles examine all three dimensions of SR (economic, environmental and social). The paper also shows that most previous studies are based on developing countries and exclude the financial sector from the investigation. Additionally, the majority of prior studies focus on the quantity of SR and apply single rather than multiple theoretical frameworks, with agency theory being the dominant theoretical lens. Moreover, the findings of the influence of board attributes frequently examined iv (size, independence, gender diversity, and CEO duality) are conflicting. Thus, this paper provides suggestions for future research on the CG-SR nexus.
The second paper investigates the impact of CG, with a particular reference to board characteristics (i.e. board size, board independence, CEO duality, board gender diversity, and the existence of sustainability committee (SC)) on total SR practices and separately on each dimension (economic, environmental and social) based on stakeholder-agency theory. Using a sample of 370 firms from 50 countries (22 developed countries and 28 developing countries) in 2017 and a Global Reporting Initiative (GRI) standards-based disclosure index to measure the level of SR across various reporting mediums, the paper shows that the impact of several board characteristics differs by dimension. Then, the paper conducts further analysis by dividing the sample into developed and developing countries. The findings show that the relationship between some board attributes and total SR differs between developed and developing countries.
Following similar analysis, and drawing on agency and resource dependence theories, the third paper conducts sector-based research of the CG-SR nexus. Specifically, this paper, first, explores whether the efficacy of several board mechanisms (i.e. board size, board independence, CEO duality, board gender diversity, board age, board tenure, and the presence of SC) on SR practices differs depending on sampling decision. Second, the paper examines the differences in the effect of these governance mechanisms on SR practices between financial and non-financial firms. Using data relating to 370 companies (104 from the financial sector and 266 from the non-financial sector) belonging to 50 countries in 2017 and a disclosure index based on GRI standards to quantify the SR activities, the paper finds that the chosen sample influences the relationship between some board characteristics and SR. Furthermore, the paper suggests that several board attributes affect SR practices in financial and non-financial sectors differently.

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ORCID for Venancio Tauringana: orcid.org/0000-0002-1433-324X

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