Article

Reconnoitering the impact of corporate governance on carbon emission disclosure in an emerging setting

March 2024
International Journal of Law and Management 66(3/4)

DOI:10.1108/IJLMA-11-2023-0251

Authors:

Guru Nanak Dev University

Purpose This study aims to determine the influence of corporate governance characteristics on carbon emission disclosure in an emerging economy. Design/methodology/approach The study is based on S&P BSE 500 Indian firms for the period of 6 years from 2016–2017 to 2021–2022. The panel data regression models are used to gauge the association between corporate governance and carbon emission disclosure. Findings The empirical findings of the study support the positive and significant association between board activity intensity, environment committee and carbon emission disclosure. This evinced that the board activity intensity and presence of the environment committee have a critical role in carbon emission disclosure. On the contrary, findings reveal a significant and negative relationship between board size and carbon emission disclosure. Practical implications The present study provides treasured insights to regulators, policymakers, investors and corporate managers, as the study corroborates that various corporate governance characteristics exert significant influence on carbon emission disclosure. Originality/value The current research work provides novel insights into corporate governance and climate change literature that good corporate governance significantly boosts the carbon emission disclosure of firms. Previous studies examining the impact of corporate governance on carbon emission disclosure ignored emerging economies. Thus, the current work explores the role of governance mechanisms on carbon emission disclosure in an emerging context. Further, to the best of the author’s knowledge, the current study is the first of its kind to investigate the role of corporate governance on carbon emission disclosure in the Indian context.

THE INFLUENCE OF CORPORATE GOVERNANCE MECHANISMS ON CARBON EMISSION DISCLOSURE: DOES GREEN PERFORMANCE MATTER?

Article

Full-text available

Feb 2025

Carbon emissions disclosure has attracted researchers' attention. This study aims to provide empirical evidence on the influence of more comprehensive corporate governance mechanisms on carbon emission disclosure based on legitimacy and stakeholder theories. This study introduces virtue ethics theory, a new theory in carbon emission research, to explain the moderating role of green performance. Observational data includes 455 data from a sample of companies listed on the Indonesia Stock Exchange from 2018 to 2022. The research data was processed using multiple linear regression methods and moderated regression analysis. The study's results prove that the size of the board of commissioners, the independence of the board of commissioners, the sustainability committee, and institutional ownership positively affect carbon emission disclosure. The green performance also revealed can strengthen the influence of board of commissioners diversity on carbon emission disclosure. Corporate governance is needed to encourage companies to disclose their carbon emissions.

THE INFLUENCE OF CORPORATE GOVERNANCE MECHANISMS ON CARBON EMISSION DISCLOSURE: DOES GREEN PERFORMANCE MATTER?

Article

Oct 2024

Corporate carbon emissions, science-based targets initiatives and firm performance: evidence from India

Article

Aug 2024
Manag Law

Purpose-This study aims to examine the influence of corporate carbon emissions on the financial performance of select Indian companies. It further studies the moderating role of science-based target initiatives (SBTi) in this relationship. Design/methodology/approach-The study is based on 57 Indian SBTi companies and 74 Bombay Stock Exchange-listed non-SBTi companies for the period of four years from 2019-2020 to 2022-2023. The panel data regression models are used to study this association. Furthermore, two-stage least square and generalized method of moments models are used to test the robustness of the results. Findings-There is a negative relationship between corporate carbon emissions and financial performance. The findings support the "win-win" hypothesis and confirm that reducing carbon emissions can improve the financial performance of Indian firms. Furthermore, the SBTi moderate the carbon emission and firm performance nexus. Practical implications-The findings of the study would provide insights to the policymakers, regulators and managers to mainstream climate change in their core business activities driving sustainability and profitable outcomes. Originality/value-This study is a noble attempt to study the moderating role of science-based targets in the carbon emissions and firm performance nexus in an emerging market setting. Earlier studies have been conducted in a crosscountry context.

What do we know about carbon disclosure? A bibliometric analysis

Article

Full-text available

Jan 2025

Climate change is a global risk that drives extensive research, including carbon disclosure. Although the field has grown significantly over the past two decades, there are remains gaps in comprehensive reviews. Therefore, this review aimed to provide an updated summary of the literature on carbon disclosure. A total of 278 articles were selected from the Scopus database, covering the period from 2004 to 2024. Co-author and co-word analyses were conducted using VOSViewer and Bibliometrix R-Packages. The review successfully identified the most relevant authors, sources, countries, and affiliations related to carbon disclosure. It also analyzed the intellectual structure, influential journal, thematic evolution, trend topics, and selective data sources, as well as theoretical foundations in the field. Several investigations have focused on evaluating some aspects of disclosure such as its quantity and quality, determinants, as well as beneficial effects. The current review identified the most relevant topics for future surveys, including companies governance and greenwashing. Additionally, it contributed to the existing body of empirical literature by providing an updated summary and addressing the gaps and limitations in previous investigations, particularly in methodology, data acquisition, and review methods.

Corporate governance and emission performance: Malaysian evidence on the moderating role of environmental innovation

Article

Full-text available

Dec 2024

This study examines the effects of corporate governance mechanisms on emission scores. Furthermore, it evaluates the moderating effect of environmental innovation activities on the association between corporate governance mechanisms and emission performance. The sample consists of 122 Malaysian companies in several sectors. Data were extracted exclusively from the Refinitiv Eikon database for the period 2016–2023. This study adopted a panel data approach with a fixed-effect estimation, fixed effect with the Driscoll–Kraay standard error, and a generalized method of moments. The findings reveal that audit expertise, audit independence, board expertise, and board-specific skills have a statistically significant negative impact on emission performance. Furthermore, the results show that environmental innovation has no substantial moderating effect on the links between audit committee characteristics and emission performance. However, environmental innovation moderates the association between board attendance, gender diversity, and emission performance. This study makes several valuable contributions to the existing body of literature. Our study offers a distinct and thorough assessment of board and audit committee characteristics and environmental innovation, setting it apart from the previous research conducted in Malaysia.

Factors Determining of Carbon Emissions Voluntary Disclosure in Indonesia’s Energy Sector Companies

Article

Full-text available

May 2024

Reporting information on carbon emission from company operations is a form of social and environmental responsibility that contributes to the reduction of greenhouse gas emissions to achieve the SDGs target by 2030. This carbon-related reporting is the role of accountants through carbon accounting as a form of transparency and accountability, as well as an effort to reduce GHGs emissions produced by companies. This research is intended to see how energy sector companies implement voluntary disclosure of carbon emissions with several determinants which is reflected in the company size scale, the exposure carried out by companies in the company’s website media, and shareholding owned by institutions. The research population is in energy sector companies listed on the Indonesia Stock Exchange (IDX) during 2018-2022. Samples of this research used purposive sampling, so that 50 observational data were obtained consisting of 10 energy sector companies in 5 years period. Result show that media exposure influences carbon emission disclosure. Companies that present media exposure have an increase in the carbon emission disclosure level. Meanwhile, firm size and institutional ownership have no influence on the carbon emission disclosure. A company with a large size scale and high institutional shareholding does not guarantee that it will report information of carbon emission thoroughly.

The Impact of Carbon Emission Disclosure on Firm Value

Article

Full-text available

Jun 2024

This study illustrates the importance of corporate disclosure of carbon emissions as a strategy to increase firm value in a global context that is increasingly concerned with sustainability. Through a meta-analysis of five international journals, findings show that carbon emissions disclosure is positively correlated with increased firm value in several Asian countries such as Korea and Taiwan, where this transparency is supported by strict government oversight and media attention to environmental policies. However, challenges arise in China, where a lack of responsiveness to economic transformation and inadequate disclosure practices can negatively impact firm value by hindering access to funding and firms' risk management capabilities. The implementation of international standards such as ISO 14064 in carbon emissions management was also emphasized as key to improving transparency, corporate reputation in terms of sustainability, and attractiveness to investors who are increasingly prioritizing sustainable business practices.

Does ownership structure affect carbon emission disclosure?

Article

Jun 2024
Asian Rev Account

Purpose The current research strives to shed light on how ownership structure can impact carbon emission disclosure. Design/methodology/approach The present study is based on S&P BSE 500 Indian firms. Using manual content analysis, carbon emission disclosure data were collected from a final sample of 318 nonfinancial Indian firms over seven years, i.e. from 2016–17 to 2022–23, having 2,226 firm-year observations. The panel regression has been employed to examine the association between ownership structure and carbon emissions disclosure. Findings The results of the study suggest that ownership structure variables, such as institutional and foreign ownership, exert a positive and significant influence on carbon emission disclosure. Conversely, block-holder ownership is negatively associated with carbon emission disclosure. Practical implications This study enriches the emerging literature on environmental disclosure, climate change, carbon emission disclosure and ownership structure. Social implications The present research work provides treasured acumens to corporate managers, investors, regulators and policymakers as the study corroborates that ownership structure has an imperative role in firms' carbon emission disclosure. Originality/value Existing literature has determined the impact of ownership structure on environmental disclosure. In contrast, the current research extends the climate change literature by providing novel insights into how ownership structure can influence firms’ carbon emission disclosure. Moreover, to the best of the authors’ knowledge, the present study is the first to scrutinize the relationship between ownership structure and carbon emission disclosure in the Indian context.

Firm-Level Attributes, Industry-Specific Factors, Stakeholder Pressure, and Country-Level Attributes: Global Evidence of What Inspires Corporate Sustainability Practices and Performance

Article

Full-text available

Oct 2022

This study examined differing attributes that motivate corporate sustainability practices and performance (CSP&P) in the global economy. Utilizing publicly disclosed information from the Carbon Disclosure Project (CDP), data were gathered for publicly listed companies operating in high carbon-intensive and less carbon-intensive sectors on a global scale, and a panel ordered probit regression model analysis was conducted to arrive at the findings. The rigorous reliability and validity of the scales were ensured. Firm-level attributes, industry-specific factors, stakeholder pressure, and country-level attributes were the variables examined for each context. The findings reveal that the firm-level attributes showed that board size, board independence, sustainability committee, and firm size were linked to positive motivation, while firm age was found to negatively influence the response level. The study discovered that the industry-specific factors variable has a negative significant influence because industry leaders (firms in high carbon-intensive sectors) exhibit poor sustainability performance, suggesting a negative attitude towards environmental issues. The study discovered a positive and highly significant influence of stakeholder pressure, while country-level attributes partially played a significant role. Overall, the findings show that a disparity exists in the level of response between the different global economies. The justification for the findings is based on the theory of interested parties, political theory, and legitimacy concerns that shape the strategic choices made by companies.

A novel measure of corporate carbon emission disclosure, the effect of capital expenditures and corporate governance

Article

Full-text available

Apr 2021

The UK's 2050 net-zero emission target is one of the most ambitious goals in the world. Organisations should play a vital role by communicating a sufficient level of carbon emission information with the stakeholders. Motivated by the necessity of measuring the level of carbon disclosure, this paper provides a unique carbon emission disclosure measurement based on a sample of UK firms from 2013 to 2019. We apply different methods to assess the validity and reliability of our developed measurement. The results suggest that our measurement captures the actual CO2 emission, including scope 1, scope 2, and also captures the environmental, social and governance (ESG) score. Additionally, we explore the association between capital expenditure, corporate governance and the level of carbon emission disclosure. Further, the results show a positive relationship between capital expenditure and carbon emission disclosure. Also, there is a significant positive relationship between internal governance and carbon emission disclosure. Moreover, the analysis suggests that internal governance strengthen the relationship between capital expenditure and carbon emission disclosure. We also use quantile regression, and the findings show that capital expenditure and internal governance have a positive impact on carbon emission disclosure under all quantiles. Our data suggest that capital expenditure declines within the UK by around 53% over the last six years. Following the reduction in capital expenditure, the results demonstrate 39% decline in the CO2 emission level. The results also indicate that for every $1 million capital expenditure, approximately 2.75 Metric tons of carbon dioxide (MtCO2) emissions increase. Business investment is around 70% of the UK's total investment. Therefore, the reduction in capital expenditure is one of the primary reasons that might explain the decrease in the UK's overall CO2 emission level. The unique findings of this paper are relevant to the government, management and standard-setters.

Impact of board characteristics on governance, environmental and ethical disclosure تأثير خصائص مجلس الإدارة على الحوكمة والإفصاح البيئي والأخلاقي

Article

Full-text available

Mar 2020
Soc Bus Rev

Purpose The purpose of this study is to investigate how board characteristics impact the governance, environmental and ethics disclosure. Board characteristics such as board size, gender diversity, board independence, CEO/chair duality and board meeting are included. Design/methodology/approach This study is based on a sample of 82 companies listed in the SBF120 between 2012 and 2017. A number of econometric techniques are used such as generalized least squares to test the panel regressions. Findings Board independence, board gender diversity and board meetings have a positive and significant influence on governance, environmental and ethics disclosure. Board size is positively and significantly associated only with corporate environmental disclosure. The adoption of Global Reporting Initiatives (GRI, G4) has not affected or biased the corporate governance (CG), environmental and ethics disclosure. Originality/value This study adds to the literature on management reporting behavior and ethics and contributes to the extant CG literature by offering new evidence on the disclosure of good CG practices as well as environmental and ethics behavior. This study offers new insights about the potential influence of board characteristics on such specific disclosure practices focusing “during the optional period of GRI4 and after their mandatory adoption”.

Board gender diversity, environmental committee and greenhouse gas voluntary disclosures

Article

Full-text available

Mar 2020

We highlight the interrelations between board gender diversity, environmental committees and greenhouse gas (GHC) voluntary disclosures on a sample of 215 firms listed on the London Stock Exchange (LSE). Evidence from the study indicates significantly positive association gender diversity. Our findings suggests that a more diverse board can serve a diverse range of stakeholder demands and hence legitimise its green credentials and gain trust from a broad range of stakeholders. These findings have implications for policy formulation for firms. <br/

Carbon Emissions, Firm Size, and Corporate Governance Structure: Evidence from the Mining and Agricultural Industries in Indonesia

Article

Full-text available

Apr 2019

The purpose of this research was to examine the relationship between firm size, corporate governance, and carbon emission disclosure (CED) in Indonesia, a country with rich natural resources. This study focused on the mining and agricultural industries to better capture the disclosure behavior of companies directly engaged in natural resources. Using a sample of 305 firm-year observations of listed firms in Indonesia spanning from 2011 to 2016, the results show that larger firms and firms with larger board sizes are more likely to have higher disclosure on CED. We also showed that firms with a higher percentage of independent commissioners and directors are less likely to disclose information related to carbon emissions. These findings indicate that a greater number of commissioners and directors sitting on the board will stimulate a firm's decision to make a higher number of disclosures related to carbon emissions. However, the increased percentage of independent commissioners and directors will cause more conservative disclosure outcomes to the firms. In addition, firms in the mining industry are more likely to have a higher level of CED relative to firms in the agricultural industry. These findings remained robust even after we corrected the standard errors.

BOARD MEETING, LOSS, AND CORPORATE SOCIAL RESPONSIBILITY DISCLOSURE

Article

Full-text available

Jan 2020

The purpose of this study is to analyze how the meeting of the board of commissioners and board of directors affect the level of corporate social responsibility disclosure. This study uses 251 observations from 71 companies listed on the Indonesia Stock Exchange (IDX) in the period 2010-2017. This study finds that the board of commissioners meeting does not affect corporate social responsibility disclosure (CSRD), but the board of directors meeting has a negative and significant effect on CSRD. Furthermore, this study finds that loss suffered by company does not affect CSRD. However, the loss suffered by company can mitigate the negative relationship between the board of directors meeting and CSRD. For companies, managers, and shareholders, this study can show how to manage the frequency of board meeting effectively, especially when the company is experiencing loss. This research shows that the frequency of board meeting becomes effective when the company suffers loss.

Corporate voluntary greenhouse gas reporting: Stakeholder pressure and the mediating role of the chief executive officer

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Jan 2020
Bus Strat Environ

The study sheds light on the extent to which various stakeholder pressures influence voluntary disclosure of greenhouse gas (GHG) emissions and how the impact is explained and moderated Chief executive office (CEO) characteristics of 215 FTSE350 listed United Kingdom (UK) companies for the year 2011. The study developed a classification of GHG emission disclosure based on the guidelines of GHG Protocol, DEFRA and Global Framework for Climate Risk Disclosure using content analysis. Evidence from the study suggests that some stakeholder pressure (regulatory, creditor, supplier, customer, board control) positively impacts on GHG disclosure information by firms. We found stakeholder pressure in the form of regulatory, mimetic and shareholders pressure positively influenced the disclosure of GHG information. We also found creditor pressure also had a significant negative relationship with GHG disclosure. While CEO age had a direct negative effect on GHG voluntary disclosure, its moderation effect on stakeholder pressure influence on GHG disclosure was only significant on regulatory pressure.

Corporate Governance, Firms’ Characteristics and Environmental Performance Disclosure Practices of Indian Companies

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Nov 2019

This study attempts to explore the effect of corporate governance parameters like board size and independent directors along with firm-specific characteristics such as age, size and profitability on the environmental performance disclosure of 38 National Stock Exchange (NSE) listed Indian non-financial companies for the period of 2013–2017. This study uses panel data analysis and finally documents a positive impact of board size and age of firm on the environmental performance disclosures of Indian companies. The study also finds a significant and negative effect of board independence on the environmental performance disclosure of such companies. The study based on its findings questions the role of independent directors as an internal regulatory body and suggests external regulatory specifications for better environmental performance and its disclosure to the public.

Do Women on Boards Influence Climate Change Disclosures to CDP? – Evidence from Large Indian Companies

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Aug 2019

Participation of women on corporate boards is increasing across the globe. Corporate with women directors on their board are more likely to address the emerging strategic issues of climate change, enhance GHG emission disclosure strategy and communicate the actions to the stakeholders. According to Board Capital Theory, the presence of women on boards increases board capital breadth in different dimensions. According to Critical Mass Theory, boards with three or more female directors tend to influence the board’s decision-making process which results in more favourable environmental disclosure. Findings of earlier studies reiterate that female executives and directors bring different ethical values and traits to decision-making. This paper studies the effect of women on board on climate change reporting to the Carbon Disclosure Project (CDP) by the large Indian companies. The sample for this study includes S&P BSE 100 indexed companies and the period of the study is 6 years ranging from 2010-11 to 2015-16. This study used secondary data. The CDP data and financial data are taken from Bloomberg Professional Database. Based on the items disclosed by companies for CDP questionnaire, a Carbon Disclosure Index is constructed and used in this study. Using a multiple regression model, it is found that there is a significant positive relationship between the percentage of women directors on boards and climate change-related disclosure to CDP. Using independent ‘t’ tests, it is found that companies having at least three women directors disclose more. Thus, this study supports both board capital theory and critical mass theory.

Determinants of environmental disclosure: investigating new and conventional corporate governance characteristics

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Nov 2020
ANN OPER RES

This study investigated corporate governance factors that could shape the decision for sustainability reporting. Specifically, this paper sets out to investigate the environmentally sensitive properties of distinct corporate governance characteristics vis-à-vis sustainable concerns strengthening the decision to develop environmental disclosures. Regarding explanatory variables, the study focused on corporate governance because it sets the rules and processes by which a firm is managed. Five plausible individual characteristics were employed in our proposed model, namely, “Independent Directors”, “presence of Lead Independent Director”, “frequency of Audit Committee Meetings”, “presence of Sustainable Committee”, and the “Age of the Youngest Director”. We utilized the Environmental facet of Environmental, Social and Governance score calculated by Bloomberg as a proxy driving the decision to disseminate environmental information. Hypotheses were tested using a Logit model for a sample of a total of 278 firms from the United States listed S&P 500. Results revealed that the “Age of the Youngest Director” has a negative effect, while “Independent Directors” and the “presence of Lead Independent Director” variables seem to strengthen the decision to develop environmental disclosures. Implications are valuable to different stakeholders and policy makers interested in improving corporate governance initiatives to reducing agency costs and enhancing corporate sustainable transparency.

A study of the determinants of environmental disclosure quality: evidence from French listed companies

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Dec 2019
J Manag Govern

We examine the impact of various factors on the quality of environmental disclosure. Combining multi-theories in a unique framework, it focuses on factors related to the strategy and vision of the firm (environmental audit, presence of an environmental committee), diversity of and within boards (independence of the board, gender diversity) and factors related to the environment (environmental performance, degree of pollution of the company). This study involves an attempt to develop a self-constructed index to measure environmental disclosure quality using qualitative attributes as provided by IASB and GRI frameworks and following (Chauvey et al. in J Bus Ethics, 130(4):789–803, 2014). A number of econometric techniques are used including panel data specifications using a sample of French listed companies in SBF120 for the period 2009–2014. The study found that quality of disclosure remains relatively low. In addition, the findings indicate that a company’s strategy and vision (environmental audit), diversity in boards (gender diversity) and environmental performance play significant roles in explaining variations in quality of environmental disclosure. This paper sheds light on whether various factors could affect the credibility of disclosed information using a multi theory framework. Standards setters and policy makers are recommended to think about implementing a generally accepted framework of non-financial reporting to answer the demand for more transparency and accountability. This paper fills the gap in the literature by highlighting an unexplored area of literature related to the quality of non-financial reporting drawing upon the regulatory framework of financial reporting.

Can board environmental orientation improve US firms' carbon performance? The mediating role of carbon strategy

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Jan 2020
Bus Strat Environ

Overwhelming evidence from prior research suggests a positive association between corporate board characteristics and carbon performance; however, very little is known about the mechanisms linking the two variables. This study attempts to fill this gap by developing and empirically testing a conceptual model that highlights the role of carbon strategy in the relationship between board environmental orientation (BEO) and carbon performance. We argue that BEO can directly and indirectly influence carbon performance through carbon strategy. Using structural equation modelling to analyse data consisting of 2,301 US firm-year observations over the 2005-2015 period, we find that the greater the BEO is, the better its carbon performance (i.e., lower greenhouse gas emissions). The results also provide evidence of the mediating effect of carbon strategy on the relationship between BEO and carbon performance. Splitting the sample into high and low carbon-intensive industries shows a partial mediation effect in high carbon-intensive industries and a full mediation effect in low carbon-intensive industries. The findings of the study and its implications for scholars, policy makers, managers, investors and environmentalists are discussed.

External Pressure, Corporate Governance, and Voluntary Carbon Disclosure: Evidence from China

Article

Full-text available

May 2019

This paper uses manually collected data of carbon information disclosure for listed companies, from 2009 to 2015 in China, to measure corporate carbon information disclosure, and it explores the impact of external pressure and internal governance on carbon information disclosure through text analysis and a hierarchy analysis process. The results show that, firstly, the greater the external pressure is, the higher the level of carbon information disclosure will be; that is, when listed companies are state-owned enterprises or in heavy pollution industries, the level of carbon information disclosure is higher. Secondly, the higher the level of corporate governance is, the higher the level of carbon information disclosure will be; that is, when the board of directors is larger, the proportion of independent directors is higher, and the chairman and general manager positions are differentiated, the level of carbon information disclosure is higher. Furthermore, when listed companies are state-owned and in heavy pollution industries, the level of carbon information disclosure is higher; when the chairman and general manager are in the same position (lower governance level), the positive impact of government pressure on carbon disclosure is less significant, the positive impact of external pressure on carbon disclosure is less significant, and the positive interactive impact of government pressure and external pressure on carbon disclosure is less significant. The conclusions of this paper are still robust after Heckman two-stage regression, propensity score matching (PSM) analysis, sub-sample regression, and double clustering analysis.

Determinants of Voluntary Greenhouse Gas Emission Disclosure: An Empirical Investigation on Turkish Firms

Article

Full-text available

Dec 2018

Firms worldwide have been facing an increasing pressure to disclose their Greenhouse Gas (GHG) emissions since GHG emissions are seen as the main source of global warming which is one of the most challenging problems that the world is faced with. For this reason, voluntary GHG disclosure represents a growing area of research interest. However, the existing research generally focuses on developed countries. In this sense, the present paper aims to contribute to the existing GHG disclosure literature by analyzing the determinants of voluntary disclosure of firms operating in a developing country, Turkey. The effects of both financial characteristics and board structures of firms on voluntary disclosure decisions are analyzed as the possible determinants of GHG disclosures of Turkish firms. We use two proxies for assessing the firms’ GHG disclosures. The first proxy, “sensitiveness tendency”, indicates the response behavior of firms to the Carbon Disclosure Project (CDP) survey. The second proxy, namely, “transparence tendency”, represents the disclosure behavior of firms. Using logistic regression models with a sample of 84 listed Turkish companies which were included in the Carbon Disclosure Project survey in 2014, 2015 and 2016, we find that firm size, institutional ownership and market value are positively related to the sensitivity of sampled firms, while board size is negatively related. On the other hand, our results indicate that firm size, profitability and institutional ownership have positive impacts on the transparency of Turkish listed firms.

Composition and Activity of the Board of Directors: Impact on ESG Performance in the Banking System

Article

Full-text available

Dec 2018

A growing body of research suggests that the composition of a firm’s board of directors can influence its environmental, social and governance (ESG) performance. In the banking industry, ESG performance has not yet been explored to discover how a critical mass of women on the board of directors affects performance. This paper seeks to fill this gap in the literature by testing the impact of a critical mass of female directors on ESG performance. Other board characteristics are accounted for: independence, size, frequency of meetings and Corporate Social Responsibility (CSR) sustainability committee. We use fixed effects panel regression models on a sample of 108 listed banks in Europe and the United States for the period 2011–2016. Our main empirical evidence shows that the relationship between women on the board of directors and a bank’s ESG performance is an inverted U-shape. Therefore, the critical mass theory for banks is not supported, confirming that only gender-balanced boards positively impact a bank’s performance for sustainability. There is a positive link between ESG performance and board size or the presence of a CSR sustainability committee, while it is negative with the share of independent directors. With this work, we stress the key role of corporate governance principles in banks’ ESG performance, with relevant implications for both banks and supervisory authorities.

The effect of corporate governance on carbon emission disclosures: Evidence from Turkey

Article

Full-text available

Jan 2019

Purpose The purpose of this study is to investigate whether corporate governance characteristics impact the voluntary disclosure of carbon emissions. Design/methodology/approach This empirical research was carried out in two stages. Initially, the carbon disclosures data were sourced from the annual and stand-alone sustainability reports of Turkish non-financial companies listed on Borsa Istanbul during 2011-2015. Later, the corporate governance characteristics that influence carbon disclosures were examined using panel data regression models. Findings The empirical findings of this study suggested that entities with a higher number of independent directors on their boards were more likely to respond to the Carbon Disclosure Project. In addition, board nationality diversity and the existence of a sustainability committee had a significant positive impact on the propensity to disclose carbon emissions and the extent of those disclosures. Originality/value This research provides empirical evidence of the determinants of carbon emission disclosures, which could be useful for organizations and regulatory bodies. Such an understanding is crucial to specify necessary policies that will provide emission reduction practices and policies for entities. This paper fills some of the gap in the literature by concentrating on the association between corporate governance characteristics and disclosures of a more specific environmental issue, being carbon emissions.

The relation between voluntary carbon disclosure and environmental performance: The case of S & P 500

Article

Full-text available

Oct 2017
Manag Law

Purpose The purpose of this study is to investigate the effect of environmental performance on the environmental disclosure level. Design/methodology/approach Carbon disclosure leadership index score is considered as a proxy of carbon disclosure level, while greenhouse gas (GHG) emissions as a proxy of environmental performance. In addition, six control variables are used: return on assets, financial leverage, company’s size, CEO duality, board size and percentage of independent directors on board. The sample comprises 102 companies from a population of Standard & Poor’s 500 (S&P 500) companies over a five-year period, 2009-2013. Findings Results revealed that higher pollution levels in terms of GHG emissions affect negatively the dissemination of carbon disclosure information, suggesting a positive relationship between environmental performance and environmental disclosure level. In addition, companies with good environmental performance in relation to their average environmental performance disseminate more carbon information in their disclosures. Thus, the carbon disclosure level is indicative of environmental performance consistent with the voluntary disclosure theory. Practical implications The managerial behavior regarding the relation of environmental disclosure and environmental performance is explained. In addition, the findings should be of use to those investors interested in finding carbon emission information so that they assess investments and evaluate their current portfolios in terms of environmental sustainability. Originality/value It is intended to ascertain the reliability level of carbon disclosure regarding carbon emission information by incorporating the carbon disclosure leadership index score and GHG emissions.

Determinants of Corporate Climate Change Disclosure for European Firms

Article

Full-text available

Oct 2017

This study identifies the determinants of climate change disclosure under the prism of sustainable development in European context. The selected variables involve environmental performance, ownership structure, and verification of climate change initiatives. Cross-sectional data derived from the Bloomberg terminal of the European 500 index concerning 215 firms in the year 2014 are employed. The novelty of the present study stands on the use of proxies for climate change disclosure by adopting the Climate Performance Leadership Index (CPLI). The results reveal that better environmental performance positively affects the level of climate change disclosure. In addition, governmental ownership and independent verification of environmental data determine climate change disclosure. Thus, climate change disclosure is thought to be an effective managerial tool for shareholders and stakeholders to superintend corporate management limiting information asymmetry level; furthermore, higher environmental performers prefer actual climate change disclosure providing a plausible signal. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment

Board size, corporate regulations and firm valuation in an emerging market: a simultaneous equation approach

Article

Full-text available

Nov 2009

We investigate the association between board size and firm valuation for a sample of 169 firms from 2002 to 2011 in South Africa (SA). The SA corporate context is interestingly and uniquely characterised by greater urgency to meet affirmative action regulations, such as black empowerment in board appointments, limited qualified and experienced directors, especially black directors, concentrated ownership, weak enforcement of corporate regulations and greater government ownership. These features make SA corporate boards perform a weaker agency (advisory, monitoring and disciplining) role than Western European and US boards, but a stronger resource dependence role, by providing access to resources, such as business contacts and contracts. This suggests that any positive impact of board size on firm valuation is likely to depend on the effective execution of the resource dependence role than the agency role. Our results suggest that board size has a positive association with firm valuation, consistent with larger boards providing better access to resources. Overall, our results support the resource dependence role of boards than their agency role. The results are robust across a raft of econometric models that control for different types of endogeneity, as well as different types of accounting and market-based firm valuation measures. JEL Classification: G32, G34, G38 Keywords: Corporate governance, board regulations, firm valuation, simultaneous equations, South Africa

The effects of board characteristics and sustainable compensation policy on carbon performance of UK firms

Article

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Jan 2017
Br Account Rev

Faizul Haque

This study examines the effects of board characteristics and sustainable compensation policy on carbon reduction initiatives and greenhouse gas (GHG) emissions of a firm. We use firm fixed effect model to analyse data from 256 non-financial UK firms covering a period of 13 years (2002–2014). Our estimation results suggest that board independence and board gender diversity have positive associations with carbon reduction initiatives. In addition, environment-social-governance based compensation policy is found to be positively associated with carbon reduction initiatives. However, we do not find any relationship between corporate governance variables and GHG emissions of a firm. Overall, our evidence suggests that corporate boards and executive management tend to focus on a firm's process-oriented carbon performance, without improving actual carbon performance in the form of reduced GHG emissions. The findings have important implications for practitioners and policymakers with respect to the effectiveness of internal corporate governance mechanisms in addressing climate change risks, and possible linkage between corporate governance reform and carbon related policies.

Board Gender Diversity and Corporate Response to Sustainability Initiatives: Evidence from the Carbon Disclosure Project

Article

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May 2017
J BUS ETHICS

This paper investigates the effect of female representation on the board of directors on corporate response to stakeholders’ demands for increased public reporting about climate change-related risks. We rely on the Carbon Disclosure Project as a sustainability initiative supported by institutional investors. Greenhouse gas emissions measurement and its disclosure to investors can be thought of as a first step toward addressing climate change issues and reducing the firm’s carbon footprint. Based on a sample of publicly listed Canadian firms over the period 2008–2014, we find that the likelihood of voluntary climate change disclosure increases with women percentage on boards. We also find evidence that supports critical mass theory with regard to board gender diversity. These findings reinforce initiatives being undertaken around the world to promote gender diversity in corporate governance while demonstrating board effectiveness in stakeholder management.

Board size, corporate regulations and firm valuation in an emerging market: A simultaneous equation approach

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Full-text available

Mar 2015

We investigate the association between board size and firm valuation for a sample of 169 firms from 2002 to 2011 in South Africa (SA). The SA corporate context is interestingly and uniquely characterised by an urgency to meet affirmative action regulations, such as black empowerment in board appointments, limited qualified and experienced directors, especially black directors, concentrated ownership, weak enforcement of corporate regulations and greater government ownership. These features make SA corporate boards perform a weaker agency (advisory, monitoring and disciplining) role than Western European and US boards, but a stronger resource dependence role, by providing access to resources, such as business contacts and contracts. This suggests that any positive impact of board size on firm valuation is likely to depend on the effective execution of the resource dependence role more than the agency role. Our results suggest that board size has a positive association with firm valuation, consistent with larger boards providing better access to resources. Overall, our results support the resource dependence role of boards more than their agency role. The results are robust across a raft of econometric models that control for different types of endogeneity, as well as different types of accounting and market-based firm valuation measures.

Carbon emission reduction: The impact on the financial and operational performance of international companies

Article

Full-text available

Sep 2015
J CLEAN PROD

Over the last few decades, companies operate in an environment in which exercising responsibility is a prerequisite for competing. Owing to the growing social concern for ethical, social, and environmental issues, the question of the impact of emissions trading on firm competitiveness has acquired special relevance in recent years. This research analyzes the impact of the variation in carbon dioxide emissions on financial and operational performance. By using international data consisting of 89 companies for the period 2006–2009, the findings show a reduction in emissions that generates a positive impact on financial performance. In addition, certain control variables are considered such as company size, sector, growth, sustainability index, and legal system, while a panel data methodology is used as the analysis technique. Overall, this research shows that companies promote greater environmental behaviour in order to obtain higher financial performance. Nonetheless, the findings do not show evidence for operational performance. This study contributes to the literature on carbon emission reduction and corporate performance. Moreover, it complements previous literature in the sense that results obtained show a reduction in emissions that generates a positive impact on financial performance.

Gender Diversity, Board Independence, Environmental Committee and Greenhouse Gas Disclosure

Article

Full-text available

Feb 2014
Br Account Rev

This paper examines the impact of corporate board’s characteristics on the voluntary disclosure of greenhouse gas (GHG) emissions in the form of a Carbon Disclosure Project report. Using both univariate and regression models with a sample of the 329 largest companies in the United Kingdom, we find a significant positive association between gender diversity (measured as the percentage of female directors on the board) and the propensity to disclose GHG information as well as the extensiveness of that disclosure. In addition, a board with more independent directors or environmental committee show a higher tendency to be ecologic transparent. However, if the committee is not sufficiently large, independent or active, its effect seems insignificant. The results are consistent with stakeholder theory, suggesting that a diversified and independent board and the existence of a board-level environmental committee may balance a firm’s financial and non-financial goals with limited resources and moderate the possible conflicting expectations of stakeholders who have disparate interests. The findings should be useful for top managers and regulators who are interested in improving corporate governance practices and climate-change strategies.

Corporate Governance and Performance in Socially Responsible Corporations: New Empirical Insights from a Neo-Institutional Framework

Article

Full-text available

Mar 2013
CORP GOV

Empirical This paper investigates the relationship between corporate governance (CG) and corporate social responsibility (CSR) and, consequently, examines whether CG can positively moderate the association between corporate financial performance (CFP) and CSR. Using a sample of large listed corporations from 2002 to 2009, we find that, on average, better-governed corporations tend to pursue a more socially responsible agenda through increased CSR practices. We also find that a combination of CSR and CG practices has a stronger positive effect on CFP than CSR alone, implying that CG positively influences the CFP-CSR relationship. Our results are robust to controlling for different types of endogeneities, as well as alternative CFP, CG and CSR proxies. The paper generally contributes to the literature on CG, CSR, and CFP. Specifically, we make two main new contributions to the extant literature by drawing on new insights from an overarching neo-institutional framework. First, we show why and how better-governed corporations are more likely to pursue a more socially responsible agenda. Second, we provide evidence on why and how CG might strengthen the link between CFP and CSR. Our findings have important implications for corporate regulators and policy-makers. Since our evidence suggests that better-governed corporations are more likely to be more socially responsible with a consequential positive effect on CFP, it provides corporate regulators, managers and policy-makers with a new impetus to develop a more explicit agenda of jointly pursuing CG and CSR reforms, instead of merely considering CSR as a peripheral component of CG or as an independent corporate activity.

Corporate Governance and Business Strategies for Climate Change and Environmental Mitigation

Article

Full-text available

Apr 2012

Strategic corporate responses to climate change and environmental challenges do not seem to be the primary domain of corporate management. In the short run, such decisions are generally not consistent with executive incentives and often not seen as profit maximizing. Nevertheless, as some climate change responses may indeed be firm value maximizing, such decisions can be expected to reflect the nature of a firm's corporate governance. Based on an analysis of 500 of the largest US firms, we show empirically that this is indeed the case. Specifically, this study documents that institutional ownership and board entrenchment seem to significantly influence climate change and environmental impact mitigation policies of large firms.

Green Governance: Boards of Directors’ Composition and Environmental Corporate Social Responsibility

Article

Full-text available

Mar 2011

This study contributes to the work on board composition and firm corporate social responsibility by extending it to the environmental domain. It evaluates the relationship between boards of directors’ composition and environmental corporate social responsibility (ECSR) by integrating literatures on board composition, firm corporate social responsibility, and individual differences in attitudes toward and information about environmental issues. Using disclosed company data and the natural environment ratings data from Kinder Lydenberg Domini (KLD) Inc. for 78 Fortune 1000 companies, the study finds that a higher proportion of outside board directors is associated with more favorable ECSR and higher KLD strengths scores. Firms with boards composed of three or more female directors received higher KLD strengths scores. And, boards whose directors average closer to 56 years in age and those with a higher proportion of Western European directors are more likely to implement environmental governance structures or processes. Our results also reinforce growing concerns around unidimensional KLD measures.

Comparison of Propensity for Carbon Disclosure between Developing and Developed Countries: A Resource Constraint Perspective

Article

Full-text available

Apr 2014
Account Res J

Purpose: This study investigates differences in voluntary carbon disclosure between developing and developed countries and the role of resource availability in explaining these differences. Design/methodology/approach: We used a sample consisting of 2045 large firms from 15 countries and representing divergent industries that released Carbon Disclosure Project (CDP) company reports in 2009. Profitability, leverage and growth were used as proxies for the degree of resource availability and the firm’s participation in the CDP was used as a proxy for carbon disclosure propensity. Findings: Consistent with our predictions, the empirical results show that the carbon disclosure propensity is correlated in the right direction with resource availability proxies; this relationship is stronger in developing nations, suggesting that the shortage of resources is one reason for the lack of commitment to carbon mitigation and disclosure in these countries. The results are robust when we control for disclosure motivation proxies. In addition, we show that firms tend to disclose carbon information if their shares are owned by CDP signatories, because it allows them to be viewed as more powerful stakeholders. This finding, which enhances the validity of stakeholder theory, previously has not been documented in the literature. Research limitations/implications: The findings are relevant to the world’s largest organisations, as determined by their market capitalisation. Thus, caution should be exercised to generalise our inferences to small or medium-sized organisations. Practical implications: The evidence suggests that resource shortages may constrain a firm management’s carbon decisions. As the regulatory environment becomes more stringent, firms, particularly those in developing countries need to take a more proactive strategy to tackle global warming challenges and balance the need to achieve financial goals and prevent carbon pollution with their limited resources. Originality/Value: Although prior studies typically considered external pressures that motivated voluntary environmental disclosure, our results offer extra insight and suggest that resource restriction provides a complementary explanation—largely ignored in the existing literature—for variation in the carbon-disclosure propensity of firms.

Satyam Fiasco: Corporate Governance Failure and Lessons Therefrom

Article

Full-text available

Jan 2010

The concept of Corporate Governance (CG) is, now, more than a decade old in India. However, the inadequacy and inefficacy of the governance framework in the country has been espoused by the massive corporate disaster - Satyam. The fiasco has brought into limelight the inherent shortcomings in the present corporate regulatory system that has been benchmarked on the CG structure of the United States (US) and United Kingdom (UK). In this backdrop, this article makes an effort to look at events that precipitated the Satyam fiasco and the loopholes in the system that enabled the fraud to occur. The present study also proposes to provide insights into the legislature in formulating provisions for curbing such corporate mishaps that obliterate investor confidence, particularly so when our country is desperate to draw on foreign capital to propel its economic growth.

An Investigation of Voluntary Corporate Greenhouse Gas Emissions Reporting in a Market Governance System: Australian Evidence

Article

Full-text available

Oct 2011
Account Audit Account J

Purpose Institutional governance theory is used to explain voluntary corporate greenhouse gas (GHG) reporting in the context of a market governance system in the absence of climate change public policy. This paper seeks to hypothesise that GHG reporting is related to internal organisation systems, external privately promulgated guidance and EU ETS trading. Design/methodology/approach A two‐stage approach is used. The initial model examines whether firms' GHG disclosures are associated with internal organisation systems factors: environmental management systems (EMS), corporate governance quality and environmental management committees as well as external private guidance provided by the Global Reporting Initiative (GRI) and the Carbon Disclosure Project (CDP) for 187 ASX 300 firms. EU ETS trading is also included. Determinants of the extent and credibility of GHG disclosure is examined in the second stage where an index constructed from the GHG reporting standard “ISO 14064‐1” items for a sub‐sample of 80 disclosing firms as the dependent variable. Findings Firms that voluntarily disclose GHGs have EMSs (uncertified and certified), higher corporate governance quality and publicly report to the CDP, tend to be large and in the energy and mining and industrial sectors. The credibility and extent of disclosures are related to the existence of a certified EMS, public reporting to the CDP, and use of the GRI. Firms that disclose more credible information are more likely to be large and in the energy and mining, industrial and services sectors. Originality/value The paper shows that some proactive but pragmatic Australian firms are disclosing their GHGs voluntarily for competitive advantage in the current market governance system in the absence of public policy.

Unraveling the impact of stakeholder pressure on carbon disclosure in an emerging economy

Article

Sep 2023

Purpose The purpose of this paper is to seek to shed light on the influence of stakeholder pressure on carbon disclosure in an emerging economy. Design/methodology/approach The present study is based on Bombay Stock Exchange 100 Indian firms for the period of 5 years from 2016–17 to 2020–21. The association between stakeholder pressure and carbon disclosure, along with certain control variables, has been explored through a regression model. Findings The results of the study suggest that stakeholders exert a significant influence on corporate carbon disclosure. Further results confirm that regulatory and customer pressure have the most significant and positive influence, while shareholders and creditors exert a significant and negative influence on carbon disclosure. The study also finds that employee pressure does not have any association with carbon disclosure. Practical implications This study adds to the existing literature on climate change, carbon disclosure and stakeholder pressure. Social implications The present study provides useful insights to corporate managers and policymakers as the study concludes that stakeholders exert a significant influence on carbon disclosure. Originality/value Previous studies examining the stakeholder pressure on carbon disclosure ignored emerging economies, while the present study has considered India, which is a developing as well as an emerging economy. Further, to the best of the authors’ knowledge, the current study is the first of its kind to investigate the stakeholder pressure on carbon disclosure in the Indian context. The present study develops a comprehensive index to measure corporate carbon disclosure.

CEO confidence and firm performance: exploring the moderating role of board independence

Article

Dec 2022
Manag Finance

Purpose Based on Upper Echelon Theory, the present study is an endeavor to assess the relationship between Chief Executive Officer (CEO) confidence and the performance of a firm. This study also investigates the moderating role of board independence in this context. Design/methodology/approach This work is based on a sample of 500 S&P-indexed Indian firms listed on the Bombay Stock Exchange over a time span of 12 years, i.e. from 2010 to 2021. Panel regression models are employed on a final sample of 3,780 firm-year observations to examine the aforesaid relationship. Findings The empirical findings of the study support the positive association between CEO confidence and firm performance as highly confident (overconfident) CEOs tend to make quick and intuitive decisions, alleviate the firm's underinvestment problem, and have a higher propensity to boost the overall firm performance. Moreover, the results reveal that the presence of independent directors (IDs) negatively moderates this relationship and reduces the positive impacts of CEO overconfidence as IDs lack the required knowledge of the business. IDs themselves tend to assume the imperative position and reject the CEO's proposals, thereby negatively impacting the firm performance in the long run. Originality/value The current study provides significant novel insights into the finance and strategic management literature that overconfidence bias among CEOs can be a desirable managerial trait for shareholders to boost the long-term performance of the firm. The study also extends to the corporate governance literature by providing empirical evidence of IDs reducing the potential beneficial effects of CEO overconfidence and that subsequently decreases the firm performance.

Corporate governance: Does it matter management of carbon emission performance? An empirical analyses of Indian companies

Article

Oct 2022
J CLEAN PROD

Narsa Goud Neralla

There is anxiety that has been rising vis-à-vis the climate changes in the entire world. Notwithstanding this, the primary purpose of this paper is to examine the board characteristics and carbon emission performance. This study applied the fixed effect model, 2SLS, and multiple regression analyses data from 220 non-financial listed companies on the BSE index and covering a period of 7 years from FY 2014-15 to FY 2020-21. The estimated results confirmed that board size, board meetings, board gender diversity, CEO duality, and ownership concentration have a negative association with carbon emission performance. In addition, board independence and the environmental committee are found to be positively associated with carbon emission performance based on 2 SLS and multiple regression analyses, and these results imply that they improve carbon performance. Overall, this study's shreds of evidence suggest that governing boards tend to pay attention to company's carbon performance and without mitigating original carbon performance is not likely to reduced GHGs emissions. This study's outcomes have significant implications for policymakers, corporate bodies, creditors, and regulators regarding the efficiency of corporate governance mechanisms in communicating climate change risks. However, corporate boards can use these results to find positive aspects of companies and formulate possible corporate governance modifications in relation to carbon policies.

Impact of carbon emission on financial performance: empirical evidence from India

Article

May 2021

Purpose The purpose of this study is to examine the effect of carbon emission on accounting and market-based financial performance of Indian companies. Design/methodology/approach Firms reporting emission data on Carbon Disclosure Project (CDP) are considered for empirical analysis and the data have been collected for the period from 2013 to 2019. The study adopts Heckman's regression model to control for self-selection bias and it also examines the moderating role of environmental sensitivity through industry-wise analysis. The results are also checked for potential endogeneity using generalized methods of moments estimation. Findings Primarily, the findings postulate a significant negative impact of carbon emissions on both measures of financial performance. Further, it also determines that environmentally sensitive firms are more exposed to such negative influence of emission compared to nonsensitive companies. Research limitations/implications Current research will enhance the understanding of managers about the economic impact of carbon emission, especially in an economy where emissions are not completely regulated. The study provides an economic rationale to the industries to reduce emission volume. It will also assist regulators to draft environmental policies by considering environmental sensitivity. It should be noted that the study is based on the Indian firms that have reported emission data on the CDP during the study period. Originality/value The present study addresses one of the most important but less explored issues of environmental research in one of the largest emerging economies of the South Asian region. The study presents a comprehensive view by covering accounting as well as market-based indicators along with the moderating effect of environmental sensitivity.

YES Bank Fiasco: A Corporate Governance Failure

Article

Apr 2021

Rajat Deb

Financial market has been jolted on 5th March, 2020 when the central government has put YES Bank Ltd., India’s fourth largest private bank under moratorium and the RBI has come out with a bailout package. The former CEO had extended loans in quid pro quo non arrangement to the companies confronting financial turmoil. Theoretically, independent directors supposed to bring independent judgement about strategy and risk management which, for the bank has been miserably failed and has extended loans without considering the borrowers’ ability of repayment. The audit committee has too failed to show its acumen and approved the management’s proposal.

Market responses to firms’ voluntary carbon disclosure: Empirical evidence from the United Kingdom

Article

Mar 2020
J CLEAN PROD

In corporate boardrooms around the world, climate change has quickly risen to become a major issue, matching public concern. Recently, corporate management has encountered stakeholder pressure to disclose more information about their carbon profile and their plans to improve it. They have also been challenged to find the appropriate strategy for carbon disclosures, requiring an understanding of the costs and benefits of both carbon improvement initiatives and the reporting of them. Using a unique data set that contains firms listed on the FTSE 350 index on the London Stock Exchange market from 2009 to 2015, we apply the event study method to examine market reaction to carbon disclosures. The results show that investors respond significantly negatively to carbon disclosure announcements via Carbon Disclosure Project (CDP) of FTSE 350 firms. Moreover, for firms working in carbon-intensive industries, investors react to carbon disclosure announcements in a more significantly negative way compared with the main sample. We also find that the study's main findings are driven by the smaller FTSE 350 firms. Furthermore, a subsample of observations for the financial crisis period of 2007–2008 was analyzed to explore the examined relationship during the crisis. In contrast, a significant positive market reaction to carbon disclosure was found for the 2007–2008 crisis period. Our study's findings offer fresh insight and updated policy implications for investors, management and sustainability institutions. We recommend management accompanies their carbon disclosures with more explicit statements of reasons for carbon initiatives and the benefits arising from them.

Effects of low carbon supply chain practices on environmental sustainability: An empirical study on Indian manufacturing firms

Article

Feb 2019

Purpose The purpose of this paper is to empirically examine the relationships between low carbon supply chain practices and their relationships with environmental sustainability (ES) and the economic performances (EP) of firms. The study also includes an examination of the low carbon supply chain practices that are utilized by Indian manufacturing firms. Design/methodology/approach Through a questionnaire-based survey, the data received from 83 Indian manufacturing firms was analyzed using a variance-based structural equation modeling technique to test the proposed hypotheses. Findings The study indicates that carbon governance is a strategic imperative for the adoption of low carbon supply chain practices. Similarly, low carbon product and process design (LCPPD), manufacturing and logistics lead to improved ES. In addition, low carbon purchasing is positively related to the adoption of LCPPD, manufacturing and logistics. No significant relationship was found between the adoption of low carbon supply chain practices and the EP of a firm. Practical implications The findings of this study may assist manufacturing managers in prioritizing operational practices for the reduction of emissions. Originality/value This study provides two major contributions to green supply chain management. First, it provides comprehensive empirical evidence on low carbon supply chain practices that are being followed by Indian manufacturing firms. Second, this study also empirically validated a structural model of low carbon supply chain practices.

The content and determinants of greenhouse gas emission disclosure: Evidence from Indonesian companies

Article

Jul 2018

This paper examined the content and determinants of greenhouse gas (GHG) emissions disclosure practices. This study found that number of firm disclosed is increased from 42.9% in 2011 to 48.1% in 2014. The assesment of risks and opportunities of climate change theme is the most item disclosed. Miscellaneous industries disclosed more GHG emissions information compared to any other industry. The results also show that profitability, leverage, company size and industry are significant determinants that can explain the extent of GHG emissions disclosure. The findings of this study indicated that GHG emissions disclosures are used as a mechanism to reduce pressures from stakeholders.This study contributes to the GHG emissions disclosure literature by providing patterns and determinants of companies’ GHG emissions disclosure in an emerging country.

Corporate governance and carbon transparency: Australian experience

Article

Jul 2018
Account Res J

Purpose The purpose of this article is to explore the association between corporate governance mechanisms and the extensiveness of carbon disclosure Design/methodology/approach Using Ordinary Least Squares (OLS) regression model with data from 2009 to 2012 for largest Australian companies that voluntarily disclose their information to the CDP Findings We find that board independence, board diversity and managerial ownership are significantly correlated with the degree of carbon transparency while the existence of environmental committee is not. Practical implications our findings should be useful for government and capital market regulators who concern the quality of CG and carbon actions. First, our evidence suggests that current CG practice that emphasise board diversity and independence seems encouraging an environment friendly decision and adopt carbon reduction initiatives. Second, however, the current version of CG codes need more stress on none financial goals that should help corporate executives to balance value enhancement vis-à-vis ecosystem protection. Finally, another implication for policy makers is corporate governance should be re-structured so motivate firms to pursue long term sustainable development instead of taking short sight view of firm performance Originality/value The study contributes in the increasing body of literature indicating that corporate governance encourages a proactive corporate strategy in general and carbon disclosure in particular. We add new empirical evidence which has policy implication that corporate governance should be improved so as to encourage executives to engage in more sustainable development and stakeholder long term value protection.

The Factors Motivating Voluntary Disclosure of Carbon Information: Evidence Based on Italian Listed Companies

Article

Apr 2017

The purpose of this research is to examine how environmental committees, institutional shareholdings, and board independence affect managerial carbon disclosure decisions, particularly those of firms belonging to highly polluting industries. We focus on Italian firms that operate in a code law environment but that have the option either to adopt the unitary corporate structure prevalent in common law countries or to retain the dual corporate structure used in code law countries. We use weighted and unweighted carbon disclosure indexes based on the Kyoto Protocol requirements. The findings show that all factors greatly affect voluntary carbon disclosure and that their impact is especially strong for firms in highly polluting industries. This study has important implications for managers and regulators.

Women in the boardroom and their impact on climate change related disclosure

Article

Apr 2017

Purpose - This paper aims to investigate the relationship between gender diversity and the Carbon Disclosure Project (CDP) score/index. Specifically, the study describes extant research on theoretical perspectives, and the impact of women on corporate boards (WOB) on carbon emission issues in the global perspective. Design/methodology/approach - This study uses the carbon disclosure scores of the Carbon Disclosure Project (CDP) from 2011 to 2013 (inclusive). A total observation for the three year periods is 1175 companies. However, based on data availability for the model, our sample size totals 331 companies in 33 countries with firms in 12 geographical locations. We used a model which is estimated using the fixed-effects estimator. Findings -The outcomes of the study reveal that there is a positive relationship between gender diversity (WOB) and carbon disclosure information. In addition to establishing a relationship between CDP score and other control variables, this study also found a relationship with Board size, asset size, energy consumption, and Tobin’s Q, which is common in the existing literature. Research limitations/implications -The limitations of the study mostly revolve around samples and the time period. To further test the generalizability and cross-sectional validity of the outcomes, it is suggested that the proposed framework be tested in more socially responsible firms. Practical implications -There are increasing pressures for WOBs from diverse stakeholders, such as the European Commission, national governments, politicians, employer lobby groups, shareholders, Fortune and FTSE rankings and best places for women to work lists. The study offers insights to policy makers implementing gender quota legislation. Originality/value -The study has important implications for putting into practice good corporate governance and in particular, gender diversity. The outcomes of our analyses advocate that companies that included women directors and with a smaller board size may expect to achieve a higher level of carbon emission performance and to voluntarily disclose the level of carbon information assessment requested by the CDP.

Corporate governance and greenhouse gas disclosure: A mixed-methods approach

Article

Feb 2017
Corp Govern

Purpose The purpose of this paper is to investigate whether four corporate governance mechanisms (board size, non-executive directors, ownership concentration and directors’ share ownership) influence the extent of greenhouse gas (GHG) disclosure. Design/methodology/approach The study uses a mixed-methods approach based on a sample of 62 FTSE 1,000 firms. Firstly, the authors surveyed the senior management of 62 UK-listed firms in the FTSE 1,000 index to determine whether the corporate governance mechanisms influence their GHG disclosure decisions. Secondly, the authors used ordinary least squares (OLS) regression to model the relationship between the corporate governance mechanisms and GHG disclosure scores of the 62 firms. Findings The survey and OLS regression results both suggest that corporate governance mechanisms (board size and NEDs) do not influence GHG disclosures. However, the results of the two approaches differ, in that the survey results suggest that corporate governance mechanisms (ownership concentration and directors’ share ownership) do not influence the extent of GHG disclosure, while the opposite is true with the OLS regression results. Research limitations/implications The sample size of 62 firms is small which could affect the generalisability of the study. The mixed results mean that more mixed-methods approach is needed to improve the understanding of the role of corporate governance in GHG disclosures. Originality/value The use of mixed-methods to examine whether corporate governance mechanisms determine the extent of GHG voluntary disclosure provides additional insights not provided in prior studies.

Corporate attributes affecting sustainability reporting: an Indian perspective

Article

May 2017
Manag Law

Purpose This paper aims to examine the relationship between sustainability reporting by companies and selected corporate specific attributes. It also highlights that the scope of sustainability reporting differs from company to company and industry to industry. Design/methodology/approach Methodology is based on content analysis of 158 Indian companies selected from BSE 200. It uses multiple regression analysis to identify significant corporate attributes. Findings The analysis in this study reveals that companies with large size, older age, having multinational operations and belonging to Software, IT and ITES and Oil and Gas industry have significant sustainability disclosure. However, company’s profits, leverage, growth and advertising intensity are negatively related with the extent of sustainability disclosure. Other variables are found to be insignificant. Research limitations/implications As content analysis technique has been used for gathering sustainability information, subjective judgment involved in identifying and classifying the nature of reported sustainability information cannot be ruled out. Practical/implications This study adds to the growing literature on international sustainability disclosure practices and their determinants. Hence, it has its implications for a number of interested groups as investors, accounting bodies, regulatory authorities, companies, government, stock exchanges, general public, academicians and researchers. Originality/value As an emerging trend, there are few empirical studies exploring the determinants of sustainability reporting. To the best of the authors’ knowledge, this paper covers the impact of large number of corporate attributes in wholesome.

Effect of board members’ gender on corporate social responsiveness orientation

Article

Jan 1994

International Business and Global Climate Change

Article

Jan 2008

Climate change has become an important topic on the business agenda with strong pressure being placed on companies to respond and contribute to finding solutions to this urgent problem. This text provides a comprehensive analysis of international business responses to global climate change and climate change policy. Embedded in relevant management literature, this book gives a concise treatment of developments in policy and business activity on global, regional and national levels, using examples and systematic data from a large number of international companies. The first part outlines the international climate policy landscape and voluntary initiatives taken by companies, both alone and together with others. The second part examines companies' strategies, covering innovation for climate change, as well as compensation via emissions trading and carbon offsetting. Written by well-known experts in the field, International Business and Global Climate Change illustrates how an environmental topic becomes strategically important in a mainstream sense, affecting corporate decision-making, business processes, products, reputation, advertising, communication, accounting and finance. This is a must-read for academics as well as practitioners concerned with this issue.

Determinants of Carbon Management Strategy Adoption: Evidence from Australia's Top 200 Publicly Listed Firms

Article

Jan 2015
Manag Audit J

Purpose: The purpose of this longitudinal study is to examine the determinants of carbon management strategy (CMS) adoption among Australia's top 200 listed firms. Design/methodology/approach: A legitimacy theory framework is adopted to investigate whether any significant relationship exists between a firm's decision to adopt CMS and internal organisational factors such as the presence of an environmental management system (EMS), as well as corporate governance factors like having an environmental committee, board size and board independence. Content analysis of Carbon Disclosure Project (CDP) data and other publicly available information sourced from firm websites, annual reports and stand-alone sustainability reports is conducted from 2008 to 2012. Findings: Logistic regression analyses confirm that firms adopting CMS are more likely to have an EMS, an environmental committee, larger board size and greater board independence. The study also finds significant association between CMS adoption, firm size and leverage. Originality/value: The study shows that internal organisational factors and corporate governance attributes play a vital role in maintaining organisational legitimacy through CMS adoption. The findings of this study should be of interest to report providers (i.e. reporting firms), report users (such as investors and consumers) and policy makers.

Corporate governance characteristics and default prediction modeling for small enterprises. An empirical analysis of Italian firms

Article

May 2015
J BUS RES

Francesco Ciampi

The aim of this paper is to analyze how the relationship between corporate governance mechanisms and business failure changes in small enterprises (SEs) compared to larger firms. Logistic regression was applied to a sample of 934 Italian SEs, and a SE default prediction model built based on both financial ratios and corporate governance characteristics. The accuracy rates obtained by this model were then compared to those from a second model, based on the same sample of firms, which used only financial ratios as predictive variables. The findings are the following: i) CEO duality, owner concentration, and a reduced number of outside directors on the board (no more than 50%) are significantly and negatively correlated with small company default and ii) corporate governance variables significantly improve the SE default prediction accuracy rates.

Environmental Disclosures by the Malaysian Construction Sector: Exploring Extent and Quality

Article

Jul 2014

We examine the extent and quality of environmental disclosures by public-listed Malaysian construction companies in their 2009 annual reports. Most of the 49 sample companies provide general disclosures which are positive and non-verifiable in nature. Very few companies disclose quantitative/non-monetary or monetary environmental information. In addition, companies did not make disclosures in eight of the items contained in the index. This suggests that environmental disclosures do not discharge the companies’ accountability as disclosures are neither complete nor comprehensive enough and are largely confined to general, narrative statements which cannot be verified. To ensure accountability, regulators must introduce environmental reporting guidelines which specify content and format of the disclosures. This study addresses the paucity of Malaysian environmental disclosure literature and is one of the few which also examines quality of disclosure. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment

Determinants of Climate Change Disclosure by Developed and Emerging Countries in Asia Pacific

Article

May 2014
SUSTAIN DEV

This research aims to examine some of the generic determinants of company attributes and corporate governance variables and whether there is any relationship to the reporting of climate change strategy. For that purpose, this study investigated firms in 10 industries, across 13 countries. This study is based on climate change disclosures made in the sustainability and annual reports by firms domiciled in developed and emerging countries in Asia Pacific. The study uses content analysis to construct weighted and unweighted disclosure indices. Based on the extant literature, several variables, namely, firm size, industrial membership, country of domicile, environment certification, board size, independent non-executives, the CEO duality structure and gender were selected and their influence on the level of climate change disclosure was tested empirically. As for agency theory, this study offers both confirmatory and contradictory results regarding board independence. The results reveal that in spite of the fact that the level of climate change disclosure in some emerging countries in Asia Pacific is still low, by increasing the proportion of independent non-executives on the board of directors, encouragement of firms' practice to separate the CEO-board chair role, and firm practices in obtaining and maintaining environment certification would directly increase the climate change disclosure in their sustainability reports. Furthermore, firms that demonstrate a lack of gender diversity on the board would increase the climate change reporting system practices. Copyright © 2011 John Wiley & Sons, Ltd and ERP Environment.

Boards of directors and corporate social responsibility performance

Article

Jun 1989
Eur Manag J

Shaker A. Zahm

Do boards of directors influence corporate social responsibility performance (CSRP)? If so, how? These two questions have been the focus of attention in a growing, but fragmented, body of the literature that is replete with contradictory findings. The present article proposes a preliminary model that focuses on board composition, characteristics and decision-making process as potential predictors of CSRP. Data from a field study corroborate the model's central arguments. The results urge executives and scholars to go beyond composition variables to explain boards' effect on CSRP. The results show that an appropriate mix of directors' characteristics and the development of a sound board decision-making process are also crucial determinants of CSRP.

Reconnoitering the impact of corporate governance on carbon emission disclosure in an emerging setting

Abstract

No full-text available

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