Do board characteristics influence sustainability-related disclosures? Evidence from an emerging market
Abstract
Purpose
This study aims to examine the association between board characteristics (namely, diligence, independence, gender diversity, size and expertise) and sustainability-related disclosures (SRD) in Malaysia.
Design/methodology/approach
A robust SRD index of 409 items is used to derive SRD scores for 56 Malaysian listed companies from 2018 to 2020, yielding 168 observations. Pooled ordinary least squares is applied to test the research hypotheses and model.
Findings
The authors find that board members in audit committees and female board members show a significant relationship with SRD, casting doubt on the widely held belief that other board characteristics (such as size, diligence, independence and expertise) independently impact SRD. However, the authors find that market influence (firm value) and firm size are associated with SRD.
Practical implications
SRD is at its nascent stage, and companies are cherry-picking on what to report, as evidenced in the SRD scores. Regulators and policymakers must recognize the complex interplay between various factors impacting SRD for the timely issuance of comprehensive rules for firms to comply. The regulators’ drive for more female board representation can be a boost to enhance the sustainability agenda for Malaysian listed companies. The SRD scoring template can be used on post-2020 data to investigate the sustainability maturity of Malaysian listed companies.
Originality/value
The authors evidence that SRD practice is in the early stages of maturity using the comprehensive SRD scoring template. Although the findings contradict prior studies, the authors believe this is driven by the robust SRD measure based on the latest Global Reporting Initiative and Bursa rules.
Keywords
Acknowledgements
This research project is supported by the Fundamental Research Grant Scheme (FRGS) (Reference no: FRGS/1/2020/SS01/SYUC/02/7) provided by the Ministry of Higher Education Malaysia. The authors would like to thank the Ministry for the support.
Citation
Ho, W.K., Gultom, N.D., K. Suppiah, S.D., Singh, J., Kanagasabapathy, S. and Hashim, H.A. (2024), "Do board characteristics influence sustainability-related disclosures? Evidence from an emerging market", Journal of Financial Reporting and Accounting, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JFRA-07-2023-0419
Publisher
:Emerald Publishing Limited
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