Match!

Board and corporate social responsibility disclosure of multinational corporations

Published on Apr 12, 2019in The Multinational Business Review
· DOI :10.1108/MBR-11-2017-0084
Hanh Thi Song Pham1
Estimated H-index: 1
(SHU: Sheffield Hallam University),
Hien Thi Tran1
Estimated H-index: 1
(Foreign Trade University)
Abstract
Purpose: This paper aims to investigate the effects of board model and board independence on corporate social responsibility (CSR) disclosure of multinational corporations (MNCs). Design/methodology/approach: The authors developed an empirical model in which CSR disclosure is the dependent variable and board model (two-tier vs one-tier), board independence (a proportion of independent directors on a board) and the interaction variable of board model and board independence together with several variables conventionally used as control variables are independent variables. The authors collated the panel dataset of 244 Fortune World’s Most Admired (FWMA) corporations from 2005 to 2011 of which 117 MNCs use the one-tier board model, and 127 MNCs use the two-tier board model from 20 countries. They used the random-effect regression method to estimate the empirical models with the data they collated and also ran regressions on the alternative models for robustness check. Findings: The authors found a significantly positive effect of a board model on CSR disclosure by MNCs. Two-tier MNCs tend to reveal more CSR information than one-tier MNCs. The results also confirm the significant moderating impact of board model on the effect of board independence on CSR disclosure. The effect of board independence on CSR disclosure in the two-tier board MNCs tends to be higher than that in the one-tier board MNCs. The results do not support the effect of board independence on CSR disclosure in general for all types of firms (one-tier and two-tier board). The impact of board independence on CSR disclosure is only significant in two-tier board MNCs and insignificant in one-tier board MNCs. Practical implications: The authors advise the MNCs who wish to improve CSR reporting and transparency to consider the usage of two-tier board model and use a higher number of outside directors on board. They note that once a firm uses one-tier model, number of IDs on a board does not matter to the level of CSR disclosure. They advise regulators to enforce an application of two-tier board model to improve CSR reporting and transparency in MNCs. The authors also recommend regulators to continue mandating publicly traded companies to include more external members on their boards, especially for the two-tier board MNCs. Originality/value: This paper is the first that investigates the role of board model on CSR disclosure of MNCs.
  • References (68)
  • Citations (1)
📖 Papers frequently viewed together
2019
1 Author (Triinu Tapver)
21 Citations
78% of Scinapse members use related papers. After signing in, all features are FREE.
References68
Newest
#1Waris Ali (BZU: Bahauddin Zakariya University)H-Index: 4
#2Jedrzej George Frynas (Middlesex University)H-Index: 26
Last. Zeeshan Mahmood (BZU: Bahauddin Zakariya University)H-Index: 3
view all 3 authors...
Based on a survey and content analysis of 76 empirical research articles, this article reviews the factors driving Corporate Social Responsibility (CSR) disclosure in both developed and developing countries. We find that firm characteristics such as company size, industry sector, profitability, and corporate governance mechanisms predominantly appear to drive the CSR reporting agenda. Furthermore, political, social, and cultural factors influence the CSR disclosure agenda. We find crucial differ...
78 CitationsSource
#1Turhan Kaymak (EMU: Eastern Mediterranean University)H-Index: 4
#2Eralp Bektas (EMU: Eastern Mediterranean University)H-Index: 6
Multinational corporations (MNCs) are facing increasing pressure on two fronts – the demand for more transparency and disclosure and the need to implement good corporate governance practices. This paper develops several testable hypotheses that address these issues based on agency theory and stakeholder management approach arguments. As such, the relationship between corporate social responsibility (CSR) programs and firm-level governance structures are discussed. CSR is measured using Transpare...
20 CitationsSource
#1Sadok El Ghoul (U of A: University of Alberta)H-Index: 21
#2Omrane Guedhami (USC: University of South Carolina)H-Index: 31
Last. Yongtae Kim (Santa Clara University)H-Index: 18
view all 3 authors...
Abstract Drawing on transaction cost theories and the resource-based view of a firm, we posit that the value of corporate social responsibility (CSR) initiatives is greater in countries where an absence of market-supporting institutions increases transaction costs and limits access to resources. Using a large sample of 11,672 firm-year observations representing 2445 unique firms from 53 countries during 2003–2010 and controlling for firm-level unobservable heterogeneity, we find supportive evide...
75 CitationsSource
#1Carlo Bellavite Pellegrini (CUA: The Catholic University of America)H-Index: 4
#2Emiliano Sironi (CUA: The Catholic University of America)H-Index: 2
Even though the financial literature has examined the relation between the composition of the board of directors and firms’ performances, few studies have investigated the effect of adopting a specific corporate governance system. Past studies have not found clear evidence of the superiority of a specific corporate governance system in terms of economic and financial performances; instead, they have generally been limited to legal systems where the adoption of a specific system is mandatory. In ...
1 CitationsSource
#1Carlo Bellavite Pellegrini (UCSC: Catholic University of the Sacred Heart)H-Index: 4
#2Bruno S. Sergi (UNIME: University of Messina)H-Index: 9
Last. Emiliano Sironi (UCSC: Catholic University of the Sacred Heart)H-Index: 4
view all 3 authors...
Purpose – Alternative corporate governance systems (CGSs) have attracted a significant bulk of research recently. While the connection between the adoption of an alternative system (one tier board or two tier board system) and firms’ performances has not been fully analysed yet, the purpose of this paper is to analyse whether companies which have turned into an alternative board system have eventually improved their performance over time. Design/methodology/approach – Using a sample of more than...
2 CitationsSource
#1Alessandro Lai (University of Verona)H-Index: 7
#2Gaia Melloni (University of Verona)H-Index: 7
Last. Riccardo Stacchezzini (University of Verona)H-Index: 7
view all 3 authors...
In the field of sustainability reporting (SR), the so-called ‘integrated report’ (IR) is gaining momentum. In spite of its voluntary nature, a growing number of firms are adopting IR by participating in the International Integrated Reporting Council (IIRC) Pilot Programme. Stimulated by concerns on the use of SR as a legitimation strategy, the paper investigates whether the decision to adopt an IR stems from the need to repair legitimacy threats. By showing that IR adopters have significantly hi...
51 CitationsSource
#1J. Alberto Aragón-Correa (University of Surrey)H-Index: 16
#2Alfred A. Marcus (UMN: University of Minnesota)H-Index: 27
Last. Nuria Hurtado-Torres (UGR: University of Granada)H-Index: 12
view all 3 authors...
Previous academic and popular literature has raised important debates concerning the contradictory incentives for international firms to reduce their environmental impacts and offer transparent environmental information about their operations. As an exhaustive review of this literature revealed mixed and partial evidence, we compared the individual corporate environmental performance and disclosure of the 100 most international nonfinancial firms in the world to those of 16,023 firms in their in...
31 CitationsSource
#1Mohammad Badrul Muttakin (Deakin University)H-Index: 10
#2Arifur Khan (Deakin University)H-Index: 11
Last. Nava Subramaniam (RMIT: RMIT University)H-Index: 18
view all 3 authors...
Purpose – This study aims to purport to investigate the relationship between firm size, profitability, board diversity (namely, director gender and nationality) and the extent of corporate social responsibility (CSR) disclosures within a developing nation context. Design/methodology/approach – The dataset comprises 116 listed Bangladeshi non-financial companies for the period of 2005-2009. A CSR disclosure checklist was used to measure the extent of CSR disclosures in the annual reports and a mu...
28 CitationsSource
#1Afzalur Rashid (University of Southern Queensland)H-Index: 9
This study examines the influence of board independence on firm agency cost among listed firms in Bangladesh, which feature concentrated ownership and high insider representation on corporate boards. This study uses three measures of agency cost: the ‘expense ratio’, the ‘Q-free cash flow interaction’ and the ‘asset utilization ratio’. The finding of the study is that board independence can reduce the firm agency cost only under ‘asset utilization ratio’ measure of agency cost. These findings ar...
18 CitationsSource
Using a unique data set, I study how stock markets react to positive and negative events concerned with a firm׳s corporate social responsibility (CSR). I show that investors respond strongly negatively to negative events and weakly negatively to positive events. I then show that investors do value “offsetting CSR,” that is positive CSR news concerning firms with a history of poor stakeholder relations. In contrast, investors respond negatively to positive CSR news which is more likely to result ...
165 CitationsSource
Cited By1
Newest
#1Duane Windsor (Rice University)H-Index: 15
Source
Source