Research article

CSR reporting in banks: does the composition of the board of directors matter?

  • Received: 30 March 2019 Accepted: 23 May 2019 Published: 29 May 2019
  • JEL Codes: G21, G34, M4, M14

  • The objective of this paper is to determine the association between the composition of the board of directors and corporate social responsibility (hereafter CSR) reporting of listed banks. Special attention is paid to controlling for the impact of board composition and CSR reporting requirements. Logistic regressions with bank fixed effects are run on a global sample of 285 listed commercial banks from 2005 to 2017. The results demonstrate significant differences in the association between board composition and bankso CSR reporting after correcting for regulatory requirements. Before controlling for regulatory requirements larger board decreases and the presence of women on boards increases the likelihood of bankso CSR disclosure. After controlling for country-level governance regulations on board composition, the absence of CEO duality and inclusion of women on boards contribute to bankso CSR disclosure, only if these are done on a voluntary basis. However, the presence of non-executive board members decreases the disclosure of CSR information even if they are named to boards voluntarily. Controlling for country-level governance regulations together with CSR requirements, leads to the irrelevance of most board composition indicators. Only the result regarding non-executive board members remains the same for voluntary CSR disclosure. Thus, voluntary commitment to CSR of banks increasing their board diversity voluntarily is not substantially different from banks that are subject to board composition requirements.

    Citation: Triinu Tapver. CSR reporting in banks: does the composition of the board of directors matter?[J]. Quantitative Finance and Economics, 2019, 3(2): 286-314. doi: 10.3934/QFE.2019.2.286

    Related Papers:

  • The objective of this paper is to determine the association between the composition of the board of directors and corporate social responsibility (hereafter CSR) reporting of listed banks. Special attention is paid to controlling for the impact of board composition and CSR reporting requirements. Logistic regressions with bank fixed effects are run on a global sample of 285 listed commercial banks from 2005 to 2017. The results demonstrate significant differences in the association between board composition and bankso CSR reporting after correcting for regulatory requirements. Before controlling for regulatory requirements larger board decreases and the presence of women on boards increases the likelihood of bankso CSR disclosure. After controlling for country-level governance regulations on board composition, the absence of CEO duality and inclusion of women on boards contribute to bankso CSR disclosure, only if these are done on a voluntary basis. However, the presence of non-executive board members decreases the disclosure of CSR information even if they are named to boards voluntarily. Controlling for country-level governance regulations together with CSR requirements, leads to the irrelevance of most board composition indicators. Only the result regarding non-executive board members remains the same for voluntary CSR disclosure. Thus, voluntary commitment to CSR of banks increasing their board diversity voluntarily is not substantially different from banks that are subject to board composition requirements.


    加载中


    [1] Adams RB, Almeida H, Ferreira D (2005) Powerful CEOs and their impact on corporate performance. Rev Financ Stud 18: 1403–1432. doi: 10.1093/rfs/hhi030
    [2] Adams RB, Mehran H (2003) Is corporate governance different for bank holding companies? Econ Policy Rev 9: 123–142.
    [3] Alexander K (2006) Corporate governance and banks: The role of regulation in reducing the principal-agent problem. J Bank Regul 7: 17–40. doi: 10.1057/palgrave.jbr.2340003
    [4] Appelbaum SH, Audet L, Miller JC (2003) Gender and leadership? Leadership and gender? A journey through the landscape of theories. Leadership Org Dev J 24: 43–51.
    [5] Arora P, Dharwadkar R (2011) Corporate governance and corporate social responsibility (CSR): The moderating roles of attainment discrepancy and organization slack. Corp Gov 19: 136–152. doi: 10.1111/j.1467-8683.2010.00843.x
    [6] Bansal S, Lopez-Perez M, Rodriguez-Ariza L (2018) Board independence and corporate social responsibility disclosure: The mediating role of the presence of family ownership. Adm Sci 8: 1–21. doi: 10.3390/admsci8010001
    [7] Barako DG, Brown AM (2008) Corporate social reporting and board representation: evidence from the Kenyan banking sector. J Manage Gov 12: 309–324. doi: 10.1007/s10997-008-9053-x
    [8] Basel Committee on Banking Supervision (2012) Core Principles for Effective Banking Supervision. Basel: Bank for International Settlements, Basel: Bank for International Settlements.
    [9] Baysinger B, Hoskisson RE (1990) The composition of boards of directors and strategic control: Effects on corporate strategy. Acad Manage Rev 15: 72–87. doi: 10.5465/amr.1990.4308231
    [10] Bear S, Rahman N, Post C (2010) The impact of board diversity and gender composition on corporate social responsibility and firm reputation. J Bus Ethics 97: 207–221. doi: 10.1007/s10551-010-0505-2
    [11] Betz M, O'Connel L, Shepard JM (1989) Gender differences in proclivity for unethical behavior. J Bus Ethics 8: 321–324. doi: 10.1007/BF00381722
    [12] Birindelli G, Dell'Atti S, Iannuzzi A, et al. (2018) Composition and activity of the board of directors: Impact on ESG performance in the banking system. Sustainability-Basel 10: 4699. doi: 10.3390/su10124699
    [13] Boyacioglu MA, Kara Y, Baykan ÖK (2009) Predicting bank financial failures using neural networks, support vector machines and multivariate statistical methods: A comparative analysis in the sample of Savings Deposit Insurance Fund (SDIF) transferred banks in Turkey. Expert Syst Appl 36: 3355–3366. doi: 10.1016/j.eswa.2008.01.003
    [14] Cabeza‐García L, Fernández‐Gago R, Nieto M (2018) Do board gender diversity and director Typology impact CSR reporting?. Eur Manag Rev 15: 559–575. doi: 10.1111/emre.12143
    [15] Chakroun R, Matoussi H, Mbirki S (2017) Determinants of CSR disclosure of Tunisian listed banks: a multi-support analysis. Soc Respons J 13: 552–584. doi: 10.1108/SRJ-04-2016-0055
    [16] Chau GK, Gray SJ (2002) Ownership structure and corporate voluntary disclosure in Hong Kong and Singapore. Int J Account 37: 247–265. doi: 10.1016/S0020-7063(02)00153-X
    [17] Cucari N, Esposito De Falco S, Orlando B (2018) Diversity of board of directors and environmental social governance: Evidence from Italian listed companies. Corp Soc Resp Env Ma 25: 250–266. doi: 10.1002/csr.1452
    [18] De Haan J, Vlahu R (2016) Corporate governance of banks: A survey. J Econ Surv 30: 228–277. doi: 10.1111/joes.12101
    [19] Deegan C (2002) The legitimising effect of social and environmental disclosures-a theoretical foundation. Account Audit Accoun 15: 282–311. doi: 10.1108/09513570210435852
    [20] DeYoung R, Peng EY, Yan M (2013) Executive compensation and business policy choices at US commercial banks. J Financ Quant Anal 48: 165–196. doi: 10.1017/S0022109012000646
    [21] Dhaliwal DS, Li OZ, Tsang A, et al. (2011) Voluntary nonfinancial disclosure and the cost of equity capital: The initiation of corporate social responsibility reporting. Account Rev 86: 59–100. doi: 10.2308/accr.00000005
    [22] Dias A, Rodrigues LL, Craig R (2017) Corporate governance effects on social responsibility disclosures. Aust Account Bus Financ J 11: 3–22.
    [23] Dienes D, Velte P (2016) The impact of supervisory board composition on CSR reporting. Evidence from the German two-tier system. Sustainability 8: 1–20.
    [24] Eagly AH, Johnson BT (1990) Gender and leadership style: A meta-analysis. Psychol Bull 108: 233–256. doi: 10.1037/0033-2909.108.2.233
    [25] Eisenberg T, Sundgren S, Wells M (1998) Larger board size and decreasing firm value in small firms. J Financ Econ 48: 35–54. doi: 10.1016/S0304-405X(98)00003-8
    [26] El-Bannany M (2007) A study of determinants of social disclosure level in UK banks. Corp Ownersh Control 5: 120–130.
    [27] Esa E, Zahari AR (2016) Corporate social responsibility: Ownership structures, board characteristics & the mediating role of board compensation. Proc Econ Financ 35: 35–43. doi: 10.1016/S2212-5671(16)00007-1
    [28] Fama EF, Jensen MC (1983) Separation of ownership and control. J Law Econ 26: 301–325. doi: 10.1086/467037
    [29] Flannery MJ (1998) Using market information in prudential bank supervision: A review of the US empirical evidence. J Money Credit Bank 30: 273–305. doi: 10.2307/2601102
    [30] Forbes DP, Milliken FJ (1999) Cognition and corporate governance: Understanding boards of directors as strategic decision-making groups. Acad Manage Rev 24: 489–505. doi: 10.5465/amr.1999.2202133
    [31] Ford RC, Richardson WD (1994) Ethical decision making: A review of the empirical literature. J Bus Ethics 13: 205–221. doi: 10.1007/BF02074820
    [32] Freeman RE (1984) Strategic management: A stakeholder approach, Boston: Pitman.
    [33] Frías‐Aceituno JV, Rodriguez‐Ariza L, Garcia‐Sanchez IM (2013) The role of the board in the dissemination of integrated corporate social reporting. Corp Soc Resp Env Ma 20: 219–233. doi: 10.1002/csr.1294
    [34] Fuente JA, García-Sanchez IM, Lozano MB (2017) The role of the board of directors in the adoption of GRI guidelines for the disclosure of CSR information. J Clean Prod 141: 737–750. doi: 10.1016/j.jclepro.2016.09.155
    [35] Gamerschlag R, Möller K, Verbeeten F (2011) Determinants of voluntary CSR disclosure: Empirical evidence from Germany. Rev Manag Sci 5: 233–262. doi: 10.1007/s11846-010-0052-3
    [36] García-Meca E, Uribe-Bohórquez MV, Cuadrado-Ballesteros B (2018) Culture, board composition and corporate social reporting in the banking sector. Admin Sci 8: 41. doi: 10.3390/admsci8030041
    [37] García‐Sánchez IM, Martínez‐Ferrero J, García‐Meca E (2018) Board of directors and CSR in banking: the moderating role of bank regulation and investor protection strength. Aust Account Rev 28: 428–445. doi: 10.1111/auar.12199
    [38] García-Sánchez IM, Rodríguez-Domínguez L, Gallego-Álvarez I (2011) Corporate governance and strategic information on the Internet. Account Audit Accoun 24: 471–501. doi: 10.1108/09513571111133063
    [39] Giannarakis G (2014) The determinants influencing the extent of CSR disclosure. Int J Law Manag 56: 393–416. doi: 10.1108/IJLMA-05-2013-0021
    [40] Gillette AB, Noe TH, Rebello MJ (2003) Corporate board composition, protocols, and voting behavior: Experimental evidence. J Finance 58: 1997–2031. doi: 10.1111/1540-6261.00595
    [41] Global Reporting Initiative (2013) The external assurance of sustainability reporting, Amsterdam: Global Reporting Initiative.
    [42] Gray R (2010) Is accounting for sustainability actually accounting for sustainability… and how would we know? An exploration of narratives of organisations and the planet. Account Org Soc 35: 47–62.
    [43] Gray RH, Owen DL, Adams C (1996) Accounting and accountability: changes and challenges in corporate social and environmental reporting, Hemel Hempstead: Prentice Hall.
    [44] Gulzar MA, Cherian J, Hwang J, et al. (2019) The impact of board gender diversity and foreign institutional investors on the corporate social responsibility (CSR) engagement of Chinese listed companies. Sustainability-Basel 11: 307. doi: 10.3390/su11020307
    [45] Hall J (1971) Decisions, Decisions, Decisions. Psychol Today 5: 51–54.
    [46] Hamid FZA (2004) Corporate social disclosure by banks and finance companies: Malaysian evidence. Corp Ownersh Control 1: 118–130.
    [47] Harris M, Raviv A (2006) A theory of board control and size. Rev Financ Stud 21: 1797–1832.
    [48] Holmström B (1999) Managerial incentive problems: A dynamic perspective. Rev Econ Stud 66: 169–182. doi: 10.1111/1467-937X.00083
    [49] Hossain M, Reaz M (2007) The determinants and characteristics of voluntary disclosure by Indian banking companies. Corp Soc Resp Env Ma 14: 274–288. doi: 10.1002/csr.154
    [50] Jackson G, Apostolakou A (2010) Corporate social responsibility in Western Europe: an institutional mirror or substitute?. J Bus Ethics 94: 371–394. doi: 10.1007/s10551-009-0269-8
    [51] Javidan M, Bullough A, Dibble R (2016) Mind the gap: Gender differences in global leadership self-efficacies. Acad Manage Perspect 30: 59–73. doi: 10.5465/amp.2015.0035
    [52] Jensen MC (1993) The modern industrial revolution, exit and the failure of internal control systems. J Finance 48: 831–880. doi: 10.1111/j.1540-6261.1993.tb04022.x
    [53] Jensen MC, Meckling WH (1976) Theory of the firm: Managerial behavior, agency costs and ownership structure. J Financ Econ 3: 305–360. doi: 10.1016/0304-405X(76)90026-X
    [54] Jizi MI, Salama A, Dixon R, et al. (2014) Corporate governance and corporate social responsibility disclosure: Evidence from the US banking sector. J Bus Ethics 125: 601–615. doi: 10.1007/s10551-013-1929-2
    [55] John K, De Masi S, Paci A (2016) Corporate governance in banks. Corp Gov 24: 303–321. doi: 10.1111/corg.12161
    [56] John K, Mehran H, Qian Y (2010) Outside monitoring and CEO compensation in the banking industry. J Corp Financ 16: 383–399. doi: 10.1016/j.jcorpfin.2010.01.001
    [57] Khan A, Muttakin MB, Siddiqui J (2013) Corporate governance and corporate social responsibility disclosures: Evidence from an emerging economy. J Bus Ethics 114: 207–223. doi: 10.1007/s10551-012-1336-0
    [58] Khan HUZ (2010) The effect of corporate governance elements on corporate social responsibility (CSR) reporting: Empirical evidence from private commercial banks of Bangladesh. Int J Law Manag 52: 82–109. doi: 10.1108/17542431011029406
    [59] Kiliç M, Kuzey C, Ali U (2015) The impact of ownership and board structure on corporate social responsibility (CSR) reporting in the Turkish banking industry. Corp Gov Int J Bus Soc 15: 357–374.
    [60] Kirkpatrick G (2009) The corporate governance lessons from the financial crisis. OECD J: Financ Mark Trends 1: 61–87.
    [61] Kravet T, Muslu V (2013) Textual risk disclosures and investors' risk perceptions. Rev Acc Stud 18: 1088–1122. doi: 10.1007/s11142-013-9228-9
    [62] Laeven L (2013) Corporate governance: what's special about banks?. Annu Rev Financ Econ 5: 63–92. doi: 10.1146/annurev-financial-021113-074421
    [63] Laidroo L (2016) Reliability of graphs disclosed in annual reports of Central and Eastern European banks. Eastern Eur Econ 54: 319–350. doi: 10.1080/00128775.2016.1193757
    [64] Lattemann C, Fetscherin M, Alon I, et al. (2009) CSR communication intensity in Chinese and Indian multinational companies. Corp Gov 17: 426–442. doi: 10.1111/j.1467-8683.2009.00758.x
    [65] Laugel J, Laszlo C (2009) Financial crisis: The opportunity for sustainable value creation in banking and insurance. J Corp Citi 35: 24–38.
    [66] Legendre S, Coderre F (2013) Determinants of GRI G3 application levels: The case of the Fortune Global 500. Corp Soc Resp Env Ma 20: 182–192. doi: 10.1002/csr.1285
    [67] Macey JR, O'Hara M (2003) The corporate governance of banks. Econ Policy Rev 9: 91–107.
    [68] Menassa E, Brodhäcker M (2017) The type and quantity of corporate social disclosures of German 'Universal' banks. J Manage Gov 21: 119–143. doi: 10.1007/s10997-015-9336-y
    [69] Michelon G, Parbonetti A (2012) The effect of corporate governance on sustainability disclosure. J Manage Gov 16: 477–509. doi: 10.1007/s10997-010-9160-3
    [70] O'Dwyer B (2002) Managerial perceptions of corporate social disclosure: An Irish stories. Account Audit Accoun 15: 406–436. doi: 10.1108/09513570210435898
    [71] OECD (1999) OECD principles of corporate governance, Paris: OECD Publications Service.
    [72] Pearce JA, Zahra SA (1992) Board composition from a strategic contingency perspective. J Manage Stud 29: 411–438. doi: 10.1111/j.1467-6486.1992.tb00672.x
    [73] Petkoski D, Twose N (2003) Public policy for corporate social responsibility. WBI Series on Corporate Responsibility, 7–25.
    [74] Pfeffer J, Salancik GR (1978) The external control of organizations: A resource dependence perspective, Palo Alto, CA : Stanford University Press.
    [75] Prado-Lorenzo JM, Gallego-Alvarez I, García-Sanchez IM (2009) Stakeholder engagement and corporate social responsibility reporting: the ownership structure effect. Corp Soc Resp Env Ma 16: 94–107. doi: 10.1002/csr.189
    [76] Prado-Lorenzo JM, García-Sánchez IM (2010) The role of the Board of Directors in disseminating relevant information on greenhouse gases. J Bus Ethics 97: 391–424. doi: 10.1007/s10551-010-0515-0
    [77] Rechner PL, Dalton DR (1991) CEO duality and organizational performance: A longitudinal analysis. Strateg Manage J 12: 155–160. doi: 10.1002/smj.4250120206
    [78] Roberts RW (1992) Determinants of corporate social responsibility disclosure: an application of stakeholder theory. Account Org Soc 17: 595–612. doi: 10.1016/0361-3682(92)90015-K
    [79] Roman A, Şargu AC (2013) Analysing the financial soundness of the commercial banks in Romania: An approach based on the CAMELS framework. Proc Econ Financ 6: 703–712. doi: 10.1016/S2212-5671(13)00192-5
    [80] Saeidi SP, Sofian S, Saeidi P, et al. (2015) How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction. J Bus Res 68: 341–350.
    [81] Sharif M, Rashid K (2014) Corporate governance and corporate social responsibility (CSR) reporting: And empirical evidence from commercial banks (CB) of Pakistan. Qual Quant 48: 2051–521.
    [82] Siciliano JI (1996) The relationship of board member diversity and organizational performance. J Bus Ethics 15: 1313–1320. doi: 10.1007/BF00411816
    [83] Sierra L, Zorio A, García‐Benau MA (2013) Sustainable development and assurance of corporate social responsibility reports published by Ibex‐35 companies. Corp Soc Resp Env Ma 20: 359–370. doi: 10.1002/csr.1303
    [84] Sierra‐García L, Zorio‐Grima A, García‐Benau MA (2015) Stakeholder engagement, corporate social responsibility and integrated reporting: An exploratory study. Corp Soc Resp Env Ma 22: 286–304. doi: 10.1002/csr.1345
    [85] Srivastav A, Hagendorff J (2016) Corporate governance and bank risk‐taking. Corp Gov 24: 334–345. doi: 10.1111/corg.12133
    [86] Suchman MC (1995) Managing legitimacy: Strategic and institutional approaches. Acad Manage Rev 20: 571–606. doi: 10.5465/amr.1995.9508080331
    [87] Sun WC, Huang HW, Dao M, et al. (2017) Auditor selection and corporate social responsibility. J Bus Finan Account 44: 1241–1275.
    [88] Sundarasen SD, Je-Yen T, Rajangam N (2016) Board composition and corporate social responsibility in an emerging market. Corp Gov Int J Bus Soc 16: 35–53.
    [89] Viganò F, Nicolai D (2009) CSR in the European banking sector: evidence from a survey, In: Barth, R., Wolff, F. Eds., Corporate Social Responsibility in Europe: Rhetoric and Realities, Cheltenham, UK : Edward Elgar Publishing Inc, 95–108.
    [90] Zhuang Y, Chang X, Lee Y (2018) Board composition and corporate social responsibility performance: Evidence from Chinese public firms. Sustainability-Basel 10: 2752. doi: 10.3390/su10082752
  • Reader Comments
  • © 2019 the Author(s), licensee AIMS Press. This is an open access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0)
通讯作者: 陈斌, bchen63@163.com
  • 1. 

    沈阳化工大学材料科学与工程学院 沈阳 110142

  1. 本站搜索
  2. 百度学术搜索
  3. 万方数据库搜索
  4. CNKI搜索

Metrics

Article views(5840) PDF downloads(1819) Cited by(17)

Article outline

Figures and Tables

Tables(6)

Other Articles By Authors

/

DownLoad:  Full-Size Img  PowerPoint
Return
Return

Catalog