Assessment of the Influence of Foreign Directors on Integrated Sustainability Reporting of Consumer Goods Firms Listed on Nigerian Stock Exchange

Chidiebele Innocent Onyali(1), Tochukwu Gloria Okafor(2),


(1) Nnamdi Azikiwe University, Department of Accountancy, Awka, Nigeria
(2) Nnamdi Azikiwe University, Department of Accountancy, Awka, Nigeria

Abstract

The purpose of this paper is to explore the influence of foreign directors on integrated sustainability reporting of listed consumer goods firms in Nigeria. Specifically, the study investigated the impact of foreign directors on the economic, social, and governance disclosure of listed consumer goods firms in Nigeria. The study used the ex post facto research design. Population and sample size comprised of 21 listed consumer goods firms on the Nigerian Stock Exchange. The duration of the study is from 2011 to 2017 financial year. Multiple regressions analysis was adopted in testing the formulated hypotheses. The dependent variable sustainability integrated reporting was measured using an Economic, Social, and Governance (ESG) index. The independent variable was measured as the number of foreign directors on board. The results show a significant influence of foreign directors on the economic, social, and governance disclosure of listed consumer goods firms in Nigeria. Based on this, the study recommends the adoption of a genetic heterogeneous board structure to leverage the diverse set of skills brought by foreign board members to decision–making.

Keywords

board, foreign directors, integrated reporting, performance, sustainability

Full Text:

PDF

References

Aboud, A., & Diab, A. (2018). The Impact of Social, Environmental and Corporate Governance Disclosures on Firm Value: Evidence from Egypt. Journal of Accounting in Emerging Economies, 8(4), 442–458. https://doi.org/10.1108/JAEE-08-2017-0079

Anazonwu, H. O., Egbunike, F. C., & Gunardi, A. (2018). Corporate Board Diversity and Sustainability Reporting: A Study of Selected Listed Manufacturing Firms in Nigeria. Indonesian Journal of Sustainability Accounting and Management, 2(1), 65–78. https://doi.org/10.28992/ijsam.v2i1.52

Arayssi, M., Dah, M., & Jizi, M. (2016). Women on Boards, Sustainability Reporting and Firm Performance. Sustainability Accounting, Management and Policy Journal, 7(3), 376–401. https://doi.org/10.1108/SAMPJ-07-2015-0055

Bear, S., Rahman, N., & Post, C. (2010). The Impact of Board Diversity and Gender Composition on Corporate Social Responsibility and Firm Reputation. Journal of Business Ethics, 97(2), 207–221. https://doi.org/10.1007/s10551-010-0505-2

Ben-Amar, W., Chang, M., & McIlkenny, P. (2017). Board Gender Diversity and Corporate Response to Sustainability Initiatives: Evidence from the Carbon Disclosure Project. Journal of Business Ethics, 142(2), 369–383. https://doi.org/10.1007/s10551-015-2759-1

Cabeza-García, L., Fernández-Gago, R., & Nieto, M. (2018). Do Board Gender Diversity and Director Typology Impact CSR Reporting? European Management Review, 15(4), 559–575. https://doi.org/10.1111/emre.12143

Cai, Y., Pan, C. H., & Statman, M. (2016). Why Do Countries Matter So Much in Corporate Social Performance? Journal of Corporate Finance, 41, 591–609. https://doi.org/10.1016/j.jcorpfin.2016.09.004

Cho, C. H., Michelon, G., Patten, D. M., & Roberts, R. W. (2015). CSR Disclosure: The More Things Change…? Accounting, Auditing and Accountability Journal, 28(1), 14–35. https://doi.org/10.1108/AAAJ-12-2013-1549

Cucinelli, D. (2013). The Impact of Board Diversity on Operating Performance and Firm Risk: Evidence from the Italian Market. Corporate Ownership and Control, 10(2), 91–103. https://doi.org/10.22495/cocv10i2art7

Eccles, R. G., & Saltzman, D. (2011). Achieving Sustainability Through Integrated Reporting. Stanford Social Innovation Review, 9(3), 56–61.

Fernandez-Feijoo, B., Romero, S., & Ruiz-Blanco, S. (2014). Women on Boards: Do They Affect Sustainability Reporting? Corporate Social Responsibility and Environmental Management, 21(6), 351–364. https://doi.org/10.1002/csr.1329

Ferreira, D. (2010). Board Diversity. In H. K. Baker & R. Anderson (Eds.), Corporate Governance: A Synthesis of Theory, Research, and Practice (pp. 225–242). New Jersey: John Wiley & Sons, Inc. https://doi.org/10.1002/9781118258439.ch12

Ferrero-Ferrero, I., Fernández-Izquierdo, M. Á., & Muñoz-Torres, M. J. (2015). Integrating Sustainability into Corporate Governance: An Empirical Study on Board Diversity. Corporate Social Responsibility and Environmental Management, 22(4), 193–207. https://doi.org/10.1002/csr.1333

Fields, M. A., & Keys, P. Y. (2003). The Emergence of Corporate Governance from Wall St. to Main St.: Outside Directors, Board Diversity, Earnings Management, and Managerial Incentives to Bear Risk. The Financial Review, 38(1), 1–24. https://doi.org/10.1111/1540-6288.00032

Frias-Aceituno, J. V., Rodriguez-Ariza, L., & Garcia-Sanchez, I. . (2013). The Role of the Board in the Dissemination of Integrated Corporate Social Reporting. Corporate Social Responsibility and Environmental Management, 20(4), 219–233. https://doi.org/10.1002/csr.1294

Garcia-Torea, N., Fernandez-Feijoo, B., & de la Cuesta, M. (2016). Board of Director’s Effectiveness and the Stakeholder Perspective of Corporate Governance: Do Effective Boards Promote the Interests of Shareholders and Stakeholders? BRQ Business Research Quarterly, 19(4), 246–260. https://doi.org/10.1016/j.brq.2016.06.001

Ghani, E. K., Jamal, J., Puspitasari, E., & Gunardi, A. (2018). Factors Influencing Integrated Reporting Practices Among Malaysian Public Listed Real Property Companies: A Sustainable Development Effort. International Journal of Managerial and Financial Accounting, 10(2), 144–162. https://doi.org/10.1504/IJMFA.2018.10012811

Giannetti, M., Liao, G., & Yu, X. (2015). The Brain Gain of Corporate Boards: Evidence from China. The Journal of Finance, 70(4), 1629–1682. https://doi.org/10.1111/jofi.12198

Habbash, M. (2016). Corporate Governance and Corporate Social Responsibility Disclosure: Evidence from Saudi Arabia. Social Responsibility Journal, 12(4), 740–754. https://doi.org/10.1108/SRJ-07-2015-0088

Hahn, P. D., & Lasfer, M. (2016). Impact of Foreign Directors on Board Meeting Frequency. International Review of Financial Analysis, 46, 295–308. https://doi.org/10.1016/j.irfa.2015.11.004

Hair Jr., J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2010). Multivariate Data Analysis (7th ed.). New Jersey: Prentice Hall.

Haniffa, R. M., & Cooke, T. E. (2002). Culture, Corporate Governance and Disclosure in Malaysian Corporations. Abacus, 38(3), 317–349. https://doi.org/10.1111/1467-6281.00112

Hassan, Z., Samian, A. L., & Silong, A. D. (2006). Readings on Ethnic Relations in a Multicultural Society: Perspectives and Research on National Unity and Integration. Serdang: Universiti Putra Malaysia.

Ho, F. N., Wang, H.-M. D., & Vitell, S. J. (2012). A Global Analysis of Corporate Social Performance: The Effects of Cultural and Geographic Environments. Journal of Business Ethics, 107(4), 423–433. https://doi.org/10.1007/s10551-011-1047-y

Hyun, E., Yang, D., Jung, H., & Hong, K. (2016). Women on Boards and Corporate Social Responsibility. Sustainability, 8(4). https://doi.org/10.3390/su8040300

Integrated Reporting Committee of South Africa. (2011). Framework for Integrated Reporting and the Integrated Report.

International Integrated Reporting Council. (2012). Towards Integrated Reporting: Communicating Value in the 21st Century.

Jain, T., & Jamali, D. (2016). Looking Inside the Black Box: The Effect of Corporate Governance on Corporate Social Responsibility. Corporate Governance: An International Review, 24(3), 253–273. https://doi.org/10.1111/corg.12154

Jizi, M. (2017). The Influence of Board Composition on Sustainable Development Disclosure. Business Strategy and the Environment, 26(5), 640–655. https://doi.org/10.1002/bse.1943

Khan, H. (2010). The Effect of Corporate Governance Elements on Corporate Social Responsibility (CSR) Reporting: Empirical Evidence from Private Commercial Banks of Bangladesh. International Journal of Law and Management, 52(2), 82–109. https://doi.org/10.1108/17542431011029406

Kolk, A. (2008). Sustainability, Accountability and Corporate Governance: Exploring Multinationals’ Reporting Practices. Business Strategy and the Environment, 17(1), 1–15. https://doi.org/10.1002/bse.511

Kolk, A., & van Tulder, R. (2010). International Business, Corporate Social Responsibility and Sustainable Development. International Business Review, 19(2), 119–125. https://doi.org/10.1016/j.ibusrev.2009.12.003

Landry, E. E., Bernardi, R. A., & Bosco, S. M. (2016). Recognition for Sustained Corporate Social Responsibility: Female Directors Make a Difference. Corporate Social Responsibility and Environmental Management, 23(1), 27–36. https://doi.org/10.1002/csr.1358

Lau, C., Lu, Y., & Liang, Q. (2016). Corporate Social Responsibility in China: A Corporate Governance Approach. Journal of Business Ethics, 136(1), 73–87. https://doi.org/10.1007/s10551-014-2513-0

Lee, C., & Farh, J.-L. (2004). Joint Effects of Group Efficacy and Gender Diversity on Group Cohesion and Performance. Applied Psychology, 53(1), 136–154. https://doi.org/10.1111/j.1464-0597.2004.00164.x

Leung, E. Y. W. (2015). Diversifying the Board – A Step Towards Better Governance. Retrieved from http://www.accaglobal.com/in/en/student/exam-support-resources/professional-exams-study-resources/p1/technical-articles/diversifying-the-board--a-step-towards-better-governance.html

Lynall, M. D., Golden, B. R., & Hillman, A. J. (2003). Board Composition from Adolescence to Maturity: A Multitheoretic View. Academy of Management Review, 28(3), 416–431. https://doi.org/10.5465/amr.2003.10196743

Malik, M. (2015). Value-Enhancing Capabilities of CSR: A Brief Review of Contemporary Literature. Journal of Business Ethics, 127(2), 419–438. https://doi.org/10.1007/s10551-014-2051-9

Mallin, C. (2018). Corporate Governance (6th ed.). Oxford: Oxford University Press.

Masulis, R. W., Wang, C., & Xie, F. (2012). Globalizing the Boardroom–The Effects of Foreign Directors on Corporate Governance and Firm Performance. Journal of Accounting and Economics, 53(3), 527–554. https://doi.org/10.1016/j.jacceco.2011.12.003

Monks, R. A. G., & Minow, N. (2011). Corporate Governance (5th ed.). Chichester: John Wiley & Sons.

Nadeem, M., Zaman, R., & Saleem, I. (2017). Boardroom Gender Diversity and Corporate Sustainability Practices: Evidence from Australian Securities Exchange Listed Firms. Journal of Cleaner Production, 149, 874–885. https://doi.org/10.1016/j.jclepro.2017.02.141

Nekhili, M., Nagati, H., Chtioui, T., & Nekhili, A. (2017). Gender-Diverse Board and the Relevance of Voluntary CSR Reporting. International Review of Financial Analysis, 50, 81–100. https://doi.org/10.1016/j.irfa.2017.02.003

Odoemelam, N., & Okafor, R. G. (2018). The Influence of Corporate Governance on Environmental Disclosure of Listed Non-Financial Firms in Nigeria. Indonesian Journal of Sustainability Accounting and Management, 2(1), 25–49.

Okwuosa, I. (2015). Integrated Reporting Information and Its Decision Usefulness: UK Evidence. The Nigerian Accountant, 48(2).

Ong, T., & Djajadikerta, H. G. (2018). Corporate Governance and Sustainability Reporting in the Australian Resources Industry: An Empirical Analysis. Social Responsibility Journal. https://doi.org/10.1108/SRJ-06-2018-0135

Oxelheim, L., & Randøy, T. (2003). The Impact of Foreign Board Membership on Firm Value. Journal of Banking and Finance, 27(12), 2369–2392. https://doi.org/10.1016/S0378-4266(02)00395-3

Post, C., Rahman, N., & Rubow, E. (2011). Green Governance: Boards of Directors’ Composition and Environmental Corporate Social Responsibility. Business and Society, 50(1), 189–223. https://doi.org/10.1177/0007650310394642

Rodríguez-Ariza, L., García-Sánchez, I.-M., & Frías-Aceituno, J.-V. (2012). The Role of the Board in Achieving Integrated Financial and Sustainability Reporting. In XV Encuentro AECA. Esposende.

Rupley, K. H., Brown, D., & Marshall, R. S. (2012). Governance, Media and the Quality of Environmental Disclosure. Journal of Accounting and Public Policy, 31(6), 610–640. https://doi.org/10.1016/j.jaccpubpol.2012.09.002

Setó-Pamies, D. (2015). The Relationship between Women Directors and Corporate Social Responsibility. Corporate Social Responsibility and Environmental Management, 22(6), 334–345. https://doi.org/10.1002/csr.1349

Seuring, S., & Müller, M. (2008). Core Issues in Sustainable Supply Chain Management – A Delphi Study. Business Strategy and the Environment, 17(8), 455–466. https://doi.org/10.1002/bse.607

Sharif, M., & Rashid, K. (2014). Corporate Governance and Corporate Social Responsibility (CSR) Reporting: An Empirical Evidence from Commercial Banks (CB) of Pakistan. Quality and Quantity, 48(5), 2501–2521. https://doi.org/10.1007/s11135-013-9903-8

Suteja, J., & Gunardi, A. (2016). CSR disclosure, corporate fundamental factors, corporate governance and profitability of banks in Indonesia. Social Sciences, 11(19), 4672–4676. https://doi.org/10.3923/sscience.2016.4672.4676

Thanetsunthorn, N. (2015). The Impact of National Culture on Corporate Social Responsibility: Evidence from Cross-Regional Comparison. Asian Journal of Business Ethics, 4(1), 35–56. https://doi.org/10.1007/s13520-015-0042-2

Tornyeva, K., & Wereko, T. (2012). Corporate Governance and Firm Performance: Evidence from the Insurance Sector of Ghana. European Journal of Business and Management, 4(13), 95–112.

Ujunwa, A., Nwakoby, I., & Ugbam, C. O. (2012). Corporate Board Diversity and Firm Performance: Evidence from Nigeria. Corporate Ownership and Control, 9(2), 216–226. https://doi.org/10.22495/cocv9i2c1art6

Walls, J. L., Berrone, P., & Phan, P. H. (2012). Corporate Governance and Environmental Performance: Is There Really a Link? Strategic Management Journal, 33(8), 885–913. https://doi.org/10.1002/smj.1952

Yasser, Q. R., Al Mamun, A., & Ahmed, I. (2017). Corporate Social Responsibility and Gender Diversity: Insights from Asia Pacific. Corporate Social Responsibility and Environmental Management, 24(3), 210–221. https://doi.org/10.1002/csr.1400

Zhang, J. Q., Zhu, H., & Ding, H. (2013). Board Composition and Corporate Social Responsibility: An Empirical Investigation in the Post Sarbanes-Oxley Era. Journal of Business Ethics, 114(3), 381–392. https://doi.org/10.1007/s10551-012-1352-0

Dimension

Altmetric

PlumX


DOI: https://doi.org/10.28992/ijsam.v3i1.76

Refbacks

  • There are currently no refbacks.


Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.