THE ROLE OF BOARD OF DIRECTORS ON ENVIRONMENTAL, SOCIAL AND GOVERNANCE DISCLOSURE (ESG): EVIDENCE FROM EMERGING MARKETS

Abstract

Companies aim to improve their efficiency in the markets by disclosing their non-financial information as well as their financial information to their stakeholders. Non-financial information consists of three components as environmental, social and governance (ESG) related disclosures. This study aims to investigate the effects of the board structures of companies (such as board size, board gender diversity, ratio of independent members in the board of directors, and whether CEO is also the chairman of the board of directors) on their disclosure scores in terms of both ESG and its components (environmental, social and corporate governance) in developing countries context. Morgan Stanley Capital International (MSCI) classification is followed in the study to determine sample countries. The sample of the study consists of 4,973 firm-year observations of 842 unique companies from 21 countries between the years 2010-2019 and panel regression analysis is utilized. Findings show that board size, gender diversity, board independence, and CEO duality are significant factors in explaining companies’ non-financial information disclosure scores. These findings also suggest that companies’ board structure has significant impact on their non-financial information disclosure policy.