Board Diversity and Corporate Social Responsibility Disclosure: How Much Difference Does Ethnic Diversity Make?
Main Article Content
Keywords
Gender, ethnic diversity, board diversity, corporate social responsibility disclosure
Abstract
This study sought to establish the degree to which the presence of ethnic diversity within board of directors influences the financial performance of organizations with specific reference to listed firms in Kenya. To assess the effect of board’s ethnic diversity on corporate social responsibility disclosure of listed firms in Kenya. This study utilizes secondary data obtained from listed firms at the Nairobi Securities Exchange, spanning a seven-year period from 2011-2017 giving a total of 301 firm - year observations. This study incorporates descriptive statistics, correlation testing, and regression analysis. The result from the study revealed that gender composition of the board exhibits significant effect on corporate social responsibility disclosure (β1 = 0.2771, p < 0.05). The finding suggests that when the board is diverse in terms of ethnicity, this allows the board of directors to participate in the board activities and make decision that ensure the benefits of all stakeholders. This result implies that to reach a higher CSR disclosure, shareholder should maintain the ethnic diversity within their board. Hence, it is strongly advised in this study that the inclusion of ethnic diversity should be thoroughly deliberated over in order to effectively enhance the extent of corporate social responsibility disclosure within the listed enterprises of Kenya. This research paper aims to provide a substantial contribution to the existing body of literature on board diversity. It seeks to establish empirical evidence that supports the notion that having ethnic diversity on boards of directors is more likely to result in enhanced corporate social responsibility disclosure.
References
Amran, A., Lee, S. P., & Devi, S. S. (2014). The influence of governance structure and strategic corporate social responsibility toward sustainability reporting quality. Business strategy and the environment, 23(4), 217-235.
Branco, M. C., & Rodrigues, L. L. (2008). Factors influencing social responsibility disclosure by Portuguese companies. Journal of business ethics, 83, 685-701.
Broccardo, L., Truant, E., & Zicari, A. (2019). Internal corporate sustainability drivers: What evidence from family firms? A literature review and research agenda. Corporate Social Responsibility and Environmental Management, 26(1), 1-18.
da Silva Monteiro, S. M., & Aibar‐Guzmán, B. (2010). Determinants of environmental disclosure in the annual reports of large companies operating in Portugal. Corporate Social Responsibility and Environmental Management, 17(4), 185-204.
Dalton, D. R., Daily, C. M., Johnson, J. L., & Ellstrand, A. E. (1999). Number of directors and financial performance: A meta-analysis. Academy of Management journal, 42(6), 674-686.
Eisenhardt, K. M. (1989). Agency theory: An assessment and review. Academy of management review, 14(1), 57-74.
Eng, L. L., & Mak, Y. T. (2003). Corporate governance and voluntary disclosure. Journal of accounting and public policy, 22(4), 325-345.
Fifka, M. S. (2013). Corporate responsibility reporting and its determinants in comparative perspective–a review of the empirical literature and a meta‐analysis. Business strategy and the environment, 22(1), 1-35.
Fuente, J. A., García-Sanchez, I. M., & Lozano, M. B. (2017). The role of the board of directors in the adoption of GRI guidelines for the disclosure of CSR information. Journal of Cleaner Production, 141, 737-750.
Godfrey, P. C., & Hatch, N. W. (2007). Researching corporate social responsibility: An agenda for the 21st century. Journal of business ethics, 70, 87-98.
Gujarati, D. N. (2021). Essentials of econometrics: Sage Publications.
Hambrick, D. C., & Mason, P. A. (1984). Upper echelons: The organization as a reflection of its top managers. Academy of management review, 9(2), 193-206.
Harjoto, M. A., Laksmana, I., & Yang, Y.-W. (2018). Board diversity and corporate investment oversight. Journal of Business Research, 90, 40-47.
Ibrahim, A. H., & Hanefah, M. M. (2016). Board diversity and corporate social responsibility in Jordan. Journal of Financial Reporting and Accounting, 14(2), 279-298.
Issa, A., Zaid, M. A., Hanaysha, J. R., & Gull, A. A. (2022). An examination of board diversity and corporate social responsibility disclosure: evidence from banking sector in the Arabian Gulf countries. International Journal of Accounting & Information Management, 30(1), 22-46.
Jensen, M. C. (1976). Reflections on the State of Accounting Research and the Regulation of Accounting.
Katmon, N., Mohamad, Z. Z., Norwani, N. M., & Farooque, O. A. (2019). Comprehensive board diversity and quality of
corporate social responsibility disclosure: Evidence from an emerging market. Journal of business ethics, 157, 447-481.
Lagasio, V., Cucari, N., & Åberg, C. (2021). How corporate social responsibility initiatives affect the choice of a bank: Empirical evidence of Italian context. Corporate Social Responsibility and Environmental Management, 28(4), 1348-1359.
Lückerath-Rovers, M. (2013). Women on boards and firm performance. Journal of Management & Governance, 17, 491-509.
McLeod, P. L., Lobel, S. A., & Cox Jr, T. H. (1996). Ethnic diversity and creativity in small groups. Small group research, 27(2), 248-264.
Naciti, V. (2019). Corporate governance and board of directors: The effect of a board composition on firm sustainability performance. Journal of Cleaner Production, 237, 117727.
Omran, M. A., & Ramdhony, D. (2015). Theoretical perspectives on corporate social responsibility disclosure: a critical review. International Journal of Accounting and Financial Reporting, 5(2), 38-55.
Peng, X., Qi, T., & Wang, G. (2022). Board Gender Diversity, Corporate Social Disclosures, and National Culture. SAGE Open, 12(4), 21582440221130946.
Peng, X., Yang, Z., Shao, J., & Li, X. (2021). Board diversity and corporate social responsibility disclosure of multinational corporations. Applied Economics, 53(42), 4884-4898.
Pham, H. T. S., & Tran, H. T. (2018). Board and corporate social responsibility disclosure of multinational corporations. Multinational Business Review, 27(1), 77-98.
Prado‐Lorenzo, J. M., Gallego‐Alvarez, I., & Garcia‐Sanchez, I. M. (2009). Stakeholder engagement and corporate social responsibility reporting: the ownership structure effect. Corporate Social Responsibility and Environmental Management, 16(2), 94-107.
Reverte, C. (2009). Determinants of corporate social responsibility disclosure ratings by Spanish listed firms. Journal of business ethics, 88, 351-366.
Rhode, D. L., & Packel, A. K. (2014). Diversity on corporate boards: How much difference does difference make. Del. J. Corp. L., 39, 377.
Roberts, R. W. (1992). Determinants of corporate social responsibility disclosure: An application of stakeholder theory. Accounting, organizations and society, 17(6), 595-612.
Tamunomiebi, M. D., & Ehior, I. E. (2019). Diversity and ethical issues in the organizations. International Journal of Academic Research in Business and Social Sciences, 9(2), 839-864.
Tariah, I. (2019). Board diversity, composition and firm performance: do gender and ethnic diversity influence firm performance? Composition and Firm Performance: Do Gender and Ethnic Diversity influence Firm Performance.
Weber, M. (1998). Ethnic groups. In New tribalisms: The resurgence of race and ethnicity (pp. 17-30): Springer.
Westphal, J. D., & Milton, L. P. (2000). How experience and network ties affect the influence of demographic minorities on corporate boards. Administrative science quarterly, 45(2), 366-398.
Wiseman, J. (1982). An evaluation of environmental disclosures made in corporate annual reports. Accounting, organizations and society, 7(1), 53-63.
Zainal, D., Zulkifli, N., & Saleh, Z. (2013). Corporate board diversity in Malaysia: A longitudinal analysis of gender and nationality diversity. International Journal of Academic Research in Accounting, Finance and Management Sciences, 3(1), 136-148.
Article Sidebar
Article Details
Kashorda Lemaiyan , Department of Accounting and Finance, School of Business and Economics, Moi University, P. O. Box 3900 - 30100, Kesses, Eldoret, Kenya
Department of Accounting and Finance, School of Business and Economics, Moi University, Eldoret, Kenya
Stephen Chelogoi, Department of Accounting and Finance, School of Business and Economics, Moi University, P. O. Box 3900 - 30100, Kesses, Eldoret, Kenya
Department of Accounting and Finance, School of Business and Economics, Moi University, Eldoret, Kenya
Thomas Cheruiyot, Department of Markerting Science, School of Business and Economics, Moi University, P. O. Box 3900 - 30100, Kesses, Eldoret, Kenya
Department of Markerting Science, School of Business and Economics, Moi University, Eldoret, Kenya