Corporate Governance Toward Sustainability Disclosure: Recent Development and Future Research Agenda

  • Luh Gede Krisna Dewi Faculty of Economics and Business, Universitas Udayana, Indonesia
  • Ni Luh Putu Wiagustini Faculty of Economics and Business, Universitas Udayana, Indonesia
  • Henny Rahyuda Faculty of Economics and Business, Universitas Udayana, Indonesia
  • I Putu Sudana Faculty of Economics and Business, Universitas Udayana, Indonesia

Abstract

The concept of sustainability is important in global business practices. Companies should manage business practices that are in line with the achievement of the SDGs agenda. This study aims to review previous research and fill gaps using a literature review approach. It critically reviews the theoretical perspectives and issues based on the relationship between corporate governance mechanisms and the level of corporate sustainability disclosure. This study adopts a systematic literature review approach with bibliometric analysis methods and content analysis using 44 articles from the Scopus database. The results of this study describe three clusters in the latest research developments. The first cluster is with regard to corporate social responsibility, the second is board composition; and the third is practical implications. Another finding is female director and independent director variables appear to be predictors of the sustainability report disclosure. The implication of the research is to provide comprehensive future research agenda.


Keywords: corporate governance, sustainability disclosure, board composition, bibliometric analysis

Downloads

Download data is not yet available.

References

Adel, C., Hussain, M. M., Mohamed, E. K. A., & Basuony, M. A. K. (2019). Is corporate governance relevant to the quality of corporate social responsibility disclosure in large European companies? International Journal of Accounting and Information Management, 27(2), 301–332. https://doi.org/10.1108/IJAIM-10-2017-0118

Africa Merlin-Tao Visser, W. (2002). Sustainability reporting in South Africa. Corporate Environmental Strategy, 9(1), 79–85. https://doi.org/10.1016/S1066-7938(01)00157-9

Ahmad, N. B. J., Rashid, A., & Gow, J. (2018). Corporate board gender diversity and corporate social responsibility reporting in Malaysia. Gender, Technology and Development, 22(2), 87–108. https://doi.org/10.1080/09718524.2018.1496671

al Farooque, O., & Ahulu, H. (2017). Determinants of social and economic reportings: Evidence from Australia, the UK and South african multinational enterprises. International Journal of Accounting and Information Management, 25(2), 177–200. https://doi.org/10.1108/IJAIM-01-2016-0003

Alazzani, A., Hassanein, A., & Aljanadi, Y. (2017). Impact of gender diversity on social and environmental performance: evidence from Malaysia. Corporate Governance (Bingley), 17(2), 266–283. https://doi.org/10.1108/CG-12-2015-0161

Al-Shaer, H., & Zaman, M. (2016). Board gender diversity and sustainability reporting quality. Journal of Contemporary Accounting and Economics, 12(3), 210–222. https://doi.org/10.1016/j.jcae.2016.09.001

Amidjaya, P. G., & Widagdo, A. K. (2020). Sustainability reporting in Indonesian listed banks: Do corporate governance, ownership structure and digital banking matter? Journal of Applied Accounting Research, 21(2), 231–247. https://doi.org/10.1108/JAAR-09-2018-0149

Amorelli, M. F., & García-Sánchez, I. M. (2021). Trends in the dynamic evolution of board gender diversity and corporate social responsibility. Corporate Social Responsibility and Environmental Management, 28(2), 537–554. https://doi.org/10.1002/csr.2079

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. https://doi.org/10.28992/ijsam.v2i1.52

Ararat, M., & Sayedy, B. (2019). Gender and climate change disclosure: An interdimensional policy approach. Sustainability (Switzerland), 11(24), 1–19. https://doi.org/10.3390/su11247217

Arayssi, 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

Bae, S. M., Masud, M. A. K., & Kim, J. D. (2018). A cross-country investigation of corporate governance and corporate sustainability disclosure: A signaling theory perspective. Sustainability (Switzerland), 10(8). https://doi.org/10.3390/su10082611

Bakar, A. B. S. A., Ghazali, N. A. B. Mohd., & Ahmad, M. B. (2019). Sustainability Reporting and Board Diversity in Malaysia. International Journal of Academic Research in Business and Social Sciences, 9(2), 91–99. https://doi.org/10.6007/ijarbss/v9-i2/5663

Bini, L., & Bellucci, M. (2020). Integrated Sustainability Reporting. In Integrated Sustainability Reporting. https://doi.org/10.1007/978-3-030-24954-0

Bonsón, E., & Bednárová, M. (2015). CSR reporting practices of Eurozone companies. Revista de Contabilidad-Spanish Accounting Review, 18(2), 182–193. https://doi.org/10.1016/j.rcsar.2014.06.002

Boutchkova, M., Gonzalez, A., Main, B. G. M., & Sila, V. (2021). Gender diversity and the spillover effects of women on boards. Corporate Governance: An International Review, 29(1), 2–21. https://doi.org/10.1111/corg.12339

Bravo, F., & Reguera-Alvarado, N. (2019). Sustainable development disclosure: Environmental, social, and governance reporting and gender diversity in the audit committee. Business Strategy and the Environment, 28(2), 418–429. https://doi.org/10.1002/bse.2258

Bristy, H. J., How, J., & Verhoeven, P. (2021). Gender diversity: the corporate social responsibility and financial performance nexus. International Journal of Managerial Finance, 17(5), 665–686. https://doi.org/10.1108/IJMF-04-2020-0176

Brown, H. S., de Jong, M., & Levy, D. L. (2009). Building institutions based on information disclosure: lessons from GRI’s sustainability reporting. Journal of Cleaner Production, 17(6), 571–580. https://doi.org/10.1016/j.jclepro.2008.12.009

Buallay, A. (2019). Is sustainability reporting (ESG) associated with performance? Evidence from the European banking sector. Management of Environmental Quality: An International Journal, 30(1), 98–115. https://doi.org/10.1108/MEQ-12-2017-0149

Buallay, Amina. (2019). Management of Environmental Quality: An International Journal Is sustainability reporting (ESG) associated with performance? Evidence from the European banking sector. Management of Environmental Quality: An International Journal, 30(1), 98–115.

Buallay, Amina, & Al-Ajmi, J. (2020). The role of audit committee attributes in corporate sustainability reporting: Evidence from banks in the Gulf Cooperation Council. Journal of Applied Accounting Research, 21(2), 249–264. https://doi.org/10.1108/JAAR-06-2018-0085

Cadbury, A. (1992). Report of the commitee on the financial aspects of corporate governance. Gee.

Camilleri, M. A. (2015). Valuing Stakeholder Engagement and Sustainability Reporting. Corporate Reputation Review, 18(3), 210–222. https://doi.org/10.1057/crr.2015.9

Carter, D. A., D’Souza, F., Simkins, B. J., & Simpson, W. G. (2010). The gender and ethnic diversity of US boards and board committees and firm financial performance. Corporate Governance: An International Review, 18(5), 396–414. https://doi.org/10.1111/j.1467-8683.2010.00809.

Christofi, A., Christofi, P., & Sisaye, S. (2012). Corporate sustainability: Historical development and reporting practices. Management Research Review, 35(2), 157–172. https://doi.org/10.1108/01409171211195170

Correa-Garcia, J. A., Garcia-Benau, M. A., & Garcia-Meca, E. (2020). Corporate governance and its implications for sustainability reporting quality in Latin American business groups. Journal of Cleaner Production, 260, 121142. https://doi.org/10.1016/j.jclepro.2020.121142

Crespy, C. T., & Miller, V. v. (2011). Sustainability reporting: A comparative study of NGOs and MNCs. Corporate Social Responsibility and Environmental Management, 18(5), 275–284. https://doi.org/10.1002/csr.248

Cullinan, C. P., Mahoney, L., & Roush, P. B. (2019). Directors & Corporate Social Responsibility: Joint Consideration of Director Gender and the Director’s Role. Social and Environmental Accountability Journal, 39(2), 100–123. https://doi.org/10.1080/0969160X.2019.1586556

Czernkowski, R., Kean, S., & Lim, S. (2019). Impact of ASX corporate governance guidelines on sustainability reporting. Accounting Research Journal, 32(4), 692–724. https://doi.org/10.1108/ARJ-07-2017-0122

de Jongh, D., & Möllmann, C. M. (2014). Market barriers for voluntary climate change mitigation in the south african private sector. South African Journal of Economic and Management Sciences, 17(5), 639–652. https://doi.org/10.4102/sajems.v17i5.532

de Klerk, M., de Villiers, C., & van Staden, C. (2015). The influence of corporate social responsibility disclosure on share prices: Evidence from the United Kingdom. Pacific Accounting Review, 27(2), 208–228. https://doi.org/10.1108/PAR-05-2013-0047

Eagly, A. H., & Carli, L. L. (2003). The female leadership advantage: An evaluation of the evidence. Leadership Quarterly, 14(6), 807–834. https://doi.org/10.1016/j.leaqua.2003.09.004

Eagly, A. H., & Johnson, B. T. (1990). Gender and Leadership Style: A Meta-Analysis. Psychological Bulletin, 108(2), 233–256. https://doi.org/10.1037/0033-2909.108.2.233

Ehnert, I., Parsa, S., Roper, I., Wagner, M., & Muller-Camen, M. (2016). Reporting on sustainability and HRM: a comparative study of sustainability reporting practices by the world’s largest companies. International Journal of Human Resource Management, 27(1), 88–108. https://doi.org/10.1080/09585192.2015.1024157

Eisenhardt, K. M. (1989). Agency Theory: An Assessment and Review. The Academy of Management Review, 14(1), 57–74. https://doi.org/10.2307/258191

Elkington, J. (2006). Governance for sustainability. Corporate Governance: An International Review, 14(5), 522–529. https://doi.org/10.1111/j.1467-8683.2006.00527.x

Elsayed, N., & Ammar, S. (2020). Sustainability governance and legitimisation processes: Gulf of Mexico oil spill. Sustainability Accounting, Management and Policy Journal, 11(1), 253–278. https://doi.org/10.1108/SAMPJ-09-2018-0242

Embuningtiyas, S. S., Puspasari, O. R., Utama, A. A. G. S., & Ardianti, R. I. (2020). Bank financial soundness and the disclosure of banking sustainability reporting in Indonesia. International Journal of Innovation, Creativity and Change, 10(12), 237–247.

Freeman, R. E. (2015). Stakeholder Theory. Wiley Encyclopedia of Management, 1–6. https://doi.org/10.1002/9781118785317.weom020179

Furlotti, K., Mazza, T., Tibiletti, V., & Triani, S. (2019). Women in top positions on boards of directors: Gender policies disclosed in Italian sustainability reporting. Corporate Social Responsibility and Environmental Management, 26(1), 57–70. https://doi.org/10.1002/csr.1657

Giannarakis, G., Andronikidis, A., & Sariannidis, N. (2020). Determinants of environmental disclosure: investigating new and conventional corporate governance characteristics. Annals of Operations Research, 294(1–2), 87–105. https://doi.org/10.1007/s10479-019-03323-x

Goyal, S., & Dhamija, S. (2018). Corporate governance failure at Ricoh India: rebuilding lost trust. Emerald Emerging Markets Case Studies, 8(4), 1–20. https://doi.org/10.1108/EEMCS-06-2017-0166

Gracheva, M. (2004). Development of Corporate Governance Standards in UK: The Higgs Report. Voprosy Ekonomiki, (1), 118–128. https://doi.org/10.32609/0042-8736-2004-1-118-128

GRI. (2021). Global Reporting Index. Retrieved from Global Reporting Index website: https://www.globalreporting.org/

Guidry, R. P., & Patten, D. M. (2012). Voluntary disclosure theory and financial control variables: An assessment of recent environmental disclosure research. Accounting Forum, 36(2), 81–90. https://doi.org/10.1016/j.accfor.2012.03.002

Haji, A. A. (2013). Corporate social responsibility disclosures over time: Evidence from Malaysia. Managerial Auditing Journal, 28(7), 647–676. https://doi.org/10.1108/MAJ-07-2012-0729

Hambrick, D. C. (2007). Upper echelons theory: An update. Academy of Management Review, 32(2), 334–343. https://doi.org/10.5465/AMR.2007.24345254

Handajani, L., Subroto, B., T., S., & Saraswati, E. (2014). Does board diversity matter on corporate social disclosure? An indonesian evidence. Journal of Economics and Sustainable Development, 5(9), 8–16.

Hu, M., & Loh, L. (2018). Board governance and sustainability disclosure: A cross-sectional study of Singapore-listed companies. Sustainability (Switzerland), 10(7). https://doi.org/10.3390/su10072578

Hummel, K., & Schlick, C. (2016). The relationship between sustainability performance and sustainability disclosure – Reconciling voluntary disclosure theory and legitimacy theory. Journal of Accounting and Public Policy, 35(5), 455–476. https://doi.org/10.1016/j.jaccpubpol.2016.06.001

Hussain, N., Rigoni, U., & Orij, R. P. (2016). Corporate Governance and Sustainability Performance: Analysis of Triple Bottom Line Performance. Journal of Business Ethics, 149(2), 411–432. https://doi.org/10.1007/s10551-016-3099-5

Jensen, M. C., & Meckling, W. H. (1976). Theory of the Firm: Managerial Behavior, Agency Costs And Ownership Structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/http://dx.doi.org/10.1016/0304-405X(76)90026-X

Jiang, L., Cherian, J., Sial, M. S., Wan, P., Filipe, J. A., Mata, M. N., & Chen, X. (2021). The moderating role of CSR in board gender diversity and firm financial performance: empirical evidence from an emerging economy. Economic Research-Ekonomska Istrazivanja , 34(1), 2354–2373. https://doi.org/10.1080/1331677X.2020.1863829

Kend, M. (2015). Governance, firm-level characteristics and their impact on the client’s voluntary sustainability disclosures and assurance decisions. Sustainability Accounting, Management and Policy Journal, 6(1), 54–78. https://doi.org/10.1108/SAMPJ-12-2013-0061

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

Konrad, A. M., Ritchie, J. E., Lieb, P., & Corrigall, E. (2000). Sex Differences and Similarities in Job Attribute Preferences: A Meta-Analysis. Psychological Bulletin, 126(4), 593–641. https://doi.org/10.1037/0033-2909.126.4.593

Liao, L., Luo, L., & Tang, Q. (2015). Gender diversity, board independence, environmental committee and greenhouse gas disclosure. British Accounting Review, 47(4), 409–424. https://doi.org/10.1016/j.bar.2014.01.002

Mahmood, M., & Orazalin, N. (2017). Green governance and sustainability reporting in Kazakhstan’s oil, gas, and mining sector: Evidence from a former USSR emerging economy. Journal of Cleaner Production, 164, 389–397. https://doi.org/10.1016/j.jclepro.2017.06.203

Maroun, W. (2019). Exploring the rationale for integrated report assurance. Accounting, Auditing and Accountability Journal, 32(6), 1826–1854. https://doi.org/10.1108/AAAJ-04-2018-3463

Martínez-Ferrero, J., García-Sánchez, I. M., & Ruiz-Barbadillo, E. (2018). The quality of sustainability assurance reports: The expertise and experience of assurance providers as determinants. Business Strategy and the Environment, 27(8), 1181–1196. https://doi.org/10.1002/bse.2061

Mohamed Adnan, S., Hay, D., & van Staden, C. J. (2018). The influence of culture and corporate governance on corporate social responsibility disclosure: A cross country analysis. Journal of Cleaner Production, 198, 820–832. https://doi.org/10.1016/j.jclepro.2018.07.057

Moses, E., Che-Ahmad, A., & Abdulmalik, S. O. (2020). Board governance mechanisms and sustainability reporting quality: A theoretical framework. Cogent Business and Management, 7(1). https://doi.org/10.1080/23311975.2020.1771075

Mungai, E. M., Ndiritu, S. W., & Rajwani, T. (2020). Raising the bar? Top management teams, gender diversity, and environmental sustainability. Africa Journal of Management, 6(4), 269–294. https://doi.org/10.1080/23322373.2020.1830688

Naciti, V., Cesaroni, F., & Pulejo, L. (2021). Corporate governance and sustainability: a review of the existing literature. Journal of Management and Governance. https://doi.org/10.1007/s10997-020-09554-6

Nielsen, S., & Huse, M. (2010). involvement : The role of equality perception. European Management Review, 16–29.

Obiamaka, N., & Akintola, O. (2016). Governance Commitment and Time Differences in Aspects of Sustainability Reporting in Nigerian Banks. International Journal of Economics and Management Engineering, 10(1), 328–332. https://doi.org/doi.org/10.5281/zenodo.1111598

Ogden, J., Jen, F. C., & O’Connor, P. F. (2012). Advanced Corporate Finance 1st Edition (1st Editio). Prentice Hall.

Ong, T., & Djajadikerta, H. G. (2020). Corporate governance and sustainability reporting in the Australian resources industry: an empirical analysis. Social Responsibility Journal, 16(1), 1–14. https://doi.org/10.1108/SRJ-06-2018-0135

Pham, H. T. T., Jung, S. C., & Lee, S. Y. (2020). Governmental ownership of voluntary sustainability information disclosure in an emerging economy: Evidence from Vietnam. Sustainability (Switzerland), 12(16). https://doi.org/10.3390/su12166686

Powell, G. N. (1990). One More Time: Do Female and Male Managers Differ? Academy of Management Perspectives, 4(3), 68–75. https://doi.org/10.5465/ame.1990.4274684

Prado-Lorenzo, J. M., & Garcia-Sanchez, I. M. (2010). The Role of the Board of Directors in Disseminating Relevant Information on Greenhouse Gases. Journal of Business Ethics, 97(3), 391–424. https://doi.org/10.1007/s10551-010-0515-0

Rao, K., & Tilt, C. (2016). Board Composition and Corporate Social Responsibility: The Role of Diversity, Gender, Strategy and Decision Making. Journal of Business Ethics, 138(2), 327–347. https://doi.org/10.1007/s10551-015-2613-5

Rathnayaka Mudiyanselage, N. C. S. (2018). Board involvement in corporate sustainability reporting: evidence from Sri Lanka. Corporate Governance (Bingley), 18(6), 1042–1056. https://doi.org/10.1108/CG-10-2017-0252

Richardson, A. J., & Welker, M. (2001). Social disclosure, financial disclosure and the cost of equity capital. Accounting, Organizations and Society, 26(7–8), 597–616. https://doi.org/10.1016/S0361-3682(01)00025-3

Rodrigues, M., & Mendes, L. (2018). Mapping of the literature on social responsibility in the mining industry: A systematic literature review. Journal of Cleaner Production, 181, 88–101. https://doi.org/10.1016/j.jclepro.2018.01.163

Schaltegger, S., Bennett, M., & Burrit, R. (2006). Corporate Sustainability – the Basis of Sustainability Accounting and Reporting. In Sustainability Accounting and Reporting.

Schein, V. E., Mueller, R., Lituchy, T., & Liu, J. (1996). Think manager—think male: a global phenomenon? Journal of Organizational Behavior, 17(1), 33–41. https://doi.org/10.1002/(SICI)1099-1379(199601)17:1<33::AID-JOB778>3.0.CO;2-F

Secinaro, S., Calandra, D., Petricean, D., & Chmet, F. (2021). Social finance and banking research as a driver for sustainable development: A bibliometric analysis. Sustainability (Switzerland), 13(1), 1–18. https://doi.org/10.3390/su13010330

Shamil, M. M., Shaikh, J. M., Ho, P. L., & Krishnan, A. (2014). The influence of board characteristics on sustainability reporting Empirical evidence from Sri Lankan firms. Asian Review of Accounting, 22(2), 78–97. https://doi.org/10.1108/ARA-09-2013-0060

Siew, R. Y. J. (2017). Critical evaluation of environmental, social and governance disclosures of Malaysian property and construction companies. Construction Economics and Building, 17(2), 81–91. https://doi.org/10.5130/AJCEB.v17i2.5328

Stacchezzini, R., Melloni, G., & Lai, A. (2016). Sustainability management and reporting: the role of integrated reporting for communicating corporate sustainability management. Journal of Cleaner Production, 136, 102–110. https://doi.org/10.1016/j.jclepro.2016.01.109

Stanciu, V., & Bran, F. P. (2019). Sustainability Reporting. A Romanian Insight. Quality-Access to Success, 20(S2), 604–608.

Sudana, I. P. (2014). Transformasi Laporan Keuangan Entitas Bisnis Dengan Spirit Sustainable Development. Universitas Brawijaya.

The Time Has Come! The KPMG Survey of Sustainability Reporting 2020. (2020). Retrieved from KPMG website: https://home.kpmg/sustainabilityreporting

Trotman, A. J., & Trotman, K. T. (2015). Internal audit’s role in GHG emissions and energy reporting: Evidence from audit committees, senior accountants, and internal auditors. Auditing. https://doi.org/10.2308/ajpt-50675

van Eck, N. J., & Waltman, L. (2020). VOSviewer Manual version 1.6.16. Univeristeit Leiden, (November), 1–52. Retrieved from https://www.vosviewer.com/download/f-33t2.pdf

von Ungern-Sternberg, S., & Lindquist, M. G. (1995). The impact of electronic journals on library functions. Journal of Information Science, 21(5), 396–401. https://doi.org/10.1177/016555159502100507

Wachira, M. M., Berndt, T., & Romero, C. M. (2020). The adoption of international sustainability and integrated reporting guidelines within a mandatory reporting framework: lessons from South Africa. Social Responsibility Journal, 16(5), 613–629. https://doi.org/10.1108/SRJ-12-2018-0322

Wang, M. C. (2017). The relationship between firm characteristics and the disclosure of sustainability reporting. Sustainability (Switzerland), 9(4). https://doi.org/10.3390/su9040624

Zahra, S. A., & Pearce, J. A. (1989). Boards of Directors and Corporate Financial Performance: A Review and Integrative Model. Journal of Management, 15(2), 291–334. https://doi.org/10.1177/014920638901500208

Zainal, D. (2017). Quality of Corporate Social Responsibility Reporting (CSRR): The Influence of Ownership Structure and Company Character. Asian Journal of Accounting Perspectives, 10(1), 16–35. https://doi.org/10.22452/ajap.vol10no1.2

Zhuang, Y., Chang, X., & Lee, Y. (2018). Board composition and corporate social responsibility performance: Evidence from Chinese public firms. Sustainability (Switzerland), 10(8). https://doi.org/10.3390/su10082752
Published
2022-07-27
How to Cite
DEWI, Luh Gede Krisna et al. Corporate Governance Toward Sustainability Disclosure: Recent Development and Future Research Agenda. Jurnal Ilmiah Akuntansi dan Bisnis, [S.l.], v. 17, n. 2, july 2022. ISSN 2303-1018. Available at: <https://ojs.unud.ac.id/index.php/jiab/article/view/82754>. Date accessed: 14 aug. 2022.
Section
Articles

Most read articles by the same author(s)