The purpose of this research is to ascertain the impact of audit committee (AC) activism and independence on the quality and quantity of environmental, social and governance (ESG) disclosures for energy sector firms in Australia. This paper aims to understand how AC attributes such as meeting frequency, and the number of independent directors influence the compliance with the global reporting initiative (GRI) guidelines and quantity of ESG disclosures.
Bloomberg ESG disclosure scores and company reported AC attributes are collected and analysed using the pooled ordinary least square (OLS) regression framework with Petersen’s (2009) technique by using a two-dimensional cluster at the firm and year level. Further, this paper uses a lagged independent variable and two-stage least square approach to address endogeneity concerns.
The results show a significant positive effect of AC activism and independence on the level of compliance with the GRI guidelines, indicating the favourable effect of AC attributes on ESG reporting quality. Likewise, AC attributes positively affect the quantity of ESG disclosures. Notably, the impact of AC attributes is more pronounced on environmental disclosures.
This paper validates the significance of the management control mechanism in improving the quality and quantity of ESG disclosures for an environmentally sensitive sector, hence offering a potential answer to reduce agency and legitimacy issues for the sensitive industry firms.
Arif, M., Sajjad, A., Farooq, S., Abrar, M. and Joyo, A.S. (2021), "The impact of audit committee attributes on the quality and quantity of environmental, social and governance (ESG) disclosures", Corporate Governance, Vol. 21 No. 3, pp. 497-514. https://doi.org/10.1108/CG-06-2020-0243
Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited