Does the chairman’s political and royal authority matter? Evidence from ESG disclosure in Gulf Cooperation Council

Abstract

Purpose

This study aims to explore the influence of the chairman’s political and royal authority on environmental, social and governance (ESG) disclosure within the context of nonfinancial companies listed in the Gulf Cooperation Council (GCC).

Design/methodology/approach

The authors adopt a mixed-methods approach, analyzing a data set of 262 nonfinancial GCC companies from 2016 to 2021. The authors use content analysis to collect the ESG disclosure data based on the ESG Disclosure Guidance provided by the GCC Financial Markets Committee. Quantitative methods are applied to investigate the effect of the chairman’s political and royal authority on ESG disclosure. The credibility of the findings is fortified through rigorous robustness and endogeneity tests.

Findings

Consistent with the resource-based view and servant leadership theory, the authors found a positive impact of the chairman’s political and royal authority on ESG disclosure.

Practical implications

The findings of this study insight investors to consider the complex relationship between political affiliations and governance practices to align investments with sustainability and ethical criteria, thereby improving investment strategies in these contexts. This research offers a solid foundation for regulatory craft governance frameworks that acknowledge and incorporate the unique influence of royal family members and politically connected individuals within corporate boards.

Originality/value

This study enhances the discourse on ESG disclosure by focusing on the underrepresented GCC region. This research breaks new ground by focusing on the impact of the chairman’s political and royal authority on ESG disclosure. In addition, it addresses previous methodological limitations by incorporating more comprehensive ESG data for the GCC market.

Citation

Abdelgawad, H.N.M. and Liu, G. (2024), "Does the chairman’s political and royal authority matter? Evidence from ESG disclosure in Gulf Cooperation Council", Journal of Financial Reporting and Accounting, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JFRA-10-2023-0600