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Women on boards, sustainability reporting and firm performance

Mahmoud Arayssi (A. Kassar School of Business, Lebanese American University, Beirut, Lebanon)
Mustafa Dah (A. Kassar School of Business, Lebanese American University, Beirut, Lebanon)
Mohammad Jizi (A. Kassar School of Business, Lebanese American University, Beirut, Lebanon)

Sustainability Accounting, Management and Policy Journal

ISSN: 2040-8021

Article publication date: 5 September 2016

Abstract

Purpose

As pressures mount for women directors on corporate boards (WDOCBs) from different stakeholders, companies become more interested in finding out how WDOCBs impact sustainability disclosure. The purpose of this paper is to investigate the effect of gender-diverse boards on the association between sustainability reporting and shareholders’ welfare.

Design/methodology/approach

This paper examines the implications of women on board for firm-related factors, particularly environmental, social and governance (ESG) disclosure and firm performance. The firms studied are all listed in the Financial Times Stock Exchange 350 index between 2007 and 2012. Bloomberg social disclosure score is used and panel data through a regression model are applied.

Findings

The results reveal that the presence of WDOCBs favorably influences on firm’s risk and performance through promoting a firm’s investment in effectual social engagements and reporting on them. The desirable effect of WDOCB on the ESG-performance relationship leads to increased risk-adjusted and buy-and-hold abnormal returns and reduced firm risks, measured by both volatility of returns and systematic risk.

Originality/value

The research contributes to the literature on the relationship between women participation on corporate boards and firms’ good citizenship and enhanced shareholders’ welfare. The empirical findings contribute to providing statistical and economical validity to the UK Corporate Governance Code 2014 recommendation on the importance of board gender diversity for effective board functioning.

Keywords

Acknowledgements

The authors contributed equally to the paper and their names are alphabetically ordered.

The authors thank Professor Carol Adams (the Editor) and Professor Giovanna Michelon (the Associate Editor) and the two anonymous reviewers for their valuable and constructive comments, which indeed assisted in enhancing the clarity and the quality of the paper.

Citation

Arayssi, M., Dah, M. and Jizi, M. (2016), "Women on boards, sustainability reporting and firm performance", Sustainability Accounting, Management and Policy Journal, Vol. 7 No. 3, pp. 376-401. https://doi.org/10.1108/SAMPJ-07-2015-0055

Publisher

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Emerald Group Publishing Limited

Copyright © 2016, Emerald Group Publishing Limited