Abstract
The paper examines the influence of gender and board representation on communication of corporate social reporting by Kenyan banks. The descriptive statistical analysis reveals that the level of corporate social disclosure by Kenyan banks is low with a mean of 15%, indicating that disclosure of corporate governance information is not of primary concern to Kenyan banks. In particular, there is a complete lack of disclosure on the categories of Recruitments, Employment of Special Groups, Assistance to Retiring Employees, Employees Productivity and Turnover. The results of multiple regression analysis indicate that board representation can fundamentally improve corporate communication. A higher level of women representation and independent directors greatly improves disclosure.
Similar content being viewed by others
Notes
NEPAD is new initiative undertaken by African countries to address the challenges facing the continent such as, poverty, underdevelopment, peace and security. For further details see http://www.nepad.org/. APRM is a mutually agreed instrument to assess a member country on a number of socio-economic fronts.
Central Bank of Kenya requires all banks to separate the position and role of board chair and CEO, as well as establish board audit committee. Thus, due to the statutory requirements, variables such as board audit committee and board leadership structure are not considered in this study.
With respect to board oversight role, the Central Bank of Kenya risk management guidelines reads; “The board of directors carries the ultimate responsibility of approving and reviewing the credit risk strategy and credit risk policies of the bank. This role is part of the board’s ultimate responsibility of offering overall strategic direction of the bank” (p. 13).
While a total of 40 banks in the sample may appear low, they do represent the entire population facilitating the ease with which to make conclusions about the data.
As one referee points out, ostensibly while it appears greater disclosure occurs with more non-executive directors, it is possible that executive bank directors who give more posts to non-executive directors influence may actually be the ones influencing the levels of disclosures. Further research, particularly through a qualitative paradigm, may shed light on this possibility.
References
Adams, R. B. & Ferreira, D. (2004). Gender diversity in the boardroom, European Corporate Governance Institute, Finance Working Paper No 57.
African Peer Review Mechanism. (2006). Country Review Report of the Republic of Kenya.
Ahmed, K., & Courtis, J. K. (1999). Association between corporate characteristics on mandatory disclosure compliance in annual reports: A meta-analysis. British Accounting Review, 31, 35–61.
Ahmed, K., & Nicholls, D. (1994). The impact of non-financial company characteristics on mandatory disclosure compliance in developing countries: The case of Bangladesh. The International Journal of Accounting, 29(1), 62–77.
Ayuso, S. & Argandona, A. (2007). Responsible corporate governance: Towards a stakeholder board of directors? IESE Business School Working Paper No. 701, July.
Barako, D. G., Hancock, P., & Izan, H. Y. (2006). Factors influencing voluntary corporate disclosure by Kenyan companies. Corporate Governance: An International Review, 14(2), 107–125.
Belal, A. R. (2000). Environmental reporting in developing countries: Empirical evidence from Bangladesh. Eco-Management and Auditing, 7(4), 114–121.
Belal, A. R. (2001). A study of corporate social disclosure in Bangladesh. Managerial Auditing Journal, 16(5), 274–289.
Brennan, N., & McCafferty, J. (1997). Corporate governance practices in Irish companies. Irish Business and Administrative Research, 18, 116–135.
Brown, A. M., Tower, G., & Taplin, R. (2005). Human resources disclosure in the annual reports of Pacific Island countries. Asia Pacific Journal of Human Resources, 43, 252–272.
Brown, A. M., Purushothaman, M., Scharl, A., & Astami, E. W. (2007). Natural environmental disclosures in Pacific Island countries: Analysing the public communication of South Pacific Exchange (SPSE) Entities. The Journal of Accounting, Management and Economics Research, 7(1), 47–68.
Burgess, Z., & Tharenou, P. (2002). Women board directors: Characteristics of the few. Journal of Business Ethics, 37(1), 39–49.
Burke, R. J. (1993). Women on corporate boards of directors. Equal Opportunities International, 12(6), 5–13.
Carter, D. A., Simkins, B. J., & Simpson, W. G. (2003). Corporate governance, board diversity and firm value. The Financial Review, 38, 33–53.
Chen, C. J. P., & Jaggi, B. (2000). Association between independent non-executive directors, family control and financial disclosures in Hong Kong. Journal of Accounting and Public Policy, 19(4–5), 285–310.
Chow, C. W., & Wong-Boren, A. (1987). Voluntary financial disclosure by Mexican corporations. The Accounting Review, 62(3), 533–541.
Cooke, T. E. (1991). An assessment of voluntary disclosure in the annual reports of Japanese corporations. The International Journal of Accounting, 26, 174–189.
Cooke, T. E. (1992). The impact of size, stock market listing and industry type on disclosure in the annual reports of Japanese listed corporations. Accounting and Business Research, 22(87), 229–237.
Deegan, C. (2000). Financial accounting theory. Sydney: McGraw Hill.
Deegan, C., Rankin, M., & Voght, P. (2000). Firms’ disclosure reactions to major social incidents: Australian evidence. Accounting Forum, 24(1), 101–130.
Disu, A., & Gray, R. H. (1998). An exploration of social reporting and MNCs in Nigeria. Social and Environmental Accounting, 18(2), 13–15.
Donaldson, T. (1999). Making stakeholder theory whole. Academy of Management Review, 24(2), 237–241.
Donaldson, T., & Preston, L. E. (1995). The stakeholder theory of the corporation: concepts, evidence, and implications. Academy of Management Review, 20(1), 65–91.
Douglas, A., Doris, J., & Johnson, B. (2004). Corporate social reporting in Irish financial institutions. The TQM Magazine, 16(6), 387–395.
Driver, C., & Thompson, G. (2002). Corporate governance and democracy. Journal of Management and Governance, 6(2), 111–130.
Elkington, J. (1994). Towards the sustainable corporation win-win-win business strategies for sustainable development. California Management Review, 36(2), 90–100.
Eng, L. L., & Mak, Y. T. (2003). Corporate governance and voluntary disclosure. Journal of Accounting and Public Policy, 22, 325–345.
Erhandt, N. L., Werbel, J. D., & Shrader, C. B. (2003). Board of director diversity and firm financial performance. Corporate Governance: An International Review, 11(2), 102–111.
Fama, E. F., & Jensen, M. C. (1983). Agency problem and residual claims. The Journal of Law and Economics, 1983(26), 327–349.
Fields, M. A., & Keys, P. Y. (2003). The emergence of corporate governance from Wall St. to Main St.: Outside directors, board diversity, earnings management, and managerial incentives to bear risk. The Financial Review, 38, 1–24.
Franks, J., Mayer, C., & Renneboog, L. (2001). Who discipline management in poorly performing companies. Journal of Financial Intermediation, 10, 209–248.
Hair, J. F., Anderson, R. E., Tatham, R. L., & Black, W. C. (1995). Multivariate data analysis (4th edn.). NJ, USA: Prentice-Hall, Inc.
Haniffa, R. M., & Cooke, T. E. (2002). Culture, corporate governance and disclosure in Malaysian corporations. Abacus, 38(3), 317–349.
Hossain, M., & Adams, M. (1995). Voluntary financial disclosure by Australian listed companies. Australian Accounting Review, 5(2), 45–55.
Hossain, M., Perera, M. H. B., & Rahman, A. R. (1995). Voluntary disclosure in the annual reports of New Zealand companies. Journal of International Financial Management and Accounting, 6(1), 69–87.
Hossain, M., Tan, L. M., & Adams, M. (1994). Voluntary disclosure in an emerging capital market: Some empirical evidence from companies listed on Kuala Lumpur stock exchange. The International Journal of Accounting, 29(4), 334–351.
Huse, M., & Solberg, A. G. (2006). Gender-related boardroom dynamics: How Scandinavian women make and can make contributions on corporate boards. Women in Management Review, 21(2), 113–130.
Ibrahim, N. A., & Angelidis, J. P. (1994). Effect of board members’ gender on corporate social responsiveness orientation. Journal of Applied Business Research, 10(1), 35–41.
Ismail, K. N., & Chandler, R. (2005). Disclosure in the quarterly reports of Malaysian companies. Financial Reporting, Regulation and Governance, 4(1), 1–26.
Khalid, A. (2005). The association between firm-specific characteristics and disclosure: The case of Saudi Arabia. The Journal of American Academy of Business, 7(1), 2005.
Kisenyi, V., & Gray, R. H. (1998). Social disclosure in Uganda. Social and Environmental Accounting, 18(2), 16–18.
Leung, S. & Horwitz, B. (2004). Director ownership and voluntary segment disclosure: Hong Kong evidence. Journal of International Financial Management and Accounting, 15(3).
Moyo, T., & Rohan, S. (2006). Corporate citizenship in the context of the financial services sector: What lessons from the Financial Sector Charter? Development Southern Africa, 23(2), 289–303.
O’Dwyer, B. (2002). Managerial perceptions of corporate social disclosure: An Irish stories. Accounting, Auditing and Accountability Journal, 15(3), 406–436.
Owusu-Ansah, S. (1998). The impact of corporate attributes on the extent of mandatory disclosure and reporting by listed companies in Zimbabwe. The International Journal of Accounting, 33(5), 605–631.
Pajo, K., McGregor, J., & Cleland, J. (1997). Profiling the pioneers: Women directors on New Zealand corporate boards. Women in Management Review, 12(5), 174–181.
Ratanajongkol, S., Davey, H., & Low, M. (2006). Corporate social reporting in Thailand: The news is all good and increasing. Qualitative Research in Accounting and Management, 3(1), 67–83.
Shilton, J., McGregor, J., & Tremaine, M. (1996). Feminizing the board: A study of the effect of corporatization on the number and status of women directors in New Zealand companies. Women in Management Review, 11(3), 20–30.
Siciliano, J. I. (1996). The relationship of board member disversity and organisation performance. Journal of Business Ethics, 15(12), 1313–1320.
The Centre for Corporate Governance. (2005). Guidelines on reporting and disclosure in Kenya.
The Centre for Corporate Governance. (2004). A study of corporate governance practices in the commercial banking sector in Kenya.
Thomas, B. (2001). Women at the top in British retailing: A longitudinal analysis. The Service Industries Journal, 21(3), 1–12.
Tsang, E. W. K. (1998). A longitudinal study of corporate social reporting in Singapore: The case of the banking, food and beverages and hotel industries. Accounting, Auditing and Accountability Journal, 11(3), 624–635.
Wallace, R. S. O. (1988). Corporate financial reporting in Nigeria. Accounting and Business Research, 18(72), 352–362.
Wallace, R. S. O., & Naser, K. (1995). Firm-specific determinants of comprehensiveness of mandatory disclosure in the corporate annual reports of firms on the stock exchange of Hong Kong. Journal of Accounting and Public Policy, 14(4), 311–368.
Wallace, R. S. O., Naser, K., & Mora, A. (1994). The relationship between the comprehensiveness of corporate annual reports and firm specific characteristics in Spain. Accounting and Business Research, 25(97), 41–53.
Walt, N., & Ingley, C. (2003). Board dynamics and the influence of Professional background, gender and ethnic diversity of directors. Corporate Governance: An International Review, 11(3), 218–234.
Williams, S. M. (2001). Is intellectual capital performance and disclosure practices related? Journal of Intellectual Capital, 2(3), 192–203.
Acknowledgements
The authors would like to thank three anonymous referees and the editor for their helpful comments.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Barako, D.G., Brown, A.M. Corporate social reporting and board representation: evidence from the Kenyan banking sector. J Manage Gov 12, 309–324 (2008). https://doi.org/10.1007/s10997-008-9053-x
Received:
Revised:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10997-008-9053-x