Skip to main content
SpringerLink
Log in

Corporate Governance mechanisms as drivers that enhance the credibility and usefulness of CSR disclosure

  • Published:
Journal of Management and Governance Aims and scope Submit manuscript

Abstract

The aim of this paper is to examine what kinds of CG mechanisms (institutional, firm or group level) are driving getting an Assurance or a GRI application level, like CSR disclosure decisions linked with credibility and usefulness of the information disclosed, in the particular context of energy companies. Previous evidence is scarce and does not jointly consider all levels of CG mechanisms. Our sample is composed by 176 energy companies worldwide which currently report about CSR through a sustainability report. On the basis of our findings, we could support the idea that the credibility of the CSR report of the utilities companies will be greater if the company listed in a Relation-Based country has an Assurance report. In addition, those companies that have a concentrated ownership and the fewer insiders sitting in the BoD present more probabilities of having an Assurance. Moreover, the usefulness of the CSR information provided by this kind of firms will be higher, the greater the efficiency of the BoD will be. The enhancement of the credibility and the usefulness of the information reported is essential for companies involved in this sector due to the frequent claim of window-dressing behaviours.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Notes

  1.  More details are reported in Table 1.

  2.  Five relevant aspects of each environment are considered: the political rights, the rule of law, free press, the quality of accounting standards, and the level of general trust.

  3.  The Thomson Reuters ASSET4 Database was already used by Ioannou and Serafeim (2012). This database is frequently used by investors to build their sustainability reports. It provides a collection of indicators (valued from 0 to 100) organised into four pillars: Social Scores, Environmental Scores, Corporate Governance Scores and, finally, Economic Scores.

  4.  Since ASSET4 database is used, the institutions included in our sample are companies listed in the stock markets of all markets. Most of them are private, although we could find some mixed companies included. Finally, data about pure public firms or SMEs are not available, but these data will be most of the times not comparable to those reported by listed firms.

  5.  The DataStream database is one of the largest databases of companies´ financial and non-financial data.

  6.  In this sense, companies that decide to prepare a CSR report based on GRI guidelines could get an “application level” (each level is labelled as A, B, or C) which reflects to what extent each company’s report follows the guidelines. This level can be self-reported or checked by a third-party or the GRI.

  7.  Between the potential Firm level CG mechanisms highlighted by Jain and Jamali (2016), we have chosen these two variables due to their availability in the database. Alternative and additional variables are not available through the databases and are implying an handle collection of this data with an high risk of subjectivity and a large risk that the information are not available and not comparable within the different countries composing the sample.

  8.  There have been considered “mandatory” those countries that their listed companies have to publish a CSR report or Integrated report in 2012: Brazil, Denmark, Finland, France, South Africa and Malaysia. Other regulations have not been included.

References

  • Adams, C. A. (2002). Internal organisational factors influencing corporate social and ethical reporting. Accounting, Auditing & Accountability Journal, 15(2), 223–250.

    Article  Google Scholar 

  • Alonso-Almeida, M. M., Llach, J., & Marimon, F. (2014). A closer look at the ‘Global Reporting Initiative’ sustainability reporting as a tool to implement environmental and social policies: A worldwide sector analysis. Corporate Social Responsibility and Environmental Management, 21(6), 318–335.

    Article  Google Scholar 

  • Amran, A., Lee, S. P., & Devi, S. S. (2014). The influence of governance structure and strategic corporate social responsibility toward sustainability reporting quality. Business Strategy and the Environment, 23(4), 217–235.

    Article  Google Scholar 

  • Aras, G., & Crowther, D. (2008). Culture and Corporate Governance. Leicester, UK: Social Responsibility Research Network.

    Google Scholar 

  • Barako, D., & Brown, A. (2008). Corporate social reporting and board representation: Evidence from the Kenyan banking sector. Journal of Management and Governance, 12(4), 309–324.

    Article  Google Scholar 

  • Baughn, C. C., Bodie, N. L., & McIntosh, J. C. (2007). Corporate social and environmental responsibility in Asian countries and other geographical regions. Corporate Social Responsibility and Environmental Management, 14(4), 189–205.

    Article  Google Scholar 

  • Boiral, O. (2013). Sustainability reports as simulacra? A counter-account of A and A+ GRI reports. Accounting, Auditing & Accountability Journal, 26(7), 1036–1071.

    Article  Google Scholar 

  • Boyd, B. K. (1994). Board control and CEO compensation. Strategic Management Journal, 15, 335–344.

    Article  Google Scholar 

  • Brammer, S. J., & Pavelin, S. (2006). Corporate reputation and social performance: The importance of fit. Journal of Management Studies, 43(3), 435–455.

    Article  Google Scholar 

  • Brennan, N. (2006). Boards of directors and firm performance: Is there an expectations gap? Corporate Governance: An International Review, 14(6), 577–593.

    Article  Google Scholar 

  • Burlea, A. S., & Popa, I. (2013). Legitimacy theory. In S. O. Idowu, N. Capaldi, L. Zu, & A. D. Gupta (Eds.), Encyclopedia of corporate social responsibility (pp. 1579–1584). Berlin: Springer.

    Chapter  Google Scholar 

  • Castelo-Branco, M., Delgado, C., Ferreira, S., & Pereira, T. (2014). Factors influencing the assurance of sustainability reports in the context of the economic crisis in Portugal. Managerial Auditing Journal, 29(3), 237–252.

    Article  Google Scholar 

  • Chelli, M., Durocher, S., & Richard, J. (2014). France’s new economic regulations: insights from institutional legitimacy theory. Accounting, Auditing & Accountability Journal, 27(2), 283–316.

    Article  Google Scholar 

  • Chen, S., & Bouvain, P. (2009). Is corporate responsibility converging? A comparison of corporate responsibility reporting in the USA, UK, Australia, and Germany. Journal of Business Ethics, 87, 299–317.

    Article  Google Scholar 

  • Cheng, M. M., Green, W. J., & Konn, J. C. W. (2015). The impact of strategic relevance and assurance of sustainability indicators on investors’ decisions. Auditing: A Journal of Practice and Theory, 34(1), 131–162.

    Article  Google Scholar 

  • Cho, C. H., Michelon, G., Patten, D. M., & Roberts, R. W. (2014). CSR report assurance in the USA: An empirical investigation of determinants and effects. Sustainability Accounting, Management and Policy Journal, 5(2), 130–148.

    Article  Google Scholar 

  • Clarkson, P. M., Overell, M. B., & Chapple, L. (2011). Environmental reporting and its relation to corporate environmental performance. Abacus, 47(1), 27–60.

    Article  Google Scholar 

  • Crowther, D. (2000). Corporate reporting, stakeholders and the internet: Mapping the new corporate landscape. Urban Study, 37(10), 1837–1848.

    Article  Google Scholar 

  • De Andrés, P., Azofra, V., & Lopez, F. (2005). Corporate boards in OECD countries: size, composition, functioning and effectiveness. Corporate Governance: An International Review, 13(2), 197–210.

    Article  Google Scholar 

  • De Beelde, I., & Tuybens, S. (2015). Enhancing the credibility of reporting on corporate social responsibility in Europe. Business Strategy and the Environment, 24(3), 190–216.

    Article  Google Scholar 

  • Deegan, C. (2002). The legitimating effect of social and environmental disclosures—A theoretical foundation. Accounting, Auditing & Accountability Journal, 15(3), 281–311.

    Google Scholar 

  • Dienes, D., Sassen, R., & Fischer, J. (2016). What are the drivers of sustainability reporting? A systematic review. Sustainability Accounting, Management and Policy Journal, 7(2), 154–189.

    Article  Google Scholar 

  • DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147–160.

    Article  Google Scholar 

  • Doidge, C., Karolyi, A., & Stulz, R. M. (2007). Why do countries matter so much for corporate governance? Journal of Financial Economics, 86(1), 1–39.

    Article  Google Scholar 

  • Freeman, R.E. (1984). Strategic management: A stakeholder approach. Pitman.

  • Fernandez-Feijoo, B., Romero, S., & Ruiz, S. (2012). Does board gender composition affect corporate social responsibility reporting? International Journal of Business and Social Science, 3(1), 31–38.

    Google Scholar 

  • Fernández-Feijoo, B., Romero, S., & Ruiz, S. (2012). Measuring quality of sustainability reports and assurance statements: Characteristics of the high quality reporting companies. International Journal of Society Systems Science, 4(1), 5–27.

    Article  Google Scholar 

  • Fifka, M. S. (2013). Corporate responsibility reporting and its determinants in comparative perspective—A review of the empirical literature and a meta-analysis. Business Strategy and the Environment, 22(1), 1–35.

    Article  Google Scholar 

  • Frías-Aceituno, J. V., Rodríguez-Ariza, L., & García-Sánchez, I. M. (2013). The role of the board in the dissemination of integrated corporate social reporting. Corporate Social Responsibility and Environmental Management, 20(4), 219–233.

    Article  Google Scholar 

  • Galbreath, J. (2016). The Impact of board structure on corporate social responsibility: A temporal view. Business Strategy and the Environment. https://doi.org/10.1002/bse.1922.

    Google Scholar 

  • Gandía, J. L. (2008). Determinants of interest-based corporate governance disclosure by Spanish listed companies. Online Information Review, 32(6), 791–817.

    Article  Google Scholar 

  • García-Benau, M. A., Sierra-García, L., & Zorio, A. (2013). Financial crisis impact on sustainability reporting. Management Decision, 51(7), 1528–1542.

    Article  Google Scholar 

  • García-Sánchez, I. M., Rodríguez-Domínguez, L., & Gallego-Álvarez, I. (2011). Corporate governance and strategic information on the internet. Accounting, Auditing & Accountability Journal, 24(4), 471–501.

    Article  Google Scholar 

  • Global Reporting Initiative (2000–2006). RG, Sustainability Reporting Guidelines, Version 3.0, GRI.

  • Graves, S. B., & Waddock, S. A. (1994). Institutional owners and corporate social performance. Academy of Management Journal, 37(4), 1034–1046.

    Google Scholar 

  • Gray, R., Owen, D., & Adams, C. (1996). Accounting & accountability: Changes and challenges in corporate social and environmental reporting. Prentice Hall.

  • Gray, R., Javad, M., Power, D. M., & Sinclair, C. D. (2001). Social and environmental disclosure and corporate characteristics: a research note and extension. Journal of Business Finance & Accounting, 28(3–4), 327–356.

    Article  Google Scholar 

  • Guthrie, J., & Parker, L. D. (1989). Corporate social reporting: A rebuttal of legitimacy theory. Accounting and Business Research, 19(76), 343–352.

    Article  Google Scholar 

  • Hahn, R., & Kühnen, M. (2013). Determinants of sustainability reporting: a review of results, trends, theory, and opportunities in an expanding field of research. Journal of Cleaner Production, 59, 5–21.

    Article  Google Scholar 

  • Haniffa, R. M., & Cooke, T. E. (2005). The impact of culture and governance on corporate social reporting. Journal of Accounting and Public Policy, 24(5), 391–430.

    Article  Google Scholar 

  • Hillman, A. J., & Dalziel, T. (2003). Boards of directors and firm performance: Integrating agency and resource dependence perspectives. Academy of Management Review, 28(3), 383–396.

    Article  Google Scholar 

  • Hodge, K., Subramaniam, N., & Stewart, J. (2009). Assurance of sustainability reports: impact on report users’ confidence and perceptions of information credibility. Australian Accounting Review, 19(3), 178–194.

    Article  Google Scholar 

  • Ioannou, I., & Serafeim, G. (2012). What drives corporate social performance? The role of nation-level institutions. Journal of International Business Studies, 43(9), 834–864.

    Article  Google Scholar 

  • Jain, T., & Jamali, D. (2016). Looking inside the black box: The effect of corporate governance on corporate social responsibility. Corporate Governance: An International Review, 24(3), 253–273.

    Article  Google Scholar 

  • Jensen, M. C. (1993). The modern industrial revolution, exit, and the failure of internal control systems. The Journal of Finance, 48(3), 831–880.

    Article  Google Scholar 

  • Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behaviour, agency costs and ownership structure. Journal of Financial Economics, 3, 305–360.

    Article  Google Scholar 

  • Karamanou, L., & Vafeas, N. (2005). The association between corporate boards, audit committees and management earnings forecasts: An empirical analysis. Journal of Accounting Research, 43(3), 453–486.

    Article  Google Scholar 

  • 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.

    Article  Google Scholar 

  • Kent, P., & Stewart, J. (2008). Corporate governance and disclosures on the transition to international financial reporting standards. Accounting and Finance, 48(4), 649–671.

    Google Scholar 

  • Klapper, L. F., & Love, I. (2004). Corporate governance, investor protection, and performance in emerging markets. Journal of Corporate Finance, 10(5), 703–728.

    Article  Google Scholar 

  • Kolk, A., & Perego, P. (2010). Determinants of the adoption of sustainability assurance statements: An international investigation. Business Strategy and the Environment, 19(3), 182–198.

    Google Scholar 

  • KPMG. (2013a). KPMG international survey of corporate responsibility reporting 2013. Amsterdam: KPMG International Global Sustainability Service.

    Google Scholar 

  • KPMG. (2013b). Carrots and Sticks-Sustainability reporting policies worldwide—today’s best practice, tomorrow’s trends. Amsterdam: KPMG International Global Sustainability Service.

    Google Scholar 

  • KPMG. (2015). KPMG international survey of corporate responsibility reporting 2015. Amsterdam: KPMG International Global Sustainability Service.

    Google Scholar 

  • Lattemann, C., Fetscherin, M., Alon, I., Li, S., & Schneider, A. M. (2009). CSR communication intensity in Chinese and Indian multinational companies. Corporate Governance: An International Review, 17(4), 426–442.

    Article  Google Scholar 

  • Legendre, S., & Coderre, F. (2013). Determinants of GRI G3 application levels: The case of the fortune global 500. Corporate Social Responsibility and Environmental Management, 20(3), 182–192.

    Article  Google Scholar 

  • Li, S. (2009). Managing international business in relation-based versus rule-based countries. New York: Business Expert Press.

    Book  Google Scholar 

  • Li, J., & Harrison, J. R. (2008a). National culture and the composition and leadership structure of boards of directors. Corporate Governance: An International Review, 16(5), 375–385.

    Article  Google Scholar 

  • Li, J., & Harrison, J. R. (2008b). Corporate governance and national culture: A multi-country study. Corporate Governance, 8(5), 607–621.

    Article  Google Scholar 

  • Li, S., Park, S. H., & Li, S. (2004). The great leap forward: The transition from relation-based governance to rule-based governance. Organizational Dynamics, 33(1), 63–78.

    Article  Google Scholar 

  • Mahoney, L. S., Thorne, L., Cecil, L., & LaGore, W. (2013). A research note on standalone corporate social responsibility reports: Signaling or greenwashing? Critical Perspectives on Accounting, 24(4), 350–359.

    Article  Google Scholar 

  • Mallin, C., Michelon, G., & Raggi, D. (2013). Monitoring intensity and stakeholders’ orientation: How does governance affect social and environmental disclosure. Journal of Business Ethics, 114(1), 29–43.

    Article  Google Scholar 

  • Margolis, J. D., & Walsh, J. P. (2003). Misery loves companies: Rethinking social initiatives by business. Administrative Science Quarterly, 48(2), 268–305.

    Article  Google Scholar 

  • Martínez-Ferrero, J., & García-Sánchez, I. M. (2017). Sustainability assurance and assurance providers: Corporate governance determinants in stakeholder-oriented countries. Journal of Management & Organization. https://doi.org/10.1017/jmo.2016.65.

    Google Scholar 

  • Martínez-Ferrero, J., Garcia-Sanchez, I. M., & Cuadrado-Ballesteros, B. (2015). Effect of financial reporting quality on sustainability information disclosure. Corporate Social Responsibility and Environmental Management, 22(1), 45–64.

    Article  Google Scholar 

  • Michelon, G., & Parbonetti, A. (2012). The effect of corporate governance on sustainability disclosure. Journal of Management and Governance, 16(3), 477–509.

    Article  Google Scholar 

  • Michelon, G., Pilonato, S., & Ricceri, F. (2015). CSR reporting practices and the quality of disclosure: An empirical analysis. Critical Perspectives on Accounting, 33, 59–78.

    Article  Google Scholar 

  • Michelon, G., Pilonato, S., Ricceri, F., & Roberts, R. W. (2016). Behind camouflaging traditional and innovative theoretical perspectives in social and environmental accounting research. Sustainability Accounting, Management and Policy Journal, 7(1), 2–25.

    Article  Google Scholar 

  • Miras, M. M., & Escobar, B. (2016). Does the institutional environment affect CSR disclosure? The role of governance. Revista de Administracao de Empresas, 56(6), 641–654.

    Article  Google Scholar 

  • Miras, M. M., Escobar, B., & Carrasco, A. (2014). Are Spanish listed firms betting on CSR during the crisis? Evidence from the agency problem. Business and Management Research, 3(1), 85–95.

    Article  Google Scholar 

  • Moneva, J. M., & Llena, F. (2000). Environmental disclosures in the annual reports of large companies in Spain. European Accounting Review, 9(1), 7–29.

    Article  Google Scholar 

  • Moroney, R., Windsor, C., & Aw, Y. T. (2012). Evidence of assurance enhancing the quality of voluntary environmental disclosures: An empirical analysis. Accounting & Finance, 52(3), 903–939.

    Article  Google Scholar 

  • Nikolaeva, R., & Bicho, M. (2011). The role of institutional and reputational factors in the voluntary adoption of corporate social responsibility reporting standards. Journal of the Academy of Marketing Science, 39(1), 136–157.

    Article  Google Scholar 

  • Owen, D. L., Swift, T. A., Humphrey, C., & Bowerman, M. (2000). The new social audits: accountability, managerial capture or the agenda of social champions? European Accounting Review, 9(1), 81–98.

    Article  Google Scholar 

  • Patten, D. M. (2002). The relation between environmental performance and environmental disclosure: a research note. Accounting, Organizations and Society, 27(8), 763–773.

    Article  Google Scholar 

  • Perego, P., & Kolk, A. (2012). Multinationals’ accountability on sustainability: The evolution of third-party assurance of sustainability reports. Journal of Business Ethics, 110(2), 173–190.

    Article  Google Scholar 

  • Pérez, A., García, M. M., & López, C. (2015). Corporate reputation in the spanish context: an interaction between reporting to stakeholders and industry. Journal of Business Ethics, 129(3), 733–746.

    Article  Google Scholar 

  • Peters, G. F., & Romi, A. M. (2015). The association between sustainability governance characteristics and the assurance of corporate sustainability reports. Auditing: A Journal of Practice and Theory, 34(1), 163–198.

    Article  Google Scholar 

  • Pflugrath, G., Roebuck, P., & Simnett, R. (2011). Impact of assurance and assurer’s professional affiliation on financial analysts’ assessment of credibility of corporate social responsibility information. Auditing: A Journal of Practice & Theory, 30(3), 239–254.

    Article  Google Scholar 

  • Prado-Lorenzo, J. M., & García-Sánchez, I. M. (2010). The role of the board of directors in disseminating relevant information on greenhouse gases. Journal of Business Ethics, 97, 391–424.

    Article  Google Scholar 

  • Rodríguez-Ariza, L., Frías-Aceituno, J. V., & García-Rubio, R. (2014). El consejo de administración y las memorias de sostenibilidad. Revista de Contabilidad- Spanish Accounting Review, 17(1), 5–16.

    Article  Google Scholar 

  • Rodriguez-Dominguez, L., Gallego-Alvarez, I., & Garcia-Sanchez, I. M. (2009). Corporate governance and code of ethics. Journal of Business Ethics, 90(2), 187–202.

    Article  Google Scholar 

  • Ruhnke, K., & Gabriel, A. (2013). Determinants of voluntary assurance on sustainability reports: An empirical analysis. Journal of Business Economics, 83(9), 1063–1091.

    Article  Google Scholar 

  • Said, R., Zainuddin, Y. H., & Haron, H. (2009). The relationship between corporate social responsibility disclosure and corporate governance characteristics in Malaysian public listed companies. Social Responsibility Journal, 5(2), 212–226.

    Article  Google Scholar 

  • Samaha, K., Dahawy, K., Hussainey, K., & Stapleton, P. (2012). The extent of corporate governance disclosure and its determinants in a developing market: The case of Egypt. Advances in Accounting, 28(1), 168–178.

    Article  Google Scholar 

  • Scott, W. R., & Meyer, J. W. (1994). Institutional environments and organizations: Structural complexity and individualism. Sage.

  • Sethi, S. P., Martell, T. F., & Demir, M. (2015). Enhancing the role and effectiveness of corporate social responsibility (CSR) reports: The missing element of content verification and integrity assurance. Journal of Business Ethics. https://doi.org/10.1007/s10551-015-2862-3.

    Google Scholar 

  • Simnett, R., Vanstraelen, A., & Chua, W. F. (2009). Assurance on sustainability reports: An international comparison. The Accounting Review, 84(3), 937–967.

    Article  Google Scholar 

  • Sweeney, L., & Coughlan, J. (2008). Do different industries report corporate social responsibility differently? An investigation through the lens of stakeholder theory. Journal of Marketing Communications, 14(2), 113–124.

    Article  Google Scholar 

  • Thorne, L., Mahoney, L. S., & Manetti, G. (2014). Motivations for issuing standalone CSR reports: A survey of Canadian firms. Accounting, Auditing & Accountability Journal, 27(4), 686–714.

    Article  Google Scholar 

  • Tschopp, D., & Nastanski, M. (2014). The harmonization and convergence of corporate social responsibility reporting standards. Journal of Business Ethics, 125(1), 147–162.

    Article  Google Scholar 

  • Ullmann, A. A. (1985). Data in search of a theory: A critical examination of the relationships among social performance, social disclosure, and economic performance of US firms. Academy of Management Review, 10(3), 540–557.

    Google Scholar 

  • Vries, G., Terwel, B. W., Ellemers, N., & Daamen, D. D. L. (2015). Sustainability or profitability? How communicated motives for environmental policy affect public perceptions of corporate greenwashing. Corporate Social Responsibility and Environmental Management, 22(3), 142–154.

    Article  Google Scholar 

  • Young, S., & Marais, M. (2012). A multi-level perspective of CSR reporting: The implications of national institutions and industry risk characteristics. Corporate Governance: An International Review, 20(5), 432–450.

    Article  Google Scholar 

  • Zorio, A., García-Benau, M. A., & Sierra, L. (2013). Sustainability development and the quality of assurance reports: Empirical evidence. Business Strategy and the Environment, 22(7), 484–500.

    Article  Google Scholar 

Download references

Acknowledgments

The authors would like to thank Giovanna Michelon and also the two anonymous reviewers for their helpful comments on earlier versions of the manuscript. This study was funded by the Ministry of Economy of Spain “ECO2015-69637-R: Women taking business decisions: symbols or effective power?”. In addition, this research was also funded by Vice-rectorate of Research Purposes of the University of Seville through a mobility Grant given to Maria del Mar Miras for visiting the Università degli Studi di Siena.

Author information

Authors and Affiliations

  1. Department of Financial Economics and Operations Management, Universidad de Sevilla, Avd. Ramón y Cajal 1, 41018, Seville, Spain

    María del Mar Miras-Rodríguez

  2. Department of Business and Law, Università degli Studi di Siena, Piazza San Francesco, 7, Siena, 53100, Italy

    Roberto Di Pietra

Authors
  1. María del Mar Miras-Rodríguez
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Roberto Di Pietra
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to María del Mar Miras-Rodríguez.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Miras-Rodríguez, M., Di Pietra, R. Corporate Governance mechanisms as drivers that enhance the credibility and usefulness of CSR disclosure. J Manag Gov 22, 565–588 (2018). https://doi.org/10.1007/s10997-018-9411-2

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10997-018-9411-2

Keywords

Search

Navigation