Corporate governance mechanisms and corporate social responsibility disclosure: evidence from an emerging market

Abstract

Purpose This study aims to examine the relationship between corporate governance mechanisms, namely, board independence, board size and gender diversity, and the extent of corporate social responsibility (CSR) disclosure for companies listed on the Saudi stock exchange. Design/methodology/approach Data has been extracted from the annual reports of a sample of 67 companies listed on the Saudi Stock Exchange during the period 2014–2019. Three panel data techniques have been used to investigate the association between governance variables and the extent of CSR disclosures after statistically controlling the effects of the size, leverage and profitability of the companies. Findings The results of this study indicate that board independence and board size have positive and significant associations with the extent of CSR disclosures. However, the study finds that the percentage of female representation on the board has a positive effect on the extent of CSR disclosure, but that this effect is not statistically significant. Research limitations/implications The results of this study are limited to the context in which the study was conducted, which is the Saudi stock exchange during the period 2014–2019, and then the generalization of the results may be limited to listed companies operating in a similar social and economic context. Also, the data sources in this study were limited to the annual reports of companies only. Practical implications The results of this study provide some indications for policymakers in Saudi Arabia to take what is necessary to promote corporate governance mechanisms and, therefore, enhance CSR practices. Originality/value This study contributes to the literature on CSR by providing empirical evidence on the impact of corporate governance mechanisms on the extent of CSR disclosure from one of the developing countries, which is Saudi Arabia.