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AbstractThis paper focuses on levels of sustainability assurance and the impact countries have on them. The level, the "how" aspect, indicates the nature and extent of the work performed by practitioners and, therefore, the degree of confidence that stakeholders should have in the assured sustainability report. This paper examines how country factors influence the level of assurance of sustainability reports—limited/moderate vs. reasonable/high assurance—from a complementary and substitutive perspective. The paper proposes a regression model in which countries differ not only in how they protect stakeholders but also in their legal public enforcement. For a sample of international firms for the period 2007–2016, the paper's evidence supports the idea that a reasonable/high level of assurance is provided in the assurance statements of firms that operate in countries with systems orientated towards improving sustainability transparency—complementary mechanism—and lower levels of public enforcement—substitute mechanism.

PurposeThis study aims to understand whether board diversity has a direct effect on "corporate social responsibility (CSR)" performance of companies or not. In addition, this study also aims to examine the moderation effect of age and education level of female board members on the relationship between board gender diversity and CSR performance.Design/methodology/approachA "corporate social performance (CSP)" measurement instrument was designed to conduct a content analysis that analyzes the CSR disclosure in the annual reports of Turkish companies listed on the "500 biggest Turkish companies" report of "Istanbul Chamber of Industry (ISO)" in 2015. The data coming from content analysis of 117 company reports were analyzed by using hierarchical regression analysis.FindingsDespite of supporting the increase in CSR performance when there is a greater presence of independent board members in an organization, evidence supports that ratios of female and foreign board members do not have any significant effect on CSR performance.Originality/valueThe study contributes to previous literature on board diversity and CSR performance as follows. First, this paper contributes to previous literature by examining and testing independent, female and foreign board members as a new antecedent of CSR performance in research on Turkey; second, by examining a sample of the "500 biggest Turkish companies" and providing some tips about both Turkey and other developing countries; third, by reopening the debate about the positive impact of a greater presence of independent directors on board on CSR performance and the non-effect of female and foreign board members. Finally, it also offers a partially new CSP measurement instrument based on content analysis.

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AbstractThis paper examines how independent directors behave with respect to sustainability disclosure, attending to its comparability, utility, and reliability, and the moderating effect of the level of socially responsible performance. A large sample of international companies from the period 2006–2014 was used to develop our models of analysis. This research evidences that independent directors show an initial opposition to this voluntary disclosure policy unless there is a higher sustainable development and performance. Several disclosure aspects are examined where, first, utility and comparability of sustainability disclosure are fomented by independent directors only under a greater social and environmental performance. Second, this performance reinforces the positive orientation of independents towards the external assurance of social and environmental disclosure. Thus, the initial opposition of independent directors towards a sustainability disclosure is avoided if there is a greater responsible performance that reduces their reputation risks associated with potentially misleading information. Copyright © 2018 John Wiley & Sons, Ltd and ERP Environment

AbstractThis study analyses the relationship between sustainability reporting and firm risk by investigating the correlation between sustainability restatements and stock return volatility. Regression models, employed on a sample of 1580 sustainability reports by 353 European companies, evidence the risk relevance of restatement issuance. Investors interpret different signals, reacting with diverse feedbacks, based on the type of revision and whether the firm belongs to controversial industries or not. In general, restatements decrease firm risk when their purpose is to update reporting methodologies, while the opposite effect occurs when they amend errors and omissions. For companies operating in controversial industries, both types of sustainability restatement increase firm risk, with a stronger correlation when revisions redress errors or omissions. Given that sustainability reporting is still characterised by frequent standard and methodology updates, that often lead to the issuance of restatements, this study presents insights for companies and investors.

AbstractThis study attempts to improve the understanding of how factors related to the board of directors in emerging countries from America determine a firm's sustainability performance. This paper examines the effect of board cultural diversity and the mediating effect of the existence of a corporate social responsibility (CSR) committee. To test our objectives, we carried out a sample analysis on data gathered between 2012 and 2018 from a group of firms located in Argentina, Brazil, Chile and Mexico. The results suggest that board cultural diversity promotes a firm's commitment toward sustainability issues and leads to higher social and environmental performance. Moreover, the results show the mediating effect of the existence of a CSR committee, where a positive impact on sustainability performance appears to be linked to board cultural diversity.

AbstractThe purpose of this paper is to shed light on the effect of corporate social responsibility performance on tax avoidance. It also examines whether family ownership affects tax avoidance practices by socially responsible performance. Based on an international sample of 6,442 firm‐year observations from 2006 to 2014, we use several panel‐data regression models. We find that social and environmental performance is negatively related with tax avoidance so that firms with a greater socially responsible performance show a lower tax‐saving practices. However, we find that this negative relation is lower in family‐owned firms, what suggests that despite the fact that family firms show a greater socially responsible behavior aimed to preserve their socioemotional endowments, family ownership is positively associated with tax avoidance practices.

AbstractThe aim of this article is to evaluate the performance of investment portfolios built under environmental, social, and corporate governance (ESG) criteria or socially responsible portfolios, based on companies listed on three representative stock exchanges in Latin America (Chile, Colombia, and Peru) for the period 2011–2019. The performance of portfolios comprising high‐ESG stocks was compared with that of low‐ESG performance portfolios and with portfolios of companies that did not report such information, as well as against the main index of each market. A novel utility function was defined that allows evaluating different degrees of propensity to responsible investment, based on which restricted optimization processes were conducted to build efficient frontiers that combine traditional mean–variance aspects with ESG elements. Based on these frontiers, a measure of the psychic dividend or ESG utility premium generated by investing in high‐ESG portfolios is proposed. Results obtained in risk and return rates and Jensen, Treynor, alpha, VaR, tracking error, information coefficient, efficient frontiers, and utility premium show the value of following responsible investment criteria and the clear disadvantages in investing in companies that do not report ESG information. This research contributes to the debate on the importance of socially responsible investment guided by ESG criteria, filling a gap in the literature regarding Latin America and confirming the better performance by calculating a wide range of portfolio evaluation indicators. We proposed a novel approach to optimization with sustainability constraints, incorporating the utility premium derived from investing in stocks with better ESG performance.

AbstractRecent studies have investigated how women on boards impact corporate social responsibility reporting, a voluntary strategy clearly influenced by board composition in general and gender diversity in particular. However, this research goes further and proposes to provide evidence about how female directors influence gender issues reporting. Moreover, this research also examines the moderating effect between gender diversity on boards and country‐level factors related to stakeholder orientation. For an international sample of 8,609 firm‐year observations from 2007 to 2016 and by regressing several logit models for panel data, it was found that female directors increase the probability of voluntary reporting on gender issues. Moreover, the findings also suggest that institutional forces related to stakeholder pressures reinforce this effect; the greater reporting on gender issues that female directors achieve is even higher when firms are located in stakeholder‐oriented countries.

AbstractBuilding upon impression management, the objective of this paper is to analyse the enhancement or obfuscation strategies of reporting corporate social responsibility (CSR) information. Concretely, this paper aims to examine the association between the CSR performance of the firm and the socially responsible disclosure strategy adopted by managers to obtain insights into the factors associated with balance, accuracy, clarity, comparability, and reliability of information. A sample of 273 international companies from the year 2007 to 2014 was used to develop our models of analysis. The results show that, according to an obfuscation disclosure strategy, firms with the worst CSR performance disclose information that is less balanced, accurate, and clear; moreover, these reports incorporate more optimistic, longer, and less readable information. Within the realm of impression‐management strategy, firms use thematic content and verbal tone manipulation as well as quantity and syntactical reading as impression‐management tools.

PurposeThis paper aims to analyse the use of level of debt as an external control mechanism against an entrenchment strategy based on corporate social responsibility (CSR) practices.Design/methodology/approachThe authors use a database of 1,916 international companies for the years 2002 to 2010.FindingsThe evidence obtained confirms in a context of asymmetric information, bounded rationality and divergent interests, the use of debt as a control mechanism of managers' discretionary comportment. In other words, CSR practices can be used by managers as an entrenchment strategy and self-defence with the aim of decreasing the possibility of being identified by those shareholders and stakeholders whose interests have been damaged. In this context, the market demands higher debt levels to solve agency frictions, playing an active role in monitoring the management. Moreover, the demand of higher debt as a control mechanism that minimises the expropriation risk by managers through CSR is lower in contexts of greater investor protection.Originality/valueThe findings reveal that CSR engagement can be explained by the hypothesis of being a strategy of entrenchment and self-defence. Overall, this study differs from previous literature in this field by taking an alternative approach to CSR practices, in contrast to the conventional wisdom of the benefits of CSR practices. The authors contribute by empirically testing the theoretical model proposed by Cespa and Cestone (2007) who suggest the discretionary use of CSR from an agency perspective. They also give empirical relief showing the use of CSR as an entrenchment strategy. Moreover, they demonstrate that the capital market of debt decreases in a context with a greater degree of investor protection, likewise under CSR promoted as an entrenchment tool, the demand for debt as a disciplinary mechanism is less necessary to control managers. In addition, the study is enriched by the database analysis.

AbstractThis study adds clarity to inconclusive results in previous literature about the link between board characteristics and the level of social responsibility performance by using fuzzy set qualitative comparative analysis. Specifically, we propose a new holistic framework based on the complexity theory. From a sample of 471 non‐financial companies from the USA for the period 2008–2010, our findings support the four tenets of complexity theory: equifinality, complexity, asymmetry, and causal asymmetry. More concretely, they suggest that CSR performance depends on a complex configuration of some board characteristics, such as size, independency, diversity and activity, and other corporate attributes (i.e., company size, leverage, and growth opportunities). These factors play a key role as the ingredients of the recipe and, in a proper combination, contribute to obtaining high levels of social responsibility performance. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment

ABSTRACTThe main focus in this study is on analyzing the effect that voluntary information disclosure concerning corporate social responsibility (CSR) has on information asymmetry and its evidence in the stakeholder protection context. The use of the generalized method of moments (GMM) estimator for an international sample of 575 for the period 2003 to 2009, highlights how voluntary disclosure regarding CSR aspects reduces the problems of asymmetric information between the different market agents, which is especially important in environments characterized by a strong focus and commitment to stakeholders. Moreover, voluntary disclosure of information could arise from the existence of private information and agency conflicts. Therefore and in addition, this evidence is complemented by showing the bidirectional relationship between voluntary disclosure and asymmetric information in such environments. Thus, greater asymmetric information leads to higher voluntary information disclosure practices, which are able to reduce the agency problem in environments characterized by strong socially responsible commitment. Copyright © 2015 John Wiley & Sons, Ltd and ERP Environment

AbstractInterest in corporate social responsibility (CSR) information has increased in recent years. This has led companies to set aside the classic economic view and to adopt the 'triple bottom line', reporting social, environmental, and financial information, in order to satisfy their stakeholders' needs.Companies that provide high quality financial information tend to be more conservative in their accounting and less inclined to carry out unethical practices such as earnings management. Accordingly, they are more socially responsible. The aim of this paper is to analyse the relationship between financial reporting quality and the quality of CSR information. To do so, we studied a sample composed of 747 international listed non‐financial companies for the period 2002–2010. The results obtained from a Tobit method for panel data show that conservative companies, with a high level of accruals quality and/or those that carry out earnings management practices to a lesser extent, report high quality financial information and, moreover, high quality CSR information. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment.