Center for Advancing Accounting

Board Interlocks, Sustainability Committee Experience, and Sustainability Reporting

• In Event: Impact of the Board, External Assurance and the Global Reporting Intitiatives on Sustainability Reporting

Abstract

Using resource dependence theory coupled with voluntary disclosure theory, we investigate the role of board interlocks as they pertain to the quality of sustainability reporting. We determine if board members who come to the focal firm with sustainability experience gained through sitting on another board influence the quality of sustainability reporting for the focal firm. Our sample consists of United States S&P 1500 firms covering the period between 2009 and 2018. Using ordinary least squares (OLS) regressions, we find that a focal firm’s sustainability reporting will be of a higher quality if its board has interlocking directors who have gained sustainability experience by sitting on another firm’s board in current or prior years. In addition, sustainability experience of interlocked firms interacts with gender diversity and the independence of the board. Furthermore, having board interlocks from diverse industries and from firms with high-quality sustainability reporting also influence the quality of the focal firms’ sustainability reporting. Our results are robust using fixed effects models, propensity score matching, and entropy matching.

Authors

• Jing Lu, University of Guelph

• Dongning Yu, Ryerson University

• Fereshteh Mahmoudian, Simon Fraser University

• Jamal A. Nazari, Simon Fraser University

• Irene M. Herremans, University of Calgary