The Signaling Power of Social Reporting and Board Gender Diversity

• In Event: Incentives, Social Responsibility, and Crowdfunding

Abstract

Abstract
Purpose – As pressures mount for women directors on corporate boards (WDOCB) from different stakeholders, it becomes more important for companies to find out how their social disclosure are impacted by it. The purpose of this paper is to investigate the effect of gender diverse boards on the association between sustainability reporting and shareholders’ welfare.
Design/methodology/approach - This paper examines the implications of women on board for firm-related factors, particularly ESG disclosure and firm performance. The firms studied are all listed in the FTSE 350 index between 2007 and 2012. We use Bloomberg social disclosure score and apply panel data through a regression model.
Findings - The results reveal that the presence of women on the board of directors favorably influence on firm’s risk and performance through promoting firm’s investment in effectual social engagements and reporting on them. The desirable effect of WDOCB on the ESG-performance relationship is either due to their influence on directing part of the firm’s scarce resources towards leading social projects, or raising the consistency of the disclosed information and intensifying its signaling power regarding the firm’s growth opportunities.
Originality/value - The research contributes to the literature on the relationship between women participation on corporate boards and firm’s good citizenship and enhanced shareholders’ welfare. The empirical findings contribute to providing statistical and economical validity to the U.K corporate governance code 2014 recommendation on the importance of board gender diversity for effective board functioning.

Authors

• Mohammad Jizi, Lebanese American University

• Mustafa Dah, Lebanese American University

• Mahmoud Araissi, Lebanese American University