Board composition and ISR quality
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2017-07-07
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en
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Abstract
This study examines the effect of the composition of the board of directors on corporate sustainability reporting (CSR) quality. It is argued that board expertise, interlocking directorates, board independence, and board diversity will enhance CSR quality. These characteristics provide the board with better information, new insights, and new perspectives related to sustainability, which increases the sustainability knowledge on and commitment of the board to CSR, and improves the capability of the board to monitor management. Using a unique panel data set of 123 publicly-listed and private companies in the Netherlands for the years 2013-2015, the results provide some support for a positive effect of board expertise on CSR quality. Furthermore, when examining the combinations of the different board characteristics, it seems that the combinations of interlocking directorates and board diversity, and of board expertise and board independence, when measured using CEO duality, negatively affect CSR quality. In addition, it seems that the combinations of board expertise and board activity, of interlocking directorates and board activity, and of board expertise and independence, when measured using the proportion of independent directors, positively affect CSR quality. These findings suggest that the effect of board composition on CSR quality might not be as important as initially thought, however, in practice, the combination of the different board characteristics seems to be important.
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Faculteit der Managementwetenschappen