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This study investigates the relationship between CEO leadership, gender homophily and corporate environmental, social and governance (ESG) performance. We also investigate whether it is essential to have a critical mass of women directors on the board to create a significant power of gender diversity in leadership positions.

Our study is based on firms listed on the London Stock Exchange (FTSE-All-Share) from 2011 to 2019. CEO characteristics and other board variables were collected from BoardEx, and ESG data, and other related variables were collected from Eikon database.

We find a critical mass of female directors contributes to ESG performance suggesting that token representation of female directors on boards limits their effectiveness. We do not find support for the gender homophily perspective, our findings suggest that the effectiveness of female CEOs does not depend on the existence of a critical mass of female directors. Female directors and female CEOs are less likely to be associated with ESG activities when firms experience poor financial performance. We also find that younger female CEOs have a positive impact on ESG performance. Furthermore, we find female CEOs with shorter tenure are more likely to improve ESG performance. Overall, our findings suggest a substitutional effect between having female CEOs and gender diverse boards.

This study contributes to the debate on gender homophily in the boardroom and how that may affect ESG practices. It also complements existing academic research on female leadership and ESG performance and has important implications for senior management and policymakers.

This study aims to explore whether firms that have a sustainability committee operating on the board, publish separate sustainability reports that are externally assured by an independent external audit and have large and active boards are more likely to be engaged in environmental practices and have better environmental performance.

Based on a sample of firms listed on the Saudi Stock Exchange, covering the period 2014–2021, this study applies panel data models to examine the research hypotheses.

The findings show significant positive associations between the existence of a sustainability committee, the publication of separate sustainability reports and the independent external assurance of these reports and environmental performance. This study also finds that the composite internal governance index is significant and positively associated with environmental performance.

Policymakers should support the creation of a sustainability committee on the boards of Saudi firms and review its role and responsibilities. The findings of this study inform regulators of the importance of the existence of independent external assurance of the sustainability reports of Saudi firms to enhance the credibility and reliability of these reports. Managers need to establish devoted committees committed to sustainability-related tasks that help coordinate communications between the firm and stakeholders.

The Saudi Arabian Government has implemented a range of policies and initiatives aimed at improving environmental performance, which is a main focus of Saudi Vision 2030 to achieve environmental sustainability. Therefore, this study provides unique evidence and new insights on the impact of internal governance on corporate environmental performance in the Saudi context.

This paper aims to provide a novel approach to examine sustainability report narratives by considering key features of these narratives including, forward-looking content, risk content, tone and sustainability-specific content.

Using a sample of UK firms' sustainability reports from 2014 to 2018, the authors capture the report content by compiling a collection of words using a computational linguistic technique that attempts to identify specific attributes of sustainability reports.

The findings show the main factors that determine the content of sustainability reports are: (1) external governance-related factors, including the voluntary adoption of sustainability reporting assurance, the choice of assurance provider, stakeholder engagement and ownership concentration; (2) internal governance factors, including board quality and the existence of a sustainability committee; and (3) reporting behaviour including the publication of standardised Global Reporting Initiative (GRI) sustainability reports and financial reporting quality.

The authors limit our sample to companies operated in the UK. Future research can explore the results in other institutional contexts such as North America or Asia–Pacific where the governance of sustainability reporting and other factors determining the content of sustainability reports could be different. Also, it would be interesting to interview managers and other stakeholders to obtain their opinions with regard to sustainability reporting and assurance practices and to understand their opinions regarding the GRI guidelines and its appropriateness. This study combines different research streams to advance our understanding of sustainability disclosures and factors that determine sustainability narratives.

Corporate managers need to strengthen their internal and external governance mechanisms to enhance the comprehensiveness and credibility of sustainability reports and are encouraged to engage stakeholders in the sustainability reporting process. Policymakers can mandate the assurance of sustainability reports and establish reporting formats and standard words to control the tone of sustainability reports. Finally, researchers, professionals as well as policymakers need to monitor sustainable development goals and targets to increase awareness, knowledge and practices that can be operationalised to ensure a global society that can afford sustainable living.

To the best of our knowledge, no study has yet examined sustainability report narratives by considering key features of these reports, including forward-looking content, risk content, tone and sustainability-specific content.

Growing social concerns and ecological issues accelerate firms’ environmental, social and governance (ESG) engagement. Hence, this study aims to advance the existing literature by focusing on the interplay between institutional and firm governance mechanisms for greater ESG engagement. More specifically, the authors investigate whether public governance stimulates excessive ESG engagement and whether corporate governance moderates this relationship.

Using a sample of 43,803 firm-year observations affiliated with 41 countries and 9 industries, the authors adopt a country, industry and year fixed-effects regression analysis.

The authors find that public governance strength via its six dimensions stimulates excessive ESG engagement. This implies that firms in countries with strong voice and accountability, political stability, government effectiveness, regulatory quality, rule of law and control of corruption are more motivated for ESG engagement. Furthermore, corporate governance negatively moderates the relationship between all public governance dimensions (except political stability) and excessive ESG engagement. This implies that public governance and corporate governance are substitutes for encouraging firms to commit to ESG. Further tests reveal that whereas these results in the baseline analyses are valid for developed countries, they are not valid in emerging markets.

The findings support the interplay between institutional and agency theories. In countries with strong (weak) institutional mechanisms, corporate governance becomes weak (strong) in inciting greater stakeholder engagement. This implies that the public governance mechanism alleviates agency costs, rendering internal mechanisms of corporate governance noncompulsory for ESG engagement.

The findings suggest that emerging countries need to reinforce their institutions for greater accountability, regulatory quality and control of corruption, which will have a domino effect on firms in addressing stakeholder expectations. The results also advise emerging country firms to augment their internal monitoring mechanisms for greater stakeholder engagement, such as structuring boards and establishing corporate social responsibility mechanisms, committees and policies.

This study contributes to the recent literature investigating the role of corporate governance mechanisms in excessive ESG engagement. The study also explores whether public governance is associated with greater ESG involvement and provides a comprehensive analysis of the association between six indicators of public governance quality and excessive ESG practices in developed and emerging economies.

This study aims to examine whether firms that appear to exhibit high sustainable outputs are more likely to pay higher audit fees than firms without such outputs.

The sustainability outputs are measured using a sustainable product portfolio consisting of four products: clean energy products, eco-design products (EDP), environmental products (EP) and sustainable building projects (SBP). The audit fee variable is measured by the natural logarithm of the total amount of audit fees. The study tests two models of the association between these outputs and audit fees; Model 1 tests this association in the absence of the moderating variable (sustainability committee), and Model 2 tests the association in the presence of the moderating variable.

An analysis of data on 261 European firms from the Refinitiv Eikon database from 2010 to 2019 shows that high sustainability outputs are significantly and positively associated with audit fees. More importantly, this association is moderated by the presence of a board-level sustainability committee, suggesting that this type of committee reflects a factor considered by auditors in their audit risk assessment practices. The findings indicate that in Model 1, one (EP) out of four variables has a significant and positive association with audit fees, while in Model 2 and in the presence of sustainability committee, two variables (EP and EDP) have a significant and negative association with audit fees. However, the robust analysis shows that three variables (EP, EDP and SBP) have significant and negative associations with audit fees.

The study findings have important implications for policymakers, auditors and firms’ managers. For policymakers, the findings provide support for the argument that sustainable attitudes incentivise firms to manage sustainable product profiles more effectively. As such, policymakers should incentivise firms to establish a sustainability committee and regulate its role and responsibilities. Auditors should coordinate with the sustainability committee to facilitate audit efforts and reduce audit fees.

Understanding the relationship between sustainable products and audit fees will allow firms to improve their portfolio of sustainable products. In addition, other social implications of this study relate to improving relationships with society by establishing a sustainability committee that is responsible to communicate with that society.

The results support the argument that firms should manage sustainable product portfolios more effectively. In addition, the results of the study highlight the importance of a new variable as a moderator, the sustainability committee, which has not been examined before.

The purpose of this paper is to examine the determinants of the volume of environmental disclosures and their quality, with particular focus on the role of audit committees (ACs) and the effects of the Smith report recommendations for the UK Corporate Governance Code.

Quantitative large sample analysis of UK FTSE350 companies for the period 2007-2011.

Firms with higher quality ACs make higher quality disclosures. Larger firms with block shareholders have greater volume of disclosures, whilst AC quality does not increase disclosure volume.

Findings are based on evidence from single country and imply further international comparative research.

ACs mitigate the requirement for prescriptive legislation on narrative accounting disclosures relating to environmental issues.

The paper contributes to research that has examined the relationship between corporate governance mechanisms, specifically ACs, and the quality of financial reporting by considering voluntary narrative disclosures on environmental matters.

The COVID-19 pandemic has been adding pressures on companies to commit to their social and ethical responsibilities. Corporate social responsibility (CSR) reporting is the main tool through which companies communicate their social behaviour and the need for credible information is censorious during the crisis. This paper aims to measure the level of COVID-19 disclosures in CSR reports by using an automated textual analysis technique based on a sample of UK companies and investigate whether the level of disclosure is enhanced for companies that subject their CSR reports to an assurance process.

The study sample consists of FTSE All-share non-financial listed companies. The authors use a computer-aided textual analysis, and we use a bag of words to capture COVID-related information in the CSR section of the firm’s annual reports.

The results suggest that the existence of independent external assurance is significantly and positively associated with the provision of COVID-19 information in CSR reports. The authors also find that when assurance is provided by Big 4 accountancy firms, the disclosure of COVID-related information is enhanced. Furthermore, large companies are more likely to disclose COVID-related information in their CSR reports that are externally assured from top-tier accountancy firms, suggesting that assurance could be a burden for smaller firms. Overall, the findings suggest that assurance on CSR reports provides an “insurance-like” protection that mitigates the risks and signals the management’s ethical behaviour during the pandemic.

The study approach helps to assess the level of corporate engagement with COVID-19 practices and the extent of related disclosures in CSR reports based on the COVID-19 Secure Guidelines published by the UK government. This helps to emphasise how companies engage and communicate COVID-19-related information to stakeholders through CSR reports and ensure a safe working environment during this pandemic. Managers will need to assess the costs and benefits of purchasing assurance on CSR disclosures, giving the ethical signal that assurance sends to the market and protection that it covers during the crisis.

This paper provides a shred of unique evidence of the impact of the existence of external assurance and the type of assurer on the disclosure of COVID-related information in CSR reports. To the best of authors’ knowledge, no study has yet investigated the corporate disclosure on an unforeseen event in CSR reports and the role of CSR assurance in this respect.

Using a sample of UK FTSE 350 companies continuously listed in the period 2007-2011, this paper aims to investigate the impact of the quality and quantity of corporate environmental disclosure on analysts’ recommendations.

The study adopted a method based on that developed by Beck et al. (2010). The “CONI” approach measures information diversity, content and volume. It involves dual qualitative and quantitative measurement, which is suitable for the purpose of this paper.

The findings suggest that the quality of environmental disclosure is associated with more favourable buy recommendations. Mere volume of disclosure is insufficient for effective signalling about environmental strategies. Further tests show that only discretionary quality disclosure that is influenced by managerial intervention receives optimistic recommendation, suggesting that analysts are more likely to give better recommendation when managers have a higher level of discretion in their disclosures.

This paper contributes to the academic literature by empirically examining the association between sell-side analyst recommendations on both innate and discretionary components of environmental disclosures (quality and volume) within the UK context. This is a significant extension of the existing literature, which has focused on the related association between analyst recommendations and corporate social responsibility, mainly measured by corporate social responsibility ratings or a dummy variable reflecting the existence of supplementary corporate social responsibility reports in different international setting. The topic is of interest to contemporary accounting scholars and responds to calls for more research into how analysts use nonfinancial data such as environmental data in making recommendations.

This paper examines the effect of audit committee (AC) reporting, measured by the tone of audit committee disclosures, in improving financial reporting quality as proxied by earnings management.

The authors focus on the textual properties of AC reports, particularly the tone of AC disclosure, and their impact on financial reporting quality proxied using real and accruals-based earnings management. For additional analysis, the authors use a financial reporting index and matched sample. The analysis is based on a sample of UK FTSE 350 firms.

The analysis suggests that AC reports are not boilerplate but varied in language. The authors find AC reporting is negatively associated with both real and accruals-based earnings management. In our additional tests, the authors find a positive association between financial reporting quality index and reporting tone.

Overall, this paper provides baseline evidence for future research and policy making and reveals that ACs reporting what they have done increases transparency and impacts on reporting quality.

Overall, this paper suggests that the tone of AC reports seems to convey information that affects the communication function of AC reporting and thereby helps to improve reporting quality.

Though the importance of AC disclosures in improving reporting quality is well recognised in policy guidelines and governance recommendations, no study has employed computer-based textual analysis of AC reports and investigated the effect of AC disclosure tone and the role it can play in achieving higher reporting quality.