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The role of audit committee attributes in corporate sustainability reporting

Author

Listed:
  • Amina Buallay
  • Jasim Al-Ajmi

Abstract

Purpose - The purpose of this paper is to analyze the extent to which sustainability reporting by banks in the Gulf Cooperation Council (GCC) is affected by the attributes of audit committees. Design/methodology/approach - The research is positivist and quantitative, based on a cross-sectional and time series analysis of 59 banks from 2013 to 2017. A multivariate model is used to investigate the impact of selected audit committee attributes (financial expertise, size, members’ independence and meeting frequency) on sustainability reporting. The model is built on agency, legitimacy, resources and stakeholders theories. Findings - In contrast to the hypothesis, the authors report a negative association between financial expertise and sustainability reporting. Members’ independence and meeting frequency play a positive role in determining the extent of disclosure. The control variables (bank size, age and auditor type) are positively associated with corporate sustainability reporting. Research limitations/implications - The main limitations of this study are related to the chosen attributes of audit committee and do not consider the board’s attributes. However, the authors believe these limitations do not affect the findings. Future research that includes more attributes when they became available will offer more insights into the role of audit committees on sustainability disclosure of financial institutions. Overcoming these limitations may make the results more generalizable. Practical implications - The results of this study have important implications for regulators, bank management, investors and creditors. For regulators, in the countries of the GCC and in countries like them, the findings reveal the importance of disclosure requirements. The development of disclosure requirements is likely to improve corporate sustainability reporting and reduce variations in the extent of disclosure among banks. Banks could use these results to improve their reporting to outsiders. For creditors and investors, the study improves their awareness of the importance of corporate social responsibility, corporate governance and environmental information on credit and investment decisions and encourages banks to improve their disclosures of non-financial information. Originality/value - This research makes a contribution to the scarce literature on sustainability reporting by banks, especially in an environment where capital markets lack active institutional investors, where regulators play the dominant role in determining the extent of disclosure and where banks are the main source of external finance for the corporate sector.

Suggested Citation

  • Amina Buallay & Jasim Al-Ajmi, 2019. "The role of audit committee attributes in corporate sustainability reporting," Journal of Applied Accounting Research, Emerald Group Publishing Limited, vol. 21(2), pages 249-264, May.
  • Handle: RePEc:eme:jaarpp:jaar-06-2018-0085
    DOI: 10.1108/JAAR-06-2018-0085
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    Citations

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    Cited by:

    1. Wisnu Mawardi & Harjum Muharam & Mulyo Haryanto, 2022. "The Role of Audit Committee Characteristics and I.C. Performance on I.C. Disclosure: Evidence from the Indonesian Banking Sector," Economies, MDPI, vol. 11(1), pages 1-17, December.
    2. Rashid Zaman & Muhammad Bilal Farooq & Fahad Khalid & Zeeshan Mahmood, 2021. "Examining the extent of and determinants for sustainability assurance quality: The role of audit committees," Business Strategy and the Environment, Wiley Blackwell, vol. 30(7), pages 2887-2906, November.
    3. Aladdin Dwekat & Elies Seguí‐Mas & Guillermina Tormo‐Carbó & Pedro Carmona, 2020. "Corporate Governance Configurations and Corporate Social Responsibility Disclosure: Qualitative Comparative Analysis of Audit Committee and Board characteristics," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(6), pages 2879-2892, November.
    4. Rashedul Hasan & Mohammad Dulal Miah & M. Kabir Hassan, 2022. "The nexus between environmental and financial performance: Evidence from gulf cooperative council banks," Business Strategy and the Environment, Wiley Blackwell, vol. 31(7), pages 2882-2907, November.

    More about this item

    Keywords

    Sustainability reporting; GCC countries;

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