IDEAS home Printed from https://ideas.repec.org/a/gam/jjrfmx/v17y2024i7p263-d1422632.html
   My bibliography  Save this article

The Impact of Family Firms and Supervisory Boards on Corporate Environmental Quality

Author

Listed:
  • Hendra Susanto

    (Fakultas Ekonomi, Universitas Sriwijaya, Palembang 30662, Indonesia)

  • Nyoman Adhi Suryadnyana

    (Badan Pemeriksa Keuangan Republik Indonesia, Jakarta 10043, Indonesia)

  • Rusmin Rusmin

    (Fakultas Bisnis dan Humaniora, Universitas Teknologi Yogyakarta, Yogyakarta 55285, Indonesia)

  • Emita Astami

    (Fakultas Bisnis dan Humaniora, Universitas Teknologi Yogyakarta, Yogyakarta 55285, Indonesia)

Abstract

This paper examines the impact of family ownership and supervisory board characteristics on carbon emission disclosure. It uses balanced panel data and a matched-pair design of 124 non-financial firms listed on the Indonesia Stock Exchange from 2017 to 2019. This study finds that family firms and larger boards improve, while female board members harm carbon emission performance. Further analyses reveal non-linear relationships between family ownership and carbon performance. When control rights are limited, family firms prioritize controlling managers and improving carbon quality. Conversely, they prioritize personal objectives over environmental concerns when there are high control rights, resulting in decreased carbon emission performance. Additionally, family board members generate more carbon information, indicating the family owners effectively utilize their position on the supervisory boards to influence the company’s carbon emission performance. Finally, the study reports that more faculty member boards seem to hurt carbon emission reduction efforts. This result suggests that the diversity of their professional experiences does not affect the environmental effectiveness of supervisory boards. Our findings highlight the importance of understanding SEW principles and their connection to families in comprehending Indonesian corporate carbon emissions disclosures. The findings of this study enrich the worldwide literature by exploring the potential benefits of family business environmental performance. This study also adds to the literature on corporate governance, especially the role played by supervisory boards. Our findings align with the resource dependence theory, emphasizing the central function of supervisory boards as a monitoring tool. This study is constrained by its reliance on carbon emission data extracted from the annual reports of public firms, with a particular emphasis on pre-COVID-19 data. Future research should focus on sustainability reports and explore the time frame encompassing COVID-19 (2020–2022 datasets) to determine any differences in the findings.

Suggested Citation

  • Hendra Susanto & Nyoman Adhi Suryadnyana & Rusmin Rusmin & Emita Astami, 2024. "The Impact of Family Firms and Supervisory Boards on Corporate Environmental Quality," JRFM, MDPI, vol. 17(7), pages 1-24, June.
    • Handle: RePEc:gam:jjrfmx:v:17:y:2024:i:7:p:263-:d:1422632
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1911-8074/17/7/263/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1911-8074/17/7/263/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Michael C. Jensen, 2010. "The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 43-58, January.
    2. Patricia M. Dechow & Richard G. Sloan & Amy P. Sweeney, 1996. "Causes and Consequences of Earnings Manipulation: An Analysis of Firms Subject to Enforcement Actions by the SEC," Contemporary Accounting Research, John Wiley & Sons, vol. 13(1), pages 1-36, March.
    3. Abdifatah Ahmed Haji, 2013. "Corporate social responsibility disclosures over time: evidence from Malaysia," Managerial Auditing Journal, Emerald Group Publishing Limited, vol. 28(7), pages 647-676, July.
    4. Graham, John R. & Harvey, Campbell R. & Rajgopal, Shiva, 2005. "The economic implications of corporate financial reporting," Journal of Accounting and Economics, Elsevier, vol. 40(1-3), pages 3-73, December.
    5. Ryan Davidson & Jenny Goodwin‐Stewart & Pamela Kent, 2005. "Internal governance structures and earnings management," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 45(2), pages 241-267, July.
    6. Aiyesha Dey, 2008. "Corporate Governance and Agency Conflicts," Journal of Accounting Research, Wiley Blackwell, vol. 46(5), pages 1143-1181, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mohamed Khalil & Aydin Ozkan, 2016. "Board Independence, Audit Quality and Earnings Management: Evidence from Egypt," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 15(1), pages 84-118, April.
    2. Chanchal Chatterjee, 2020. "Board Quality and Earnings Management: Evidence from India," Global Business Review, International Management Institute, vol. 21(5), pages 1302-1324, October.
    3. Robin Chen & Hongrui Feng & Xuechen Gao & Shenru Li, 2023. "The effect of co-opted directors on real earnings management," Review of Quantitative Finance and Accounting, Springer, vol. 61(4), pages 1315-1339, November.
    4. Alexeyeva, Irina, 2024. "Does board composition impact the timeliness of financial reporting? Evidence from Swedish privately held companies," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 54(C).
    5. Armstrong, Christopher S. & Guay, Wayne R. & Weber, Joseph P., 2010. "The role of information and financial reporting in corporate governance and debt contracting," Journal of Accounting and Economics, Elsevier, vol. 50(2-3), pages 179-234, December.
    6. Clive Gaunt & Steven Cahan, 2014. "Accounting and Finance: authorship and citation trends," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 54(2), pages 441-465, June.
    7. Sha, Yezhou & Qiao, Lu & Li, Suyang & Bu, Ziwen, 2021. "Political freedom and earnings management," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 75(C).
    8. Husam Aldamen & Keith Duncan & Simone Kelly & Ray McNamara & Stephan Nagel, 2012. "Audit committee characteristics and firm performance during the global financial crisis," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 52(4), pages 971-1000, December.
    9. Luminita Enache & Antonio Parbonetti & Anup Srivastava, 2020. "Are all outside directors created equal with respect to firm disclosure policy?," Review of Quantitative Finance and Accounting, Springer, vol. 55(2), pages 541-577, August.
    10. Hassan Espahbodi & Reza Espahbodi & Kose John & Hua Christine Xin, 2022. "Earnings management in the short- and long-term post-regulation periods," Review of Quantitative Finance and Accounting, Springer, vol. 58(1), pages 217-244, January.
    11. Ali Meftah Gerged & Khaldoon Albitar & Lara Al‐Haddad, 2023. "Corporate environmental disclosure and earnings management—The moderating role of corporate governance structures," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 2789-2810, July.
    12. Anis Mnif, 2009. "Corporate Governance And Management Earnings Forecast Quality: Evidence From French Ipos," Post-Print halshs-00459171, HAL.
    13. Chia-Ling Chao & Shwu-Min Horng, 2013. "Asset write-offs discretion and accruals management in Taiwan: the role of corporate governance," Review of Quantitative Finance and Accounting, Springer, vol. 40(1), pages 41-74, January.
    14. Chanchal Chatterjee, 2021. "Ownership pattern, board composition, and earnings management: evidence from top Indian companies," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 18(2), pages 179-192, June.
    15. Jiang, Haiyan & Habib, Ahsan & Zhou, Donghua, 2015. "Accounting restatements and audit quality in China," Advances in accounting, Elsevier, vol. 31(1), pages 125-135.
    16. Jiménez-Angueira, Carlos E., 2018. "The effect of the interplay between corporate governance and external monitoring regimes on firms' tax avoidance," Advances in accounting, Elsevier, vol. 41(C), pages 7-24.
    17. Hideaki Sakawa & Naoki Watanabel, 2021. "Earnings quality and internal control in bank-dominated corporate governance," Asian Business & Management, Palgrave Macmillan, vol. 20(2), pages 188-220, April.
    18. Charlotte L. Schuster & Alexander T. Nicolai & Jeffrey G. Covin, 2020. "Are Founder-Led Firms Less Susceptible to Managerial Myopia?," Entrepreneurship Theory and Practice, , vol. 44(3), pages 391-421, May.
    19. Giuseppe Ianniello, 2015. "The effects of board and auditor independence on earnings quality: evidence from Italy," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 19(1), pages 229-253, February.
    20. Carlos Jiménez-Angueira & Nathan Stuart, 2015. "Relative performance evaluation, pay-for-luck, and double-dipping in CEO compensation," Review of Quantitative Finance and Accounting, Springer, vol. 44(4), pages 701-732, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jjrfmx:v:17:y:2024:i:7:p:263-:d:1422632. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.