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A Cross-Country Investigation of Corporate Governance and Corporate Sustainability Disclosure: A Signaling Theory Perspective

Author

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  • Seong Mi Bae

    (Department of Sustainability Management, Inha University, Incheon 22212, Korea)

  • Md. Abdul Kaium Masud

    (Department of Sustainability Management, Inha University, Incheon 22212, Korea
    Department of Business Administration, Noakhali Science and Technology University, Noakhali 3814, Bangladesh)

  • Jong Dae Kim

    (College of Business Administration, Inha University, Incheon 22212, Korea)

Abstract

There is a dearth of research on corporate governance and total sustainability disclosure (economic, environmental, and social) in developing, particularly South Asian, countries. This is unique cross-country research on South Asian countries’ corporate governance elements and total sustainability disclosure practices. The study considers a set of insightful theories, namely, the signaling and agency theories of understanding the motives and drivers of sustainability reporting. Based on data from the Global Reporting Initiative database, the study analyzes Bangladesh, India, and Pakistan. We have collected annual report and sustainability reports from the GRI database for the period between 2009 and 2016. Based on the signaling and agency theories, the study investigates how board and shareholding structures convey signals to the market and different stakeholders. Our empirical results find that total sustainability disclosure has a positive and significant relationship with foreign shareholding, institutional shareholding, board independence, and board size. On the other hand, we document that director shareholding is negatively but significantly associated with total sustainability disclosure. Therefore, we conclude that corporate governance elements have very strong influential power to send positive signals to the market that lead to reduced information asymmetry and ensuring honest signals from different stakeholders.

Suggested Citation

  • Seong Mi Bae & Md. Abdul Kaium Masud & Jong Dae Kim, 2018. "A Cross-Country Investigation of Corporate Governance and Corporate Sustainability Disclosure: A Signaling Theory Perspective," Sustainability, MDPI, vol. 10(8), pages 1-16, July.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:8:p:2611-:d:159925
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    References listed on IDEAS

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