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The Effects of Corporate Governance on ESG-related Information Disclosure: Evidence from Japanese Firms

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  • Tatsuya Kato

    (Deputy Director and Economist, Institute for Monetary and Economic Studies (currently, Financial System and Bank Examination Department), Bank of Japan (E-mail: tatsuya.katou@boj.or.jp))

Abstract

Given the voluntary nature of environmental, social, and governance (ESG)-related information disclosure in Japan, we use a sample of TOPIX firms from 2011 to 2019 to examine the relevance of internal and external corporate governance factors and ESG-related information disclosure for Japanese firms. For the internal governance factors, the results of the logistic regression analysis show that variables such as board independence and board activity significantly influence a company's ESG disclosure strategy, whereas the results of the generalized additive 2 model (GA2M) show that the internal governance variables are relatively less important than the external governance variables such as share ownership structure. For the external governance factors, the logistic regression results show that all the explanatory variables are significant. Although the results from the generalized additive 2 model are generally similar, non-linear relationships for institutional ownership and the Government Pension Investment Fund (GPIF) are also found. These empirical results suggest that the development of corporate governance frameworks such as Japan's Stewardship Code and Corporate Governance Code influences firms' ESG disclosure strategy and encourages them to disclose ESG-related information. This study provides new insights into the relationship between corporate governance and ESG- related information disclosure practices in Japanese firms.

Suggested Citation

  • Tatsuya Kato, 2022. "The Effects of Corporate Governance on ESG-related Information Disclosure: Evidence from Japanese Firms," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 40, pages 67-100, November.
    • Handle: RePEc:ime:imemes:v:40:y:2022:p:67-100
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    Cited by:

    1. KEIDA Masayuki & TAKEDA Yosuke, 2024. "How Loud is a Soft Voice? Effects of positive screening of ESG performance on the Japanese oil companies," Discussion papers 24002, Research Institute of Economy, Trade and Industry (RIETI).
    2. Anrong Gao & Tianren Xiong & Yuxi Luo & Defeng Meng, 2023. "Promote or Crowd Out? The Impact of Environmental Information Disclosure Methods on Enterprise Value," Sustainability, MDPI, vol. 15(4), pages 1-19, February.

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    More about this item

    Keywords

    ESG; Corporate governance; GRI standards; Disclosure; Machine learning; GA2M;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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