The Role of Corporate Governance on Sustainability Disclosure: South Asian Countries Perspective: History Edit
Subjects: Others

Comparatively less research has examined the effect of corporate governance (CG) elements on sustainability disclosure in South Asian (SA) countries. The study is designed to explore the role of SA countries business management on Sustainability disclosure performance. Further, no study in literature documents a cross-country examination of CG and sustainability disclosure in this region. The study takes three SA countries (Bangladesh, India, and Pakistan) and 88 listed organizations’ annual and sustainability reports during the years 2009–2016 from the Global Reporting Initiative (GRI) database. 

  • Environmental sustainability reporting
  • Corporate governance
  • South Asia
  • Bangladesh
  • India
  • Pakistan
  • Disclosure
  • GRI
  • Economic sustainability reporting
  • Social sustainability reporting

Corporate governance elements have a comparatively weaker presence in SA companies because: 1) Most of these companies are controlled by family members or majority shareholding investors (Masud et al. 2018; Majeed et al. 2015; Farooque et al. 2007; Mukherjee-Reed 2002; Malik and Kanwal 2016). 2) These countries lack effective regulation and have high corruption, an absence of transparency, and a heavy dependence on international grants and loans (Mahmood et al. 2018; Masud et al. 2017; Shirodkar et al. 2016). 3) There are little external pressures from non-governmental organizations (NGOs), environmental activist groups, or the international community (Lone et al. 2016; Shamil et al. 2014; Ganapathy and Kabra 2017; Hoque et al. 2016; Subramanian et al. 2017; Sharif and Rashid 2014). Additionally, the sustainability disclosure performance (SDP) in SA firms is also negligible, and few empirical researches exist on the subject (Ali et al. 2017; Dienes et al. 2016; Shirodkar et al. 2016; Khan et al. 2013). Moreover, recent studies have discovered that SA companies’ CSR and ESR performance has rapidly improved (Mahmood et al. 2018; Lone et al. 2016; Shamil et al. 2014; Ganapathy and Kabra 2017; Masud et al. 2017, 2018; Yadava and Sinha 2016; Malik and Kanwal 2016).

Despite a scarce empirical evidence on the effect of CG on SDP, a substantial amount of literature addresses the issue in the developing countries’ perspectives (Mahmood et al. 2018; Chang et al. 2017; Khan et al. 2013). Environmental sustainability with a conceptual SDP framework is a comparatively new practice and dimension in south Asian organizations. Chang et al. (2017) found only 6 of 32 studies on the linkage between CSR and board characteristics in Asian countries from 1990 to 2014. Among these six studies, only one (Khan et al. 2013) used SA countries as its context. The most recent CSR determinants literature review of Ali et al. 2017 documented only 7 studies of Bangladesh and one study from India. Moreover, Dienes et al. 2016 studies a longitudinal literatures review of CSR drivers and mentioned only two studies from Sri Lanka, one from Bangladesh and Pakistan respectively. This exemplifies the literature gap regarding SA countries in the study of CG and SDP. Thus far, research of CG and its effect on SDP have provided concrete ideas for a developed economy, but the question is whether SA companies’ CG structures have any effect on ESRP.

 

A large set of theoretical dimensions including Agency Theory, Resource Dependency Theory, Stakeholder Theory, Legitimacy Theory, Political Cost Theory and Signaling Theory can explore the relationsip of the CG and SDP.