Skip to main content
Disciplines
Automotive Business IT + Informatics Construction + Real Estate Electrical Engineering + Electronics Energy + Sustainability Insurance + Risk Finance + Banking Management + Leadership Marketing + Sales Mechanical Engineering + Materials
Events
DE
EN
Books
Journals
Topic Page
Marketing
Start single access now
Access for companies
EXTENDED SEARCH
Log in
Top
Published in:
Cover of the book

2022 | OriginalPaper | Chapter

Do Corporate Governance Mechanisms Affect the Non-financial Reporting Readability? Evidence from Italy

Authors : Adele Caldarelli, Alessandra Allini, Claudia Salvatore, Annamaria Zampella, Fiorenza Meucci

Published in: Non-financial Disclosure and Integrated Reporting

Publisher: Springer International Publishing

Log in

Activate our intelligent search to find suitable subject content or patents.

search-config
loading …

Abstract

Purpose—This study investigates whether corporate governance mechanisms can affect the readability of non-financial reporting required by Directive No. 2014/95/EU. In particular, it examines the impact of board independence, gender diversity, the social committee, and the impact of the social rating on non-financial information (NFI) readability.
Design/methodology/approach—The analysis is performed on a sample of 82 firms listed in the Italian Stock Exchange mandated by the EU Directive, and covers the periods 2017 and 2018. We used the Gunning Fog index to measure the NFI readability. Thus, we perform a regression analysis to empirically test its association with test variables and some other control variables.
Expected Findings—Our findings show that board independence, the social committee, gender diversity, and the social rating (i.e., the ESG score) improve the NFI readability of Italian-listed firms.
Originality/value/contribution—This research contributes to the academic debate in several ways. Firstly, it adds fresh insights into the literature on the role played by corporate governance mechanisms on NFI readability. Secondly, this study provides useful information to give policymakers a better understanding of the factors that improve the NFI readability of firms. Thirdly, findings may help regulators in confirming that the establishment of a social committee is a step in the right direction to enhance firms’ NFI readability.

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

  • über 102.000 Bücher
  • über 537 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Maschinenbau + Werkstoffe
  • Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 340 Zeitschriften

aus folgenden Fachgebieten:

  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Versicherung + Risiko




Jetzt Wissensvorsprung sichern!

inform now
next chapter The Disclosure of Non-financial Risk. The Emerging of Cyber-Risk
Footnotes
Literature
Abu Bakar, A. S., & Ameer, R. (2011). Readability of corporate social responsibility communication in Malaysia. Corporate Social Responsibility and Environmental Management, 18(1), 50–60.CrossRef
Adams, R. B., de Haan, J., Terjesen, S., & van Ees, H. (2015). Board diversity: Moving the field forward. Corporate Governance: An International Review, 23(2), 77–82.CrossRef
Ahmed, A., Monem, R. M., Delaney, D., & Ng, C. (2017). Gender diversity in corporate boards and continuous disclosure: Evidence from Australia. Journal of Contemporary Accounting & Economics, 13(2), 89–107.CrossRef
Allini, A., Ferri, L., Maffei, M., & Zampella, A. (2017). From accountability to readability in the public sector: Evidence from Italian universities. International Journal of Business and Management, 12(3), 27–35.CrossRef
Ameer, R., & Othman, R. (2012). Sustainability practices and corporate financial performance: A study based on the top global corporations. Journal of Business Ethics, 108(1), 61–79.CrossRef
Amran, A., Lee, S. P., & Devi, S. S. (2014). The influence of governance structure and strategic corporate social responsibility toward sustainability reporting quality. Business Strategy and the Environment, 23(4), 217–235.CrossRef
Arena, C., Bozzolan, S., & Michelon, G. (2015). Environmental reporting: Transparency to stakeholders or stakeholder manipulation? An analysis of disclosure tone and the role of the board of directors. Corporate Social Responsibility and Environmental Management, 22(6), 346–361.CrossRef
Asay, H. S., Libby, R., & Rennekamp, K. M. (2018). Do features that associate managers with a message magnify investors’ reactions to narrative disclosures? Accounting, Organizations and Society, 68, 1–14.CrossRef
Aureli, S., Magnaghi, E., & Salvatori, F. (2019). The role of existing regulation and discretion in harmonising non-financial disclosure. Accounting in Europe, 16(3), 290–312.CrossRef
Baraibar-Diez, E., Odriozola, D., & M. (2019). CSR committees and their effect on ESG performance in UK, France, Germany, and Spain. Sustainability, 11(18), 5077.CrossRef
Beattie, V., McInnes, B., & Fearnley, S. (2004). A methodology for analysing and evaluating narratives in annual reports: A comprehensive descriptive profile and metrics for disclosure quality attributes. In Accounting Forum, 28(3), 205–236. No longer published by Elsevier.CrossRef
Ben-Amar, W., & Belgacem, I. (2018). Do socially responsible firms provide more readable disclosures in annual reports? Corporate Social Responsibility and Environmental Management, 25(5), 1009–1018.CrossRef
Biber, D., Douglas, B., Conrad, S., & Reppen, R. (1998). Corpus linguistics: Investigating language structure and use. Cambridge University Press.CrossRef
Biswas, P. K., Mansi, M., & Pandey, R. (2018). Board composition, sustainability committee and corporate social and environmental performance in Australia. Pacific Accounting Review.
Bonsall, S. B., IV, Leone, A. J., Miller, B. P., & Rennekamp, K. (2017). A plain English measure of financial reporting readability. Journal of Accounting and Economics, 63(2–3), 329–357.CrossRef
Carini, C., Rocca, L., Veneziani, M., & Teodori, C. (2018). Ex-ante impact assessment of sustainability information– The directive 2014/95. Sustainability, 10(2), 560.CrossRef
Chan, M. C., Watson, J., & Woodliff, D. (2014). Corporate governance quality and CSR disclosures. Journal of Business Ethics, 125(1), 59–73.CrossRef
Cheng, E. C., & Courtenay, S. M. (2006). Board composition, regulatory regime and voluntary disclosure. The International Journal of Accounting, 41(3), 262–289.CrossRef
Christensen, G., & Miguel, E. (2018). Transparency, reproducibility, and the credibility of economics research. Journal of Economic Literature, 56(3), 920–980.CrossRef
Clarkson, P. M., Li, Y., Richardson, G. D., & Vasvari, F. P. (2008). Revisiting the relation between environmental performance and environmental disclosure: An empirical analysis. Accounting, Organizations and Society, 33(4–5), 303–327.CrossRef
Cordazzo, M., Bini, L., & Marzo, G. (2020). Does the EU directive on non-financial information influence the value relevance of ESG disclosure? Italian evidence. Business Strategy and the Environment, 29, 3470–3483.CrossRef
Cumming, D., Leung, T. Y., & Rui, O. (2015). Gender diversity and securities fraud. Academy of Management Journal, 58(5), 1572–1593.CrossRef
De Luca, F. (2020). Mandatory and discretional non-financial disclosure after the European directive 2014/95/EU: An empirical analysis of Italian listed companies’ behavior. Emerald Group Publishing.CrossRef
de Villiers, C., Naiker, V., & van Staden, C. J. (2011). The effect of board characteristics on firm environmental performance. Journal of Management, 37(6), 1636–1663.CrossRef
Deegan, C. (2002). The legitimising effect of social and environmental disclosures–a theoretical foundation. Accounting, Auditing & Accountability Journal, 15(3), 282–311.CrossRef
Deegan, C. (2017). Twenty-five years of social and environmental accounting research within critical perspectives of accounting: Hits, misses and ways forward. Critical Perspectives on Accounting, 43, 65–87.CrossRef
del Valle, I. D. D., Esteban, J. M. D., & Pérez, Ó. L. D. F. (2019). Corporate social responsibility and sustainability committee inside the board. European Journal of International Management, 13(2), 159–176.
Di Vaio, A., Palladino, R., Hassan, R., & Alvino, F. (2020). Human resources disclosure in the EU directive 2014/95/EU perspective: A systematic literature review. Journal of Cleaner Production, 257, 120509.CrossRef
Doni, F., Bianchi Martini, S., Corvino, A., & Mazzoni, M. (2019). Voluntary versus mandatory non-financial disclosure: EU directive 95/2014 and sustainability reporting practices based on empirical evidence from Italy. Meditari Accountancy Research, 28(5), 781–802.CrossRef
Dowling, J., & Pfeffer, J. (1975). Organizational legitimacy: Social values and organizational behavior. Pacific sociological review, 18(1), 122–136.CrossRef
Drago, C., Ginesti, G., Pongelli, C., & Sciascia, S. (2018). Reporting strategies: What makes family firms beat around the bush? Family-related antecedents of annual report readability. Journal of Family Business Strategy, 9(2), 142–150.CrossRef
du Toit, E. (2017). The readability of integrated reports. Meditari accountancy. Research.
Dumay, J., Frost, G., & Beck, C. (2015). Material legitimacy. Journal of Accounting & Organizational Change, 11(1), 2–23.CrossRef
Eberhardt-Toth, E., Caby, J., Gendron, C., & Ramboarisata, L. (2019). Determinants of the presence of CSR committees within European boards of directors. Revue de lorganisation responsable, 14(1), 33–49.CrossRef
Elzahar, H., & Hussainey, K. (2012). Determinants of narrative risk disclosures in UK interim reports. The. Journal of Risk Finance.
Feingold, A. (1994). Gender differences in personality: A meta-analysis. Psychological Bulletin, 116(3), 429–456.CrossRef
Fernández-Gago, R., Cabeza-García, L., & Nieto, M. (2018). Independent directors’ background and CSR disclosure. Corporate Social Responsibility and Environmental Management, 25(5), 991–1001.CrossRef
Freedman, M., & Jaggi, B. (2009). Global warming and corporate disclosures: A comparative analysis of companies from the European Union, Japan and Canada. In Sustainability, environmental performance and disclosures. Emerald Group Publishing Limited.CrossRef
Fuente, J. A., García-Sanchez, I. M., & Lozano, M. B. (2017). The role of the board of directors in the adoption of GRI guidelines for the disclosure of CSR information. Journal of Cleaner Production, 141, 737–750.CrossRef
Ginesti, G., Drago, C., Macchioni, R., & Sannino, G. (2018). Female board participation and annual report readability in firms with boardroom connections. Gender in Management: An International Journal, 33, 296–314.CrossRef
González-Benito, J., & González-Benito, Ó. (2006). A review of determinant factors of environmental proactivity. Business Strategy and the Environment, 15(2), 87–102.CrossRef
Gunning, R. (1969). The fog index after twenty years. Journal of Business Communication, 6(2), 3–13.CrossRef
Habbitts, S., & Gilbert, S. (2007). Reporting the business implications of climate change in sustainability reports.
Hahn, R., & Kühnen, M. (2013). Determinants of sustainability reporting: A review of results, trends, theory, and opportunities in an expanding field of research. Journal of Cleaner Production, 59, 5–21.CrossRef
Haller, A., Link, M., & Groß, T. (2017). The term ‘non-financial information’–a semantic analysis of a key feature of current and future corporate reporting. Accounting in Europe, 14(3), 407–429.CrossRef
Haniffa, R. M., & Cooke, T. E. (2005). The impact of culture and governance on corporate social reporting. Journal of Accounting and Public Policy, 24(5), 391–430.CrossRef
Harjoto, M. A., Laksmana, I., & Lee, W. E. (2020). Female leadership in corporate social responsibility reporting: Effects on writing, readability and future social performance. Advances in Accounting, 100475.
Harris, T. L., & Hodges, R. E. (1995). The literacy dictionary: The vocabulary of reading and writing. Order Department, International Reading Association, 800 Barksdale Road, PO Box 8139, Newark, DE 19714–8139.
Hassan, M. K., Abbas, B. A., & Garas, S. N. (2019). Readability, governance and performance: A test of the obfuscation hypothesis in Qatari listed firms. Corporate Governance: The International Journal of Business in Society, 19, 270–298.CrossRef
Helfaya, A., & Moussa, T. (2017). Do board’s corporate social responsibility strategy and orientation influence environmental sustainability disclosure? UK evidence. Business Strategy and the Environment, 26(8), 1061–1077.CrossRef
Hess, D. (2019). The transparency trap: Non-financial disclosure and the responsibility of business to respect human rights. American Business Law Journal, 56(1), 5–53.CrossRef
Hrasky, S., & Smith, B. (2008). Concise corporate reporting: Communication or symbolism? Corporate Communications: An International Journal, 13, 418–432.CrossRef
Hrasky, S., Mason, C., & Wills, D. (2009). The textual complexity of annual report narratives: A comparison of high-and low-performance companies. New Zealand Journal of Applied Business Research, 7(2), 31.
Hummel, K., & Schlick, C. (2016). The relationship between sustainability performance and sustainability disclosure–reconciling voluntary disclosure theory and legitimacy theory. Journal of Accounting and Public Policy, 35(5), 455–476.CrossRef
Hyland, K. (2001). Bringing in the reader: Addressee features in academic articles. Written Communication, 18(4), 549–574.CrossRef
Ishikawa, Y. (2015). Gender differences in vocabulary use in essay writing by university students. Procedia-Social and Behavioral Sciences, 192(2), 593–600.CrossRef
Jackson, G., Bartosch, J., Avetisyan, E., Kinderman, D., & Knudsen, J. S. (2020). Mandatory non-financial disclosure and its influence on CSR: An international comparison. Journal of Business Ethics, 162(2), 323–342.CrossRef
Jaggi, B., Allini, A., Ginesti, G., & Macchioni, R. (2020). Determinants of corporate corruption disclosures: Evidence based on EU listed firms. Meditari Accountancy Research, 29, 21–38.CrossRef
Jain, T., & Jamali, D. (2016). Looking inside the black box: The effect of corporate governance on corporate social responsibility. Corporate Governance: An International Review, 24(3), 253–273.CrossRef
Johnson, R. A., & Greening, D. W. (1999). The effects of corporate governance and institutional ownership types on corporate social performance. Academy of Management Journal, 42(5), 564–576.CrossRef
Khan, M. U. Z. (2010). The effect of corporate governance elements on corporate social responsibility (CSR) reporting: Empirical evidence from private commercial banks of Bangladesh. International Journal of Law and Management, 52(2), 82–109.CrossRef
Kim, D., & Starks, L. T. (2016). Gender diversity on corporate boards: Do women contribute unique skills? American Economic Review, 106(5), 267–271.CrossRef
La Torre, M., Sabelfeld, S., Blomkvist, M., Tarquinio, L., & Dumay, J. (2018). Harmonising non-financial reporting regulation in Europe: Practical forces and projections for future research. Meditari Accountancy Research, 26(4), 598–621.CrossRef
Lai, A., Melloni, G., & Stacchezzini, R. (2018). Integrated reporting and narrative accountability: The role of preparers. Accounting, Auditing & Accountability Journal, 31, 1381–1405.CrossRef
Lander, G. H., & Auger, K. A. (2008). The need for transparency in financial reporting: Implications of off-balance-sheet financing and inferences for the future. Journal of Accounting & Organizational Change, 4, 27–46.CrossRef
Lehavy, R., Li, F., & Merkley, K. (2011). The effect of annual report readability on analyst following and the properties of their earnings forecasts. The Accounting Review, 86(3), 1087–1115.CrossRef
Li, F. (2008). Annual report readability, current earnings, and earnings persistence. Journal of Accounting and Economics, 45(2–3), 221–247.CrossRef
Liao, L., Luo, L., & Tang, Q. (2015). Gender diversity, board independence, environmental committee and greenhouse gas disclosure. The British Accounting Review, 47(4), 409–424.CrossRef
Lindblom, C. K. (1994). The implications of organizational legitimacy for corporate social performance and disclosure. Critical Perspectives on Accounting Conference, New York, 1994.
Lopatta, K., Jaeschke, R., Tchikov, M., & Lodhia, S. (2017). Corruption, corporate social responsibility and financial constraints: International firm-level evidence. European Management Review, 14(1), 47–65.CrossRef
Loughran, T., & McDonald, B. (2016). Textual analysis in accounting and finance: A survey. Journal of Accounting Research, 54, 1187–1230.CrossRef
Manes-Rossi, F., Tiron-Tudor, A., Nicolò, G., & Zanellato, G. (2018). Ensuring more sustainable reporting in Europe using non-financial disclosure – De facto and de jure evidence. Sustainability, 10(4), 1162.CrossRef
Mazzotta, R., Bronzetti, G., & Veltri, S. (2020). Are mandatory non-financial disclosures credible? Evidence from Italian listed companies. Corporate Social Responsibility and Environmental Management, 27(4), 1900–1913.CrossRef
Melloni, G., Caglio, A., & Perego, P. (2017). Saying more with less? Disclosure conciseness, completeness and balance in integrated reports. Journal of Accounting and Public Policy, 36(3), 220–238.CrossRef
Michelon, G., & Parbonetti, A. (2012). The effect of corporate governance on sustainability disclosure. Journal of management & governance, 16(3), 477–509.CrossRef
Mio, C., Fasan, M., Marcon, C., & Panfilo, S. (2020). The predictive ability of legitimacy and agency theory after the implementation of the EU directive on non-financial information. Corporate Social Responsibility and Environmental Management.
Nadeem, M., Zaman, R., & Saleem, I. (2017). Boardroom gender diversity and corporate sustainability practices: Evidence from Australian securities exchange listed firms. Journal of Cleaner Production, 149, 874–885.CrossRef
Nazari, J. A., Hrazdil, K., & Mahmoudian, F. (2017). Assessing social and environmental performance through narrative complexity in CSR reports. Journal of Contemporary Accounting & Economics, 13(2), 166–178.CrossRef
Neu, D., Warsame, H., & Pedwell, K. (1998). Managing public impressions: Environmental disclosures in annual reports. Accounting, Organizations and Society, 23(3), 265–282.CrossRef
Nicolò, G., Zanellato, G., & Tiron-Tudor, A. (2020). Integrated reporting and European state-owned enterprises: A disclosure analysis pre and post 2014/95/EU. Sustainability, 12(5), 1908.CrossRef
Ntim, C. G., & Soobaroyen, T. (2013). Corporate governance and performance in socially responsible corporations: New empirical insights from a neo-institutional framework. Corporate Governance: An International Review, 21(5), 468–494.CrossRef
Odriozola, M. D., & Baraibar-Diez, E. (2017). Is corporate reputation associated with quality of CSR reporting? Evidence from Spain. Corporate Social Responsibility and Environmental Management, 24(2), 121–132.CrossRef
Patten, D. M. (1991). Exposure, legitimacy, and social disclosure. Journal of Accounting and Public Policy, 10(4), 297–308.CrossRef
Pennebaker, J. W. (2011). The secret life of pronouns. New Scientist, 211(2828), 42–45.CrossRef
Plumlee, M., Brown, D., Hayes, R. M., & Marshall, R. S. (2015). Voluntary environmental disclosure quality and firm value: Further evidence. Journal of Accounting and Public Policy, 34(4), 336–361.CrossRef
Prado-Lorenzo, J.-M., & Garcia-Sanchez, I.-M. (2010). The role of the board of directors in disseminating relevant information on greenhouse gases. Journal of Business Ethics, 97(3), 391–424.CrossRef
Pucheta-Martínez, M. C., & Gallego-Álvarez, I. (2019). Do board characteristics drive firm performance? An international perspective. Review of Managerial Science, 1–47.
Qiu, Y., Shaukat, A., & Tharyan, R. (2016). Environmental and social disclosures: Link with corporate financial performance. The British Accounting Review, 48(1), 102–116.CrossRef
Rajasekar, J. (2013). A comparative analysis of mission statement content and readability. Journal of Management Policy and Practice, 14(6), 131–147.
Rao, K., & Tilt, C. (2016). Board composition and corporate social responsibility: The role of diversity, gender, strategy and decision making. Journal of Business Ethics, 138(2), 327–347.CrossRef
Rennekamp, K. (2012). Processing fluency and investors’ reactions to disclosure readability. Journal of Accounting Research, 50(5), 1319–1354.CrossRef
Rezaee, Z., & Tuo, L. (2017). Voluntary disclosure of non-financial information and its association with sustainability performance. Advances in Accounting, 39, 47–59.CrossRef
Sen, S., Du, S., & Bhattacharya, C. B. (2009). Building relationships through corporate social responsibility. In M. I. DJ, C. W. Park, & J. R. Priester (Eds.), Handbook of brand relationships. Armonk, M.E. Sharpe.
Suchman, M. C. (1995). Managing legitimacy: Strategic and institutional approaches. Academy of Management Review, 20(3), 571–610.CrossRef
Sundarasen, S. D. D., Je-Yen, T., & Rajangam, N. (2016). Board composition and corporate social responsibility in an emerging market. Corporate Governance: The International Journal of Business in Society, 16, 35–53.CrossRef
Terjesen, S., & Sealy, R. (2016). Board gender quotas: Exploring ethical tensions from a multi-theoretical perspective. Business Ethics Quarterly, 26(1), 23–65.CrossRef
Testarmata, S., Ciaburri, M., Fortuna, F., & Sergiacomi, S. (2020). Harmonization of non-financial reporting regulation in Europe: A study of the transposition of the directive 2014/95/EU. In Accountability, ethics and sustainability of organizations (pp. 67–88). Springer.CrossRef
Venturelli, A., Caputo, F., Cosma, S., & Leopizzi, & R., Pizzi, S. (2017). Directive 2014/95/EU: Are Italian companies already compliant? Sustainability, 9(8), 1385.CrossRef
Wang, Z., Hsieh, T. S., & Sarkis, J. (2018). CSR performance and the readability of CSR reports: Too good to be true? Corporate Social Responsibility and Environmental Management, 25(1), 66–79.CrossRef
Weber, R. P. (1985). Basic content analysis. Sage.
Wood, D. J. (1991). Corporate social performance revisited. Academy of Management Review, 16(4), 691–718.CrossRef
Ziek, P. (2009). Making sense of CSR communication. Corporate Social Responsibility and Environmental Management, 16(3), 137–145.CrossRef
Metadata
Title
Do Corporate Governance Mechanisms Affect the Non-financial Reporting Readability? Evidence from Italy
Authors
Adele Caldarelli
Alessandra Allini
Claudia Salvatore
Annamaria Zampella
Fiorenza Meucci
Copyright Year
2022
Publisher
Springer International Publishing
Book
Non-financial Disclosure and Integrated Reporting

Print ISBN: 978-3-030-90354-1

Electronic ISBN: 978-3-030-90355-8

Copyright Year: 2022

DOI
https://doi.org/10.1007/978-3-030-90355-8_1

Premium Partner

    Image Credits