Top

Journal of Business Ethics

Published in:

01-04-2013

Monitoring Intensity and Stakeholders’ Orientation: How Does Governance Affect Social and Environmental Disclosure?

Authors: Christine Mallin, Giovanna Michelon, Davide Raggi

Published in: Journal of Business Ethics | Issue 1/2013

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

search-config

AI-assisted search

Off

Abstract

The aim of the paper is to investigate the effects of the corporate governance model on social and environmental disclosure (SED). We analyze the disclosures of the 100 U.S. Best Corporate Citizens in the period 2005–2007, and we posit a series of simultaneous relationships between different attributes of the governance system and a multidimensional construct of corporate social performance (CSP). We consider both the extent and the quality of SED, with the purpose of identifying increasing levels of corporate commitment to stakeholders and shedding some light on whether SED is used as a signal or rather as a legitimacy tool. Our empirical evidence shows that the stakeholders’ orientation of corporate governance is positively associated with CSP and SED. On the other hand, we do not find support for the monitoring intensity of corporate governance being negatively associated with social performance. We also find that CSP in the “product” dimension is positively associated with the extent and quality of SED whilst CSP in the “people” dimension is negatively associated with the extent and quality of SED. At a time when shareholders and stakeholders share more common aspects in their relationships with firms, this is a significant area to explore and this research fills an important lacuna in this respect.

previous article Is the Perception of ‘Goodness’ Good Enough? Exploring the Relationship Between Perceived Corporate Social Responsibility and Employee Organizational Identification

next article Predicting Counterproductive Work Behavior from Guilt Proneness

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

A discussion of how these characteristics are linked to monitoring intensity is beyond the scope of this paper. For a review of the literature on various monitoring mechanisms, please refer to Gillan (2006). Moreover, the ability of these separate characteristics to proxy for the monitoring intensity of the governance structure is an empirical issue and it will be addressed using a latent variable in the empirical model later in the paper.

Whilst belonging to the list of the Best Corporate Citizens, these companies present both strengths and weaknesses as the ratings present both positive and negative values. Thus, KLD’s social performance data of the Top 100 Best Corporate Citizens provides a great degree of variability in the behavior of the firms. Moreover by using a period of 3 years (2005, 2006, and 2007) we are able to analyze the company’s longer-term social performance. Nonetheless, we recognize that the generalization of the findings of the study may be limited given the fact that the sample consisted of the most highly rated companies.

Although diversity is a rich concept and would include gender, race, age, possible disabilities, etc., given the operational difficulties in proxying for such multiple aspects of diversity, we will rely only on the presence of women on the board, i.e., gender diversity, in line with Coffey and Fryxell (1991).

http://www.business-ethics.com/BE100_all.

Abbott, W., & Monsen, R. (1979). On the measurement of corporate social responsibility: Self-reported disclosures as a method of measuring corporate social involvement. Academy of Management Journal, 22(3), 501–515.CrossRef

Al-Tuwaijri, S., Christensen, T. E., & Hughes, K. E. (2003). The relations among environmental disclosure, environmental performance, and economic performance: A simultaneous equations approach. Accounting, Organizations and Society, 29(5–6), 447–471.

Belkaoui, A., & Karpik, P. G. (1989). Determinants of the corporate decision to disclose social information. Accounting, Auditing and Accountability Journal, 2(1), 36–51.

Berle, A. A., & Means, G. C. (1932). The modern corporation and private property. New York: Macmillan.

Bollen, K. A. (1989). Structural equations with latent variables. New York: Wiley.

Bondy, K., Matten, D., & Moon, J. (2008). Multinational corporation codes of conduct: Governance tools for corporate social responsibility? Corporate Governance an International Review, 16(4), 294–311.CrossRef

Bowman, E. H., & Haire, M. (1975). A strategic posture toward corporate social responsibility. California Management Review, 18(2), 49–58.CrossRef

Buckholtz, A. K., Brown, J. A., & Shabana, K. M. (2008). Corporate governance and corporate social responsibility. In A. Crane, A. McWilliams, D. Matten, J. Moon, & D. S. Siegel (Eds.), The Oxford handbook of CSR (pp. 327–345). Oxford: Oxford University Press.

Cespa, G., & Cestone, G. (2007). Corporate social responsibility and managerial entrenchment. Journal of Economics and Management Strategy, 16(3), 741–771.CrossRef

Cho, C., & Patten, D. M. (2007). The role of environmental disclosures as tools of legitimacy: A research note. Accounting, Organizations and Society, 32(7–8), 639–647.CrossRef

Cho, C. H., Patten, D. M., & Roberts, R. W. (2006). Corporate political strategy: An examination of the relation between political expenditures, environmental performance, and environmental disclosure. Journal of Business Ethics, 67(2), 139–154.CrossRef

Cho, C. H., Roberts, R. W., & Patten, D. M. (2010). The language of US corporate environmental disclosure. Accounting, Organizations and Society, 35(4), 431–443.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

Coffey, B. S., & Fryxell, G. E. (1991). Institutional ownership of stock and dimensions of corporate social performance. Journal of Business Ethics, 10(6), 437–444.CrossRef

Coffey, B. S., & Wang, J. (1998). Board diversity and managerial control as predictors of corporate social performance. Journal of Business Ethics, 17(14), 1595–1603.CrossRef

Cowen, S. S., Ferreri, L. B., & Parker, L. D. (1987). The impact of corporate characteristics on social responsibility disclosure: A typology and frequency-based analysis. Accounting, Organizations and Society, 12(2), 111–122.CrossRef

Cox, P., Brammer, S., & Millington, A. (2004). An empirical examination of institutional investor preferences for corporate social performance. Journal of Business Ethics, 52, 27–43.CrossRef

David, P., Bloom, M., & Hillman, A. (2007). Investor activism managerial responsiveness, and corporate social performance. Strategic Management Journal, 28, 91–100.CrossRef

Deephouse, D. L. (2000). Media reputation as a strategic resource: An integration of mass communication and resource-based theories. Journal of Management, 26(6), 1091–1112.CrossRef

Fama, E. F., & Jensen, M. C. (1983). Separation of ownership and control. Journal of Law and Economics, 26, 301–325.CrossRef

Fox, J. (2006). Structural equation modeling with the SEM Package in R. Structural Equations Modelling, 13(3), 465–486.CrossRef

Freedman, M., & Jaggi, B. (1982). Pollution disclosures, pollution performance and economic performance. OMEGA, 10(2), 167–176.CrossRef

Freeman, R. E. (1984). Strategic management: A stakeholder approach. Boston: Pitman.

Gales, L. M., & Kesener, I. F. (1994). An analysis of board of director size and composition in bankrupt organisations. Journal of business research, 30(3), 271–282.CrossRef

Gillan, S. L. (2006). Recent developments in corporate governance: An overview. Journal of Corporate Finance, 12(3), 381–402.CrossRef

Global Corporate Governance Forum. (2009). Corporate governance: The foundation for corporate citizenship and sustainable businesses. Washington DC: GCGF.

Graves, S. B., & Waddock, S. A. (1994). Institutional owners and corporate social performance. Academy of Management Journal, 37(4), 1034–1046.CrossRef

Gray, R., Kouhy, R., & Lavers, S. (1995). Corporate social and environmental reporting: A review of the literature and a longitudinal study of UK disclosure. Accounting, Auditing and Accountability, 8(2), 47–77.CrossRef

Guidry, R. D., & Patten, D. M. (2010). Market reactions to the first-time issuance of corporate sustainability reports: Evidence that quality matters. Sustainability Accounting, Management and Policy Journal, 1(1), 33–50.CrossRef

Guthrie, J., & Parker, L. D. (1990). Corporate social disclosure practice: A comparative international analysis. Advances in Public Interest Accounting, 3, 159–175.

Hackston, D., & Milne, M. (1996). Some determinants of social and environmental disclosures in New Zealand. Accounting Auditing and Accountability Journal, 9(1), 77–108.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

Hillman, A. J., Cannella, J., & Paetzold, A. A. (2000). The resource dependence role of corporate directors: Strategic adaptation of board composition in response to environmental change. Journal of Management Studies, 37(2), 235–255.CrossRef

Hillman, A. J., & Dalziel, T. (2003). Boards of directors and firm performance: Integrating agency and resource dependence perspectives. Academy of Management Review, 28, 383–396.

Hillman, A. J., Keim, G. D., & Luce, R. A. (2001). Board composition and stakeholder performance: Do stakeholder directors make a difference? Business and Society, 40(3), 295–314.CrossRef

Huse, M. (2003). Renewing management and governance: New paradigms of governance? Journal of Management and Governance, 7(3), 211–221.CrossRef

Jensen, M. C., & Meckling, W. M. (1976). Theory of the firm: Managerial behavior agency costs, and ownership structure. Journal of Financial Economics, 3, 305–360.CrossRef

Johnson, R., & Greening, D. (1999). The effects of corporate governance and institutional ownership on corporate social performance. Academy of Management Journal, 42, 564–580.CrossRef

Koenig, T., & Gogel, R. (1981). Interlocking corporate directorships as a social network. American Journal of Economics and Sociology, 40, 37–50.CrossRef

Krippendorff, K. (2004). Content analysis. Thousand Oaks, CA: Sage.

Lindblom, C. K. (1994). The implications of organizational legitimacy for corporate social performance and disclosure. Paper presented at the Critical Perspectives of Accounting Conference, New York.

Luoma, P., & Goodstein, J. (1999). Stakeholders and corporate boards: Institutional influences on board composition and structure. Academy of Management Journal, 42, 553–563.CrossRef

Mallin, C., & Michelon, G. (2011). Board reputation attributes and corporate social performance: An empirical investigation of the US Best Corporate Citizens. Accounting and Business Research, 41(2), 119–144.CrossRef

McGuire, J., Dow, S., & Argheyd, K. (2003). CEO incentives and corporate social performance. Journal of Business Ethics, 45(4), 341–359.CrossRef

Michelon, G., & Parbonetti, A. (2010). Stakeholder engagement: Corporate governance and sustainability disclosure. Journal of Management and Governance. doi:10.1007/s10997-010-9160-3.

Minichilli, A., Zattoni, A., & Zona, F. (2009). Making boards effective: An empirical examination of board task performance. British Journal of Management, 20, 55–74.CrossRef

Mintzberg, H. (1983). Power in and around organizations. Englewood Cliffs, NJ: Prentice-Hall.

Neubaum, D. O., & Zahra, S. A. (2006). Institutional ownership and corporate social performance: The moderating effects of investment horizon, activism, and coordination. Journal of Management, 32, 108–131.CrossRef

OECD (Organization for Economic Co-operation and Development). (2004). OECD principles of corporate governance. www.oecd.org.

OECD (Organization for Economic Co-operation and Development). (2010). Corporate Responsibility: Reinforcing a Unique Instrument—2010 Annual Report on the OECD Guidelines for Multinational Enterprises. www.oecd.org.

Patten, D. M. (1991). Exposure, legitimacy, and social disclosure. Journal of Accounting and Public Policy, 10(4), 297–308.CrossRef

Patten, D. M. (1992). Intra-industry disclosure in response to the Alaskan oil spill: A note on legitimacy theory. Accounting, Organizations and Society, 17(5), 471–475.CrossRef

Patten, D. M. (2002). The relation between environmental performance and environmental disclosure: A research note. Accounting, Organizations and Society, 27(8), 763–773.CrossRef

Pfeffer, B. R., & Salancik, J. (1978). The external control of organizations: A resource dependence perspective. New York: Harper & Row.

Provan, K. G. (1980). Board power and organizational effectiveness among human service agencies. Academy of Management Journal, 23, 221–236.CrossRef

Pugliese, A., Bezermer, P., Zattoni, A., Huse, M., Van den Bosch, F. A. J., & Volberda, W. (2007). Board of Directors’ contribution to strategy: A literature review and research agenda. Corporate Governance: An International Review, 17(3), 292–306.CrossRef

R Development Core Team (2008). R: A language and environment for statistical computing. Vienna, Austria: R Foundation for Statistical Computing.

Roberts, R. (1992). Determinants of corporate social responsibility disclosure: An application of stakeholder theory. Accounting, Organizations and Society, 17(6), 595–612.CrossRef

Rodrigue, M., Magnan, M., & Cho, C. (2011). Greening or Greenwashing: Does environmental governance matter? Paper presented at the 3rd CSEAR Conference North American, Montreal, Canada.

Sacconi, L. (2006). A social contract account for CSR as an extended model of corporate governance (I): Rational bargaining and justification. Journal of Business Ethics, 68(3), 259–281.CrossRef

Selznick, P. (1949). TVA and the grass roots. Berkeley, CA: University of California Press.

Sur, S., Livna, E., & Magnan, M. (2008, June). Why do boards differ? Exploring ownership effects on board composition. Paper presented at the Administrative Sciences Association of Canada.

Surroca, J., & Tribò, J. A. (2008). Managerial entrenchment and corporate social performance. Journal of Business Finance and Accounting, 35(5–6), 748–789.CrossRef

Trotman, K., & Bradley, G. W. (1981). Associations between social responsibility disclosure and characteristics of companies. Accounting, Organizations and Society, 6(4), 355–362.CrossRef

Ullman, A. (1985). Data in search of a theory: A critical examination of the relationship among social performance, social disclosure, and economic performance. Academy of Management Review, 10(3), 540–577.

Verecchia, R. E. (1983). Discretionary disclosure. Journal of Accounting and Economics, 5, 179–194.CrossRef

Waddock, S. A., & Graves, S. B. (1997). The corporate social performance-financial performance link. Strategic Management Journal, 18(4), 303–319.CrossRef

Zahra, S. A., & Pearce, J. A. II (1989). Boards of Directors and corporate financial performance: A review and integrative model. Journal of Management, 15(2), 291–334.CrossRef

Zahra, S. A., & Stanton, W. W. (1988). The implications of Board of Directors’ composition for corporate strategy and performance. International Journal of Management, 5(2), 229–236.

Zattoni, A. (2011). Who should control a corporation? Toward a contingency stakeholder model for allocating ownership rights. Journal of Business Ethics, 103, 255–274.CrossRef

Title: Monitoring Intensity and Stakeholders’ Orientation: How Does Governance Affect Social and Environmental Disclosure?
Authors: Christine Mallin
Giovanna Michelon
Davide Raggi
Publication date: 01-04-2013
Publisher: Springer Netherlands
Published in: Journal of Business Ethics / Issue 1/2013
Print ISSN: 0167-4544
Electronic ISSN: 1573-0697
DOI: https://doi.org/10.1007/s10551-012-1324-4

Springer Professional

Abstract

Please log in to get access to your license.

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

Springer Professional "Wirtschaft+Technik"

Springer Professional "Wirtschaft"

Other articles of this Issue 1/2013

Shared Value and the Impartial Spectator Test

The Antecedents of Moral Imagination in the Workplace: A Social Cognitive Theory Perspective

A Social Cognitive Perspective on the Relationships Between Ethics Education, Moral Attentiveness, and PRESOR

A Social Contract for International Business Ethics

Is the Perception of ‘Goodness’ Good Enough? Exploring the Relationship Between Perceived Corporate Social Responsibility and Employee Organizational Identification

The Relationship between Identity Crises and Crises of Control