Increasing Female Participation on Boards: Effects on Sustainability Reporting

Abstract

Copyright © 2020 The Authors. Utilizing data on 2,116 stock-exchange-listed banks over a 10-year period (2007–2016), this study examines the relationship between board gender diversity and sustainable reporting. Findings from descriptive analysis show that board diversity tends to be higher with banks endowed with low financial leverage and high assets. Cross-country analysis shows that Central America evinces the highest levels of board diversity among banks. In Europe, however, repose the highest levels of environmental and social disclosure among banks. In contrast, the highest level of governance disclosure among banks obtains in Australia. A regression model partially corroborates the gender board diversity as a causal factor of the corporate governance disclosure inasmuch as, when female board members account for 22–50% of the board, a positive significant effect on the level of ESG disclosure results. However, at levels above 50%, negative returns to scale manifest on ESG disclosure from female board participation. Given the effect on the latter on the former uncovered by this research, regulators ought to mandate quotas of female participation on bank boards to engender sustainable increases in the level of ESG reporting on the part of banks.