Board Characteristics and ESG Disclosure: A Systematic Literature Review

Abstract

Stakeholders heavily rely on companies' environmental, social, and governance (ESG reports) to assess ESG performance and inform investment decisions. Given the significant influence of boards of directors on ESG disclosure, understanding how board characteristics impact this disclosure is crucial. A systematic literature review of 26 articles from 2012 to 2023, explores the relationship between board characteristics (BC) and ESG disclosure, aiming at identifying the academic trend of the relationship. Notably, 35% of the studies adopt a multi-country perspective, considering country-level factors. The results reveal the application of various theories—stakeholder, agency, legitimacy, resource dependency, signaling, and upper echelons—to explain the relationship. Key board characteristics identified include board size, independence, gender diversity, expertise, the presence of board committees. Research methods, particularly content analysis, are prevalent in the studied articles, with a focus on comprehensive ESG indices covering diverse dimensions. This research makes substantial contributions to the expanding ESG literature by offering valuable perspectives on how BC influence on ESG disclosure and suggesting avenues for future research, including industry comparative studies, the development of new theoretical frameworks, exploration of specific board characteristics, reference to national ESG guidelines, in-depth analysis of particular facets of ESG disclosure, and investigation of government mechanisms' role in the relationship between these variables. Furthermore, the most recent sources including papers from the Covid-19 Pandemic period, constitute the novelty of the research and this study offers valuable guidance for scholars seeking to enhance the understanding of BC and ESG disclosure.