Corporate social responsibility disclosure in Saudi companies: analysing the impact of board independence in family and non-family companies

Ameen Qasem (), Bazeet Olayemi Badru, Belal Ali Ghaleb, Shaker Dahan AL-Duais and Adel Ali Al-Qadasi
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Ameen Qasem: University of Hail
Bazeet Olayemi Badru: University of Hail
Belal Ali Ghaleb: University of Tabuk
Shaker Dahan AL-Duais: Ibb University
Adel Ali Al-Qadasi: Shaqra University

Palgrave Communications, 2024, vol. 11, issue 1, 1-18

Abstract: Abstract This study examines the relationship between family-controlled companies and corporate social responsibility practice disclosure (CSRPD) and examines whether board independence influences this relationship. A self-constructed CSR disclosure index is developed to measure the CSRPD in a sample of 152 publicly listed companies in Saudi Arabia from 2016 to 2021. The findings from the pooled ordinary least squares (POLS) regression reveal that family-controlled companies exhibit lower levels of CSRPD than non-family companies. However, family-controlled companies with a higher number of independent directors on their boards show higher CSRPD, indicating a significant positive interaction effect of board independence. These results remain robust even after applying a variety of econometric techniques, including Newey-West regression, panel corrected standard error (PCSE), logistic regression, and addressing endogeneity problems, along with using different measures for CSRPD and family-controlled companies. These findings suggest that the governance structure of the boards, particularly independent directors, can support the prosocial and positive stimulus of socioemotional wealth (SEW) theory. Therefore, Saudi Arabian capital market regulators need to be aware of the importance of companies’ governance structures.

Date: 2024
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DOI: 10.1057/s41599-024-03495-3

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