Impact of foreign directors on carbon emissions performance and disclosure: empirical evidence from France

Ghassan H. Mardini and Fathia Elleuch Lahyani

Sustainability Accounting, Management and Policy Journal, 2021, vol. 13, issue 1, 221-246

Abstract: Purpose - Drawing on multiple theoretical approaches, this study aims to investigate whether the presence of foreign directors on the board is associated with a company’s carbon emissions performance (CP) and carbon disclosure (CD). Design/methodology/approach - The sample comprises 67 non-financial listed firms from the Société des Bourses Françaises 120 index for the period 2010–2018 and the analysis relies on carbon reports from the carbon disclosure project, using a panel data analysis based on random-effects regression. Findings - The paper finds that having foreign directors has a positive significant impact on both aspects of carbon emissions (CE), namely, CP and CD. Foreign directors’ incentives to reveal extensive sustainability information depend on the volume of CE. The findings also indicate that foreign directors are more engaged in enhancing environmental transparency and lowering information asymmetry to maintain/ improve corporate legitimacy. Practical implications - The findings show that foreign directors play a vital role as one of the main pillars of a carbon model for sustainable carbon activities and disclosure. The evidence has important insights for the managers of French listed firms, shareholders and regulators. Social implications - The evidence underlines the value of foreign directors as a critical resource that enhances CE strategic decisions. Thus, the findings are valuable to managers, as they may consider balancing between foreign and local directors to benefit from a rich heterogeneous resource encompassing the diverse merits of both types of directors, with particular emphasis on foreign directors’ international exposure and experience. Originality/value - This study offers significant insights, as it examines the relationship between foreign directors and both the CP and CD in the French context, which is characterized by a non-English civil law system and the issuing of many environmental, climate and emission control laws.

Keywords: Foreign directors; Carbon emissions; Carbon performance; Carbon disclosure; Carbon accounting (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eme:sampjp:sampj-09-2020-0323

DOI: 10.1108/SAMPJ-09-2020-0323

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