Board Diversity and Sustainability: Indonesian Evidence

Zuraida Zuraida () and Said Musnadi ()
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Zuraida Zuraida: Syiah Kuala University
Said Musnadi: Syiah Kuala University

A chapter in Eurasian Business and Economics Perspectives, 2023, pp 3-21 from Springer

Abstract: Abstract This study examines the relationship between board diversity and sustainability. The research sample consists of 38 companies listed on the Indonesia Stock Exchange from 2012 to 2018. Research data was collected from annual and sustainability reports and then analyzed using multiple regressions. We find that the level of sustainability disclosure in the sample companies is still relatively low, with an average of 17.49 points out of the 83 points listed in the Global Reporting Initiative standards. We find that the nationality and education level of the board of directors have a positive and significant relationship with sustainability disclosure. In contrast, board gender, age, and independent directors have a negative and significant relationship with sustainability disclosure. We also find that board education level has a positive and significant relationship with sustainability spending. However, gender has a negative and significant relationship with sustainability spending. We further find that the amount spent on sustainability initiatives does not match the level of sustainability disclosure. This suggests that companies disclosing higher sustainability factors do not necessarily spend more money on sustainability activities. Thus, in line with agency theory, there appears to be a practice of managerial entrenchment by outlining sustainability activities more extensively than the value invested. This study sheds light on the hidden lack of commitment to corporate sustainability, contributing to the debate in the sustainability literature.

Keywords: Board diversity; Corporate governance; Disclosure; Expenditure; Indonesia; Sustainability (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:eurchp:978-3-031-36286-6_1

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DOI: 10.1007/978-3-031-36286-6_1

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