Board independence and CSR reporting: pre and post analysis of JCGC 2009

Article


Al Fadli, Amer, Sands, John, Jones, Greg, Beattie, Claire and Pensiero, Dominic. 2020. "Board independence and CSR reporting: pre and post analysis of JCGC 2009." International Journal of Law and Management. 62 (2), pp. 117-138. https://doi.org/10.1108/IJLMA-11-2018-0259
Article Title

Board independence and CSR reporting: pre and post analysis of JCGC 2009

ERA Journal ID123355
Article CategoryArticle
AuthorsAl Fadli, Amer (Author), Sands, John (Author), Jones, Greg (Author), Beattie, Claire (Author) and Pensiero, Dominic (Author)
Journal TitleInternational Journal of Law and Management
Journal Citation62 (2), pp. 117-138
Number of Pages22
Year2020
Place of PublicationUnited Kingdom
ISSN0309-0558
1754-243X
1754-2448
Digital Object Identifier (DOI)https://doi.org/10.1108/IJLMA-11-2018-0259
Web Address (URL)https://www.emerald.com/insight/content/doi/10.1108/IJLMA-11-2018-0259/full/html
Abstract

Purpose – This study aims to investigate the influence of board independence on the level of corporate social responsibility (CSR) reporting in Jordan over time. The paper also compares this level of influence between the pre- and post-issuance of the Jordanian corporate governance code (JCGC) in 2009.

Design/methodology/approach – Longitudinal data (panel data) from all non-financial listed companies on the Amman stock exchange for the period 2006-2015 was collected and analysed. The content analysis method was used to assess the CSR reporting evident in the annual reports. An ordinary least square regression was used to investigate the relationship between board independence and the level of CSR reporting.

Findings – The results revealed that board independence has a positive and significant influence on the level of CSR reporting. This influence became significantly stronger post the issuance of the corporate governance code in Jordan. The findings suggest that the presence of independent directors on the board encourages companies to report additional CSR information as one of the legitimation strategies to manage the expectations of stakeholder groups.

Research limitations/implications – This study provides motivation for regulators and companies to continue to improve board independence effectiveness.

Practical implications – The study supported evidence from prior studies, conducted the developed countries, that legitimacy theory is also applicable in Jordanian companies, which is a developing country. This study contributes to the debate and findings of the literature about governance and CSR reporting, specifically in the Middle East, as well as the potential of future studies in developing countries using a legitimacy theory as the basis for their investigations and motivation. This study provides evidence to motivate regulators and companies to improve, further, board independence effectiveness.

Originality/value – This empirical study has explored the potential influence of board independence on the level of CSR reporting in Jordan for JCGC pre- and post-issuance, which has not been examined previously and the findings for future studies in the Middle East region and other developing countries.

KeywordsMiddle East; Jordan; Legitimacy theory; Board independence; Corporate social responsibility reporting; Jordanian corporate governance code
ANZSRC Field of Research 2020350199. Accounting, auditing and accountability not elsewhere classified
Byline AffiliationsSchool of Commerce
Institution of OriginUniversity of Southern Queensland
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