J Bus Ethics (2018) 150:41–56
https://doi.org/10.1007/s10551-016-3105-y
The Effect of Board Capital and CEO Power on Corporate
Social Responsibility Disclosures
Mohammad Badrul Muttakin1 • Arifur Khan1 • Dessalegn Getie Mihret1
Received: 7 December 2015 / Accepted: 25 February 2016 / Published online: 14 March 2016
Ó Springer Science+Business Media Dordrecht 2016
Abstract This study examines the effect of directors’
human and social capital (i.e. board capital) on the level of
corporate social responsibility (CSR) disclosures by
drawing on insights from a resource-based view. It also
investigates the effect of chief executive officer (CEO)
power on this relationship. Data were obtained from annual
reports of companies listed on the Dhaka Stock Exchange
in Bangladesh from 2005 to 2013. We employ outside
directors’ experiences and expertise as a proxy for board
capital and measure CEO power using a ‘power index’ that
comprises CEO duality, ownership, tenure and family CEO
status. Results show that board capital is positively asso-
ciated with CSR disclosure levels; however, CEO power is
negatively associated with CSR disclosures and reduces the
effect of board capital on CSR disclosures. Thus, we
conclude that although board capital can improve CSR
practices, CEO power can also inhibit these practices.
Keywords Board capital  CEO power  Corporate social
responsibility disclosure  Bangladesh
Introduction
An increasing societal focus on the corporate social
responsibility (CSR) disclosures of firms has attracted
considerable research on the behaviours of firms. Previous
& Arifur Khan
arifur.khan@deakin.edu.au
1 2010). Jeremias and Gani (2014) document a positive
Department of Accounting, Deakin Business School, Deakin
University, 221 Burwood Highway, Burwood, VIC 3125,
Australia
studies have investigated the association between CSR
disclosures and board characteristics such as board inde-
pendence and incentives (e.g. Haniffa and Cooke 2005;
Harjoto and Jo 2011; Fabrizi et al. 2013). This area of
research is largely premised on the agency theory argu-
ment that independent directors effectively monitor and
control firms (e.g. Klein 2002; Davidson et al. 2005). The
CSR disclosures of firms are often voluntary in nature
and, consequently, lack strict monitoring and control
benchmarks. Thus, it may be necessary to supplement
agency theory with other theories to gain a better
understanding of the CSR disclosure behaviours of firms.
The resource-based view provides a conceptual tool to
understand why (in addition to board independence,
emphasised in the monitoring argument), knowledge,
experience and networks of directors may matter. Becker
(1964) defined board capital as a combination of direc-
tors’ human and social capital. Hillman and Dalziel
(2003) contend that the concept of board capital can
enable us to develop hypotheses based on the resource-
based view (Pfeffer 1972; Pfeffer and Salancik 1978).
Human capital refers to directors’ knowledge, skills and
experience. Conversely, social capital refers to relation-
ships and networks developed through interlocking
directorate ties (Hillman and Dalziel 2003; Haynes and
Hillman 2010).
Previous research shows that board capital could
enhance board effectiveness in relation to decision making
and policy formulation (see, for example, Baysinger and
Hoskisson 1990). Boards with high human and social
capital provide useful advice and counsel to management
on important matters facing firms (Haynes and Hillman
impact of board capital on firm performance and also find
that board capital mitigates the negative effect of CEO
123
42
duality and board dependence1 on firm performance.
Additionally, Reeb and Zhao (2013) contend that board
capital facilitates board oversight and improves disclosure
quality. These results suggest that the effectiveness of a
board is more dependent on directors’ human and social
capital (Becker 1964) than directors’ independence. How-
ever, as CSR disclosures have yet to be examined in this
emerging area of research, the relationship between board
capital and CSR disclosures remains largely unknown. A
relationship between the two concepts is predicted, as
empirical evidence shows that boards with high human and
social capital provide useful advice to management on
strategically important matters (Haynes and Hillman 2010).
Further, CSR activities and associated disclosures are
increasingly regarded as important strategic matters for
firms due to increasing attention being directed towards
firms’ CSR activities (Reverte 2009). Recent research
shows that CEO power could influence the effect of board
capital on firm decisions (Chen 2014; Haynes and Hillman
2010). CEO power could be particularly important in the
context of CSR matters, as CSR expenditures may con-
tradict management’s short-term financial targets and the
voluntary nature of CSR activities may reduce manage-
ment attention to CSR (McWilliams and Siegel 2001;
McWilliams et al. 2006). However, research on CSR dis-
closure has yet to empirically test these relationships.
Using empirical evidence from Bangladeshi listed
companies, this study investigates whether any association
exists between board capital and CSR disclosures and
whether CEO power affects this association. Bangladesh, a
developing South Asian country, provides an ideal setting
for the present study for a number of reasons. First, inter-
ests in CSR disclosures by Bangladeshi corporations are
increasing (Momin and Parker 2013). The scrutiny on CSR
practices by Bangladeshi companies has escalated in the
wake of numerous high profile environmental, health and
safety corporate disasters in the garment industries that
claimed hundreds of lives (The Daily Star 2012; Wash-
ington Post 2013). Such incidents have directed interna-
tional attention to Bangladeshi labour rights and worker
safety and spawned stakeholder activism that has led to
international buyers pressuring Bangladeshi businesses to
improve labour practices and become socially responsible
businesses.2 Second, the small size and family ownership
structures of Bangladeshi firms provide a sizable number of
observations for a study of the CEO power effect
1
Jeremias and Gani (2014) define board dependence as the number
of inside directors divided by the total number of directors on the
board.
2
The United States of America announced the suspension of United
States trade privileges for Bangladesh in June 2013 following
concerns relating to labour rights and workers’ safety (Washington
Post 2013).
123
M. B. Muttakin et al.
(Farooque et al. 2007; Siddiqui 2010). Many Bangladesh
corporations have adopted an Anglo-American governance
model that necessitates majority board independence and
the separation of the CEO and chairperson positions;
however, family CEOs and CEO duality continues in the
Bangladeshi corporate sector (Sobhan and Werner 2003;
Uddin and Choudhury 2008).
The results of our study show that board capital is
positively associated with CSR disclosures, CEO power is
negatively associated with CSR disclosures and CEO
power reduces the positive effect of board capital on CSR
disclosures. Thus, it appears that while board capital can
improve CSR practices, CEO power can inhibit this
improvement. Our additional analysis shows that CEO
duality, CEO ownership and CEO tenure are important
dimensions of CEO power affecting Bangladeshi compa-
nies’ CSR disclosures. Three important implications can be
drawn from the findings of this study. First, a more com-
prehensive understanding of the governance issues influ-
encing the CSR disclosures of firms will inform
policymaking decisions. This is important as CSR policy
issues continue to gain prominence and some countries
have introduced mandated CSR expenditures for compa-
nies (Subramaniam et al. 2015). Second, under the current
voluntary disclosure regime, readers of CSR reports need
to put into perspective the information detailed in these
reports. Third, we extend the conclusions of emerging
research on board capital and corporate disclosures (e.g.
Reeb and Zhao 2013) in relation to the voluntary CSR
disclosures of firms.
The remainder of this paper is structured as follows.
‘‘Theory and hypothesis development’’ in section develops
the theoretical framework and hypotheses. ‘‘Research
design’’ in section describes the research methods
employed in this study. ‘‘Results’’ in section presents the
empirical results and further analyses. Finally, ‘‘Conclu-
sion’’ in section concludes the study.
Theory and Hypothesis Development
Theoretical Perspectives
The argument of this paper is grounded in Hillman and
Dalziel’s (2003) concept of board capital that comprises
directors’ human capital and social capital. Hillman and
Dalziel (2003) drew on resource dependency theory and
agency theory to develop this concept. Under the resource
dependency theory, board capital refers to a board’s ability
to provide advice and counsel. Conversely, under agency
theory, a board has crucial control and an independent
monitoring role. In the present study, board capital is defined
as the ability of directors to use their skills, reputations,
The Effect of Board Capital and CEO Power on Corporate Social Responsibility Disclosures
experience, expertise and knowledge to perform both man-
ager-monitoring activities and provide advice and counsel to
management (Hillman 2005; Chen 2008).
Resource dependence theory focuses on the strategic
actions of organisations that aim to manage and control
resource scarcity within organisations through interdepen-
dence with other firms in their environment (Mustakallio
2002). Under this theory, human capital (i.e. board mem-
bers’ experiences and occupational backgrounds) is the
main component of a board’s capital and enables directors
to act as a resource to management by providing advice and
counsel. Previous research shows that board members who
are also CEOs of other large firms (Baysinger and Butler
1985; Rosenstein and Wyatt 1994), government officers
(Hillman 2005; Hillman et al. 1999), members of board of
directors of influential firms (Haunschild and Beckman
1998) or university professors (Jeremias and Gani 2014)
usually possess high board capital that can assist managers
to perform their duties effectively. Such prominent board
members can also reduce the risk of environmental
uncertainty (Daily and Dalton 1994), help managers to
formulate strategic decisions (Westphal 1999) and assist
managers to identify strategic opportunities (Judge and
Zeithaml 1992). Further, top managers can tap into a
board’s breadth of knowledge (Zahra and Pearce 1989).
Board members provide these resources through their
skills, knowledge and experiences (Corbetta and Salvato
2004); that is, through what Hillman and Dalziel (2003)
described as their board capital.
A board’s ability to provide independent monitoring and
control (Jensen and Meckling 1976) may be more important
to compliance-oriented reporting than voluntary disclosures
such as CSR (McWilliams et al. 2006). CSR refers to ‘ac-
tions that appear to further some social good, beyond the
interests of the firm and that which is required by law’
(McWilliams and Siegel 2001, p. 117). Consequently, some
powerful CEOs may not prioritise CSR practices (McWil-
liams et al. 2006). Agency theory research shows that some
managers become powerful due to their concentrated own-
ership, long tenure and status as founders and because they
hold the dual roles of CEO and chairperson (Morck et al.
1988). The power CEOs hold usually insulates them from
disciplining and controlling forces, such as boards of
directors, the managerial labour market and/or the market
for corporate control (Fama and Jensen 1983). Entrenched
forms of CEO power may be used to advance self-interests
rather than the interests of shareholders or stakeholders
(Weisbach 1988). It may be that powerful CEOs are not
motivated to invest in CSR practices, if these practices are
not linked to their self-interests (McWilliams et al. 2006).
Thus, CEO power could also restrict the potential of board
capital to invest in CSR and make associated disclosures.
43
Board Capital and CSR Disclosures
Boards of directors are one of the most important gover-
nance devices for monitoring on behalf of shareholders.
Previous studies show the importance of board character-
istics such as board composition, size, independence and
leadership in relation to the proper functioning of a board
(Agrawal and Knoeber 1996; Yermack 1996). As the
capabilities of board members represent the board’s ability
to monitor and assist decisions of management, board
capital is important in the day-to-day operations of firms.
Previous research shows that board members with high
human and social capital effectively perform various duties
(Jeremias and Gani 2014). As outlined above, board
members with higher levels of expertise and experience
and richer social networks are better able to perform their
duties than directors with lesser experience, unproven track
records and limited social networks.
Previous research shows the effectiveness of board
monitoring and that board capital positively affects the
performances of firms. Jermias and Gani (2014) found
that firms benefit from board capital, as outside directors
have the ability to monitor managers and provide advice
and counsel resulting in better firm performance. Reeb
and Zhao (2013) contend that board capital should be of
great importance to shareholders who have little recourse
in relation to poor decisions that originates from the
limited abilities or skills of the board. Reeb and Zhao
(2013) further argue that board capital (i.e. directors’
educational backgrounds, experiences and networks)
facilitates board oversight and improves board efficacy,
thus enhancing the quality of disclosures. Chen (2014)
argues that because of their education, knowledge and
industry-specific experience, directors may more accu-
rately evaluate the prospects for innovations and related
research and development (R&D). Directors with such
capabilities are likely to increase their efforts to provide
valuable strategic advice and resources and support R&D
investment to enhance innovative capabilities. Accord-
ingly, a positive relationship between board capital and
R&D intensity has been documented in the Taiwanese
electronics industry.
The values, motives and experience of directors influ-
ence corporate disclosure policies (Haniffa and Cooke
2005). Consequently, board capital could influence corpo-
rate social disclosures. Directors with skills, experience
and knowledge may have a greater ability to monitor cor-
porate social activities and provide relevant information to
stakeholders. Thus, we propose the following hypothesis:
H1 There is a positive relationship between board capital
and the level of CSR disclosures.
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44
CEO Power and CSR Disclosures
CEO power is another variable that could potentially
influence the level of CSR disclosures by inhibiting a
board’s monitoring ability. CEO power may originate from
multiple sources (Jackling and Johl 2009) such as CEO
duality, CEO ownership, CEO tenure and family CEO
status. A powerful CEO may affect board decisions (Dalton
and Kesner 1987), ultimately reducing the effectiveness of
the board (Boyd 1994). Conversely, under the influence of
a dominant CEO, directors may engage in greater discus-
sion and debate and consider a wider range of viewpoints
(Zahra and Pearce 1989).
A CEO who also chairs the board may exert a greater
influence over the board (Cannella and Shen 2001), as the
chairperson often sets the agenda for board meetings and
thus has the ability to control the issues brought before the
board (Imhoff 2003). CEOs who serve as chairpersons also
often have a significant influence on the selection of can-
didates for board seats. This may increase the likelihood
that new board appointees will not be independent of
management, even if they are presented as independent.
Haniffa and Cooke (2002) outline two competing argu-
ments in relation to this issue. If two separate people per-
form the two separate roles of CEO and chairperson, the
checks and balances of performance management are
enhanced. However, the separation of these two roles is not
always necessary and many companies are well run and
exhibit effective board monitoring in circumstances where
these roles have been combined. In companies where a
CEO has a dual role, the CEO also has greater power that
may enable him/her to make decisions that do not take into
account the interests of stakeholders. This may also result
in reduced attention to and involvement in social or com-
munity activities and thus affect related disclosures.
A CEO that owns a fraction of a firm’s shares is affected
by managerial actions and thus will align his/her incentives
with those of other shareholders (Jensen and Meckling
1976). However, it has also been argued that increased
share ownership may result in managers becoming
entrenched (Demsetz 1983). An entrenched CEO may
dominate a board’s decisions on firm strategies and policies
concerning organisational social behaviour. Prior research
suggests that managerial ownership negatively affects
incidences of voluntary disclosures (Chau and Gray 2010).
If a CEO has held his/her position for a long period,
agency problems could begin to arise, as long tenure has
been shown to increase managerial power (Morck et al.
1988; Berger et al. 1997; Rose and Shepard 1997; Her-
malin and Weisbach 1998; Chidambaran and Prabhala
2003; Ryan and Wiggins 2004) through entrenchment. An
entrenched CEO is likely to place less emphasis on
stakeholders’ interests and may be reluctant to invest in
123
M. B. Muttakin et al.
social activities. Similarly, a family CEO (appointed by
family members) is more likely to make decisions that
protect the interests of the family. Demsetz and Lehn
(1985) argue that families tend to supply top managers to
better meet their consumption goals through the firm rather
than through their wealth. A family CEO may also have an
important role in selecting board members and may appoint
outside directors based on personal connections. Addi-
tionally, family CEOs tend to be less accountable to gen-
eral shareholders (Gomez-Mejia et al. 2001). Thus, it is
expected that family CEOs will be less motivated in rela-
tion to CSR strategies and activities than non-family CEOs.
In summary, the power of a CEO is likely to be a
function of CEO duality, ownership, tenure and family
status. Powerful CEOs may be more concerned with their
own interests and the costs of CSR practices and, conse-
quently, negatively influence corporate decisions in rela-
tion to CSR activities. Thus, we propose the following
hypothesis:
H2 There is a negative relationship between CEO power
and the level of CSR disclosures.
Board Capital, CEO Power and CSR Disclosures
In practice, in addition to directors, CEOs are also
responsible for the allocation of resources and making
strategic decisions (Minnick and Noga 2010). Thus, inter-
actions between powerful CEOs and directors may influ-
ence the quality of board decisions (Dalton and Kesner
1987; Kor 2006). As noted above, a powerful CEO is more
likely to engage in self-serving actions that decrease the
value of shareholders’ wealth (Dunn 2004). Powerful
CEOs may be reluctant to invest heavily in CSR-related
activities. Conversely, directors (particularly outside
directors) with skills, experiences and knowledge who
protect shareholders and stakeholders’ interests may
advocate for more CSR activities. Where the power of
CEOs is prevalent, CEOs may also influence the appoint-
ment of directors by selecting directors who are unlikely to
challenge their decisions (Uddin and Choudhury 2008).
This enables CEOs to dominate board decisions on CSR
matters. Thus, we propose the following hypothesis:
H3 The interaction between CEO power and board cap-
ital is negatively related to the level of CSR disclosures.
Research Design
Sample and Data
Our sampling period covers reporting years from 2005 to
2013 (inclusive). Table 1 summarises the sample selection
The Effect of Board Capital and CEO Power on Corporate Social Responsibility Disclosures 45

procedure. In 2005, 282 companies were listed on Ban- CSRD ¼ a þ b1 BCAP þ b2 CEOPWR
gladesh’s Dhaka Stock Exchange (DSE). The sample þ b3 BCAP  CEOPWR þ b4 BIND
comprises all 155 non-financial companies listed on the
þ b5 BSIZE þ b6 LEV þ b7 LAGE
DSE from 2005 to 2013. Unlike many developed coun- ; ð3Þ
tries, Bangladesh has no formal database for annual þ b8 ROA þ b9 FSIZE
reports and thus this study relied on the annual reports þ b10 INDUSTRY DUMMIES
available at the DSE library. The DSE library has a þ b11 YEAR DUMMIES þ e
limited collection, but a sufficient number of annual
reports from 2005 onwards. Thus, we decided to begin where
our study period in 2005. At the time we conducted the
research project, the latest year that annual reports were
Variable Definition Expected
available was 2013. sign
Of 1395 firm-years, we selected a final sample of 1005
firm-years due to the unavailability of necessary informa- CSRD Corporate social responsibility disclosure
score/index
tion and annual reports for 390 firm-years. We collected
BCAP Board capital ?
the financial and corporate governance data from the
CEOPWR Chief executive officer power –
annual reports of the sample companies. Social responsi-
BIND Board independence ?
bility information was collected from the CSR disclosures,
BSIZE Board size ±
corporate governance disclosures, directors’ reports,
LEV Leverage ±
Chairman’s statements and notes attached to the financial
statements contained in the annual reports. Board capital LAGE Firm age ?
data were collected from the annual reports, the prospec- ROA Return on assets ?
tuses of the listed companies, stock exchange documents FISZE Firm size ?
and company websites.

Model
We use regression analysis to test the effect of board
capital and CEO power on the level of CSR disclosures.
We test assumptions underlying the regression model for
multicollinearity based on a correlation matrix and the
variance inflation factor (VIF). None of the variables has a
VIF value in excess of 10 (Neter et al. 1983), suggesting
that multicollinearity is not a problem in interpreting the
regression results.
The regression3 equations are as follows:
CSRD ¼ a þ b1 BCAP þ b2 BIND þ b3 BSIZE
þ b4 LEV þ b5 LAGE þ b6 ROA
þ b7 FSIZE þ b8 INDUSTRY DUMMIES
þ b9 YEAR DUMMIES þ e
ð1Þ
CSRD ¼ a þ b1 CEOPWR þ b2 BIND þ b3 BSIZE
þ b4 LEV þ b5 LAGE þ b6 ROA
þ b7 FSIZE þ b8 INDUSTRY DUMMIES
þ b9 YEAR DUMMIES þ e
ð2Þ
3
We use the panel least square regression technique.
Dependent Variable
The CSR disclosure (CSRD) index is the dependent vari-
able in this study. To assess the level of CSRD in annual
reports, a checklist of 20 items was constructed based on
previous CSR studies (Rashid and Lodh 2008; Muttakin
and Khan 2014). These 20 items relate to five
themes/categories (i.e. community, environment,
employee, products and services and value added infor-
mation) applicable to the Bangladeshi environment. The
community theme includes three items: community
involvement, charitable donations and subscriptions,
sponsorship and advertising and community in relation to
health and education. The theme for environment includes
disclosures relating to environmental policies. The theme
for employee information includes nine items: number of
employees, employee relationships, employee welfare,
employee education, employee training and development,
employee profit sharing, remuneration, employees’ occu-
pational health and safety and child labour and related
actions. The product and service theme comprises six
items: types of product disclosed, product R&D, product
quality and safety, discussion of marketing network, cus-
tomer, service and satisfaction and customer award. The
value added information theme focuses on the disclosure of
a value added statement.

123
46 M. B. Muttakin et al.

Table 1 Sample description Hypothesised Variables

Panel A: sample size
Number of firm-years 1395
Adopting the approach of Jeremias and Gani’s (2014), we
measure board capital as the number of outside directors
Less
also serving as CEOs or directors of another listed com-
Firm-years without necessary 390
information/annual reports pany or university professors or government officers divi-
Total 1005 ded by total numbers of directors on the board.4
Previous studies use different dimensions such as CEO
Industry sector Number of firm-years
duality (Hermalin and Weisbach 1998; Jackling and Johl
Panel B: Industry wise distribution 2009), CEO ownership (Veprauskaite and Adams 2013),
Cement 62 CEO tenure (Morck et al. 1988; Brookman and Thistle
Ceramics 35 2009) and CEO remuneration (Grinstein and Hribar 2004;
Engineering 168 Florackis and Ozkan 2009; Jiraporn and Chintrakarn 2013)
Food 180 as proxies of CEO power. No single measure is likely to
Jute 25 capture every possible dimension of CEO power; however,
Paper and printing 13 we have developed a CEO power index that comprises four
Miscellaneous 93 different dimensions to test the influence of CEO power on
Pharmaceuticals 183 the level of CSR disclosures. The approach of developing a
Tannery 43 CEO power index to capture different dimensions is con-
Textile 203 sistent with that of Veprauskaite and Adams (2013). The
Total 1005
dimensions of the index are CEO duality, CEO ownership,
CEO tenure and family CEO status (i.e. whether the CEO
was a family member). Due to data limitations, we did not
consider CEO remuneration under the power index. How-
ever, we did consider family CEO status as a source of
A dichotomous procedure is applied whereby a com- CEO power under the index because a majority of Ban-
pany is awarded 1 if an item under each theme is disclosed gladeshi listed companies are family-owned companies and
and 0 otherwise. We undertook a content analysis to appoint family members as CEOs (Farooque et al. 2007).
develop our CSR disclosure index. To mitigate any coder To develop the power index, we first created scores for
reliability issues that could arise from this approach, a each of the four power dimensions using a dichotomous
number of precautionary measures were adopted. Specifi- procedure; for example, a dummy variable equals 1 if the
cally, the first and third authors prepared a scoring sheet for CEO of a firm also holds the position of chairperson and 0
each firm-year observation and rated each item of the otherwise. Similarly, a dummy variable equals 1 if CEO
checklist accordingly. Later, the second author verified ownership of a firm is above median ownership and 0
each scoring sheet to ensure reliable ratings had been given otherwise. A dummy variable equals 1 if the tenure of a
across all sample firm-year observations. Where incon- CEO is above median value and 0 otherwise. A dummy
gruities arose, the annual reports were reanalysed and the variable equals 1 if the CEO is a family CEO and 0
differences were resolved. otherwise. Accordingly, to derive the CEO power index,
To calculate the CSR disclosure scores, we adopted an we calculate the ratio of actual scores awarded to the
approach used in previous research (Haniffa and Cooke maximum score attainable (i.e. 4) by a company for a
2005; Khan et al. 2013) that takes the ratio of actual scores particular year. Cronbach’s coefficient alpha for these
awarded and the maximum score that could be awarded by measures is 0.67.
a sample firm-year observation. Further, we use Cron-
bach’s (1951) coefficient alpha to assess the internal con-
sistency of our disclosure scores. Cronbach’s coefficient
alpha measures the degree to which correlations among
4
different categories of the disclosure index are weakened For example, Mr K. M. Masud Siddiqui, the secretary of the
Ministry of Industries, was appointed as an independent director on
due to random error. As a general rule, an alpha of 0.7–0.8 the board of the British American Tobacco Company Bangladesh
indicates that a correlation is weakened very little by ran- Limited in 2010. Dr Mijanur Rahman, the Vice Chancellor of
dom measurement error. In this study, the coefficient score Jagganath University, was appointed as an independent director on
for the five categories in the disclosure index is 0.79. Thus, the board of Maksons Spinning Mills Limited in 2013. Mr M. Azizul
Huq, the managing director of GlaxoSmithKline (GSK) Bangladesh
random error is less likely to reduce the power of empirical Limited, was appointed as an independent director of Berger Paints
tests when we use the CSRD index as a dependent variable. Bangladesh Limited in 2012.

123
The Effect of Board Capital and CEO Power on Corporate Social Responsibility Disclosures 47

Control Variables Firm size (FSIZE) is the natural logarithmic transfor-

mation of total assets. Large companies tend to undertake
We control for the following variables: board indepen- activities that have greater impact on society, as they are
dence (BIND), board size (BSIZE), leverage (LEV), firm often exposed to greater stakeholder scrutiny than smaller
age (LAGE), profitability (ROA) and firm size (FSIZE). firms. We therefore, expect a positive association between
Board independence (BIND) is measured by calculating firm size and CSR disclosures.
the ratio of the total number of independent directors to the
total number of directors on the board. Independent
directors are usually perceived as acting to protect the Results
interests of minority shareholders and tend to exert pres-
sure on management to disclose additional information, Univariate Results
including CSR matters (Haniffa and Cooke 2005). Further,
independent directors have been found to proactively Panel A of Table 2 sets out the descriptive statistics of the
address CSR issues to enhance their reputation in society CSRD index, corporate governance and financial variables.
(Zahra and Stanton 1988). Thus, we expect a positive effect The board capital variable (BCAP) shows that outside
of board independence on CSR disclosures. directors with skills, knowledge and experiences comprise,
Board size (BSIZE) is measured as the total number of on average, 14 % of our sample. This is much lower than
directors on the board. Cheng (2008) argues that larger the figure of 48 % reported by Jermias and Gani (2014) for
boards encounter more problems in relation to directors’ their sample of UK firms. The average CSR disclosures
free-riding than smaller boards. Based on this view, if a (CSRD) are 0.245. The average of the CEO power
board has several directors, the directors might have dif- (CEOPWR) index is 0.355. The average level of prof-
ferent opinions on CSR-related matters and a lack of itability (ROA) is approximately 7 %. The average firm
consensus on CSR disclosures may result. Thus, it could be size (natural log) is 20.36 and the average firm age in our
expected that larger boards would have a negative effect on sample is approximately 24 years.
the level of CSR disclosures. However, Pfeffer and Panel B of Table 2 sets out the descriptive statistics of
Salancik (1978) contend that a large board size could the CSR disclosures score based on different
indicate that a firm is attempting to form links with its
environment and society and that board size could posi-
tively affect CSR disclosures. Thus, the relationship
between board size and CSR disclosures could be either Table 2 Descriptive statistics
positive or negative.
Variable Mean Median SD
Leverage (LEV) is measured by calculating the ratio
of total debts to total assets. Companies with high debts Panel A
may provide more information to assure their creditors CSRD 0.245 0.200 0.185
that they are unlikely to default on any debt covenants BCAP 0.138 0.000 0.204
(Schipper 1981). However, Purushothaman et al. (2000) CEOPWR 0.355 0.250 0.319
contend that companies with high leverage might have CEODU 0.185 0.000 0.388
close relationships with their creditors and use means CEOOWN 0.085 0.057 0.097
other than annual reports to provide additional informa- CEOTEN 12.310 11.000 8.941
tion, including CSR disclosures. Thus, the effect of FCEO 0.237 0.000 0.425
leverage on CSR disclosures could be either positive or BIND 0.147 0.131 0.087
negative. BSIZE 6.893 7.000 2.002
Firm age (LAGE) is a natural log of the number of years AGE 24.429 24.000 11.281
since a firm’s inception. Roberts (1992) found that more LEV 0.611 0.502 0.698
mature firms are more concerned about their reputations ROA 0.066 0.063 0.122
and thus disclose more social responsibility information. FSIZE 20.356 20.365 1.597
Thus, we expect a positive relationship between firm age Panel B
and CSR disclosures. COMDIS 0.248 0.333 0.277
Profitability (ROA) is measured by calculating the ratio
ENVDIS 0.234 0.000 0.423
of earnings before interest and taxes to the total assets.
EMPDIS 0.301 0.207 0.222
Profitable companies may wish to show their high com-
PRODIS 0.157 0.167 0.183
mitment to the wellbeing of society and thus may provide
VADIS 0.258 0.000 0.438
more CSR disclosures.

123
48
themes/categories. The three most disclosed categories are
employee-related disclosures (EMPDIS = 30 %), disclo-
sure of the value added statement (VADIS = 26 %) and
community-related disclosures (COMDIS = 25 %). The
relatively high score of employee-related disclosures is
unsurprising given that Bangladesh, particularly the textile
sector, is notorious in the international community for its
poor working conditions, workplace health and safety and
use of child labour. Thus, Bangladeshi companies may be
providing more employee-related information in an attempt
to change the perceptions of the international community.
Table 3 presents the univariate tests on the means of
CSRDs between firms with high rankings by hypothesised
variables (including the different dimensions of CEO
power) and those with low rankings. ‘High’ is equal to or
higher than the median value of each respective variable
and ‘Low’ is equal to or lower than the median value.
Comparing firms with high and low board capital, we find
that high board capital firms provide more CSR disclosures
than firms with low board capital. We also find that firms
with high CEO power provide fewer CSR disclosures than
low CEO power firms. Further, we determine that the
extent of CSR disclosures differs significantly as firms’
dimensions of CEO power such as CEO duality, CEO
ownership, CEO tenure and family CEO differ.
Table 4 presents the correlation matrix. Notably, the
incidences of board capital (BCAP) and CEO power
(CEOPWR) are positively and negatively correlated with
CSR disclosures (CSRD), respectively, at the 1 % level.
We also document that CEO power (CEOPWR) is posi-
tively correlated with CEO duality (CEODU), CEO
ownership (CEOOWN), CEO tenure (CEOTEN) and
family CEO status (FCEO), and negatively correlated
with board independence (BIND) at the 1 % level.
Notably, the magnitude of these correlations is fairly
large. This suggests that the four dimensions used in this
study to develop CEO power index are important deter-
minants of power in Bangladesh. We also document that
the control variables such as board independence (BIND),
board size (BSIZE), profitability (ROA), firm age (LAGE)
and firm size (FSIZE) are positive and significantly
Table 3 Mean difference tests
Variable CSRD
[Median (high) \Median (low) t test (P value)
BCAP 0.339 0.184 0.000
CEOPWR 0.335 0.374 0.000
CEODU 0.234 0.250 0.000
CEOOWN 0.217 0.282 0.000
CEOTEN 0.233 0.262 0.000
FCEO 0.217 0.257 0.000
123
M. B. Muttakin et al.
correlated with CSR disclosures (CSRD); however,
leverage (LEV) is negatively correlated with CSR dis-
closures (CSRD).
Multivariate Results
Table 5 sets out the results of regressing the hypothesised
variables on the level of CSR disclosures. In model 1, we
explore the effect of board capital on CSR disclosures. The
board capital (BCAP) variable has a positive and signifi-
cant coefficient (at the 1 % level). Thus, a greater pro-
portion of outside directors with skills, knowledge and
experiences provides a higher level of CSR disclosure
(supporting our first hypothesis). In model 2, we use an
alternative definition of board capital. Specifically, we
replace BCAP by BCAPDUM. BCAPDUM is a dummy
variable that equals 1 if there are any outside directors
serving as CEOs or directors of a listed company or uni-
versity professors or government officers and is otherwise
0. Again, we document a positive and significant coeffi-
cient (at the 1 % level) for the BCAPDUM variable.
Overall, our results suggest that outside directors are con-
cerned about legitimacy and reputation. This is consistent
with the notion that directors’ skills, knowledge and
experiences can improve board monitoring and decision
making (Jeremias and Gani 2014; Reeb and Zhao 2013)
and that directors can contribute to public accountability by
ensuring greater investments in CSR activities and dis-
closing accordingly.
In model 3, we investigate the effect of CEO power
(CEOPWR) on the level of CSR disclosures. We document
a negative and significant coefficient of the CEO power
variable (at the 5 % level). Consistent with our second
hypothesis, this suggests that more CEO power results in
fewer CSR disclosures. In weak legal, family-dominated
environments, CEOs are mainly family- or self-interest
driven. These CEOs are entrenched and less likely to care
about public accountability and legitimacy. Further, on
many occasions these CEOs do not engage in an activity, if
the costs of the CSR-related activity outweigh the benefits
(Fabrizi et al. 2013). Thus, powerful CEOs tend to be less
interested in using issues such as CSR to gain legitimacy.
In model 4, we test whether CEO power affects the
relationship between board capital and the level of CSR
disclosures. In this model, the key variable is the interac-
tion between board capital and CEO power (BCAP*-
CEOPWR). We document a negative and significant
coefficient (at the 1 % level) of the interaction variable.
This suggests that board capital has a negative effect on the
level of CSR disclosures in the presence of greater CEO
power. Thus, supporting our third hypothesis, the interac-
tion between board capital and CEO power negatively
affects the level of CSR disclosures.
 Table 4 Correlation matrix
BCAP CSRD LAGE LEV ROA FSIZE CEOPWR CEODU CEOOWN CEOTEN BIND FCEO BSIZE

BCAP 1.000 – – – – – – – – – – – –
P value – – – – – – – – – – – – –
CSRD 0.239 1.000 – – – – – – – – – – –
P value 0.000 – – – – – – – – – – – –
LAGE 0.035 0.248 1.000 – – – – – – – – – –
P value 0.285 0.000 – – – – – – – – – – –
LEV -0.141 -0.245 0.193 1.000 – – – – – – – – –
P value 0.000 0.000 0.000 – – – – – – – – – –
ROA 0.163 0.306 -0.047 -0.297 1.000 – – – – – – – –
P value 0.000 0.000 0.150 0.000 – – – – – – – – –
FSIZE 0.269 0.559 -0.011 -0.257 0.131 1.000 – – – – – – –
P value 0.000 0.000 0.746 0.000 0.000 – – – – – – – –
CEOPWR 0.025 -0.139 -0.180 -0.079 -0.019 -0.207 1.000 – – – – – –
P value 0.431 0.000 0.000 0.015 0.556 0.000 – – – – – – –
CEODU -0.051 -0.032 -0.092 0.026 0.016 -0.068 0.636 1.000 – – – – –
P value 0.119 0.334 0.005 0.421 0.632 0.037 0.000 – – – – – –
CEOOWN -0.131 -0.180 -0.132 -0.052 -0.008 -0.288 0.711 0.366 1.000 – – – –
P value 0.000 0.000 0.000 0.115 0.801 0.000 0.000 0.000 – – – – –
The Effect of Board Capital and CEO Power on Corporate Social Responsibility Disclosures

CEOTEN 0.182 -0.107 0.029 -0.112 0.064 -0.191 0.717 0.270 0.456 1.000 – – –
P value 0.000 0.001 0.369 0.001 0.052 0.000 0.000 0.000 0.000 – – – –
BIND 0.063 0.267 0.068 -0.222 0.152 0.233 -0.127 -0.189 -0.092 0.028 1.000 – –
P value 0.056 0.000 0.037 0.000 0.000 0.000 0.000 0.000 0.005 0.391 – – –
FCEO 0.006 -0.097 -0.200 -0.066 0.014 -0.074 0.715 0.377 0.522 0.408 -0.049 1.000 –
P value 0.866 0.003 0.000 0.045 0.664 0.025 0.000 0.000 0.000 0.000 0.133 – –
BSIZE 0.075 0.297 0.064 -0.056 0.066 0.328 -0.219 -0.132 -0.243 -0.153 0.067 -0.123 1.000
P value 0.013 0.000 0.052 0.089 0.041 0.000 0.000 0.000 0.000 0.000 0.000 0.000 –
49

123
50 M. B. Muttakin et al.

Table 5 Regression results: board capital, CEO power and CSR disclosures
Variable Model 1 Model 2 Model 3 Model 4 Model 5
Coefficient Prob. Coefficient Prob. Coefficient Prob. Coefficient Prob. Coefficient Prob.

Panel A: OLS
Constant -1.013 0.000 -0.934 0.000 -1.079 0.000 -1.077 0.000 -0.989 0.000
BCAP 0.061 0.007 – – – – 0.141 0.000 – –
BCAPDUM – – 0.068 0.000 – – – – 0.112 0.000
CEOPWR – – – – -0.021 0.031 -0.047 0.007 -0.064 0.000
BCAP*CEOPWR – – – – – – -0.216 0.003 – –
BCAPDUM*CEOPWR – – – – – – – – -0.119 0.000
BIND 0.210 0.001 0.242 0.000 0.218 0.001 0.195 0.003 0.237 0.000
BSIZE 0.011 0.000 0.010 0.000 0.010 0.000 0.011 0.000 0.009 0.001
FSIZE 0.050 0.000 0.046 0.000 0.053 0.000 0.052 0.000 0.048 0.000
LEV -0.028 0.000 -0.024 0.001 -0.028 0.000 -0.025 0.000 -0.020 0.005
LAGE 0.005 0.000 0.004 0.000 0.005 0.000 0.005 0.000 0.004 0.000
ROA 0.272 0.000 0.251 0.000 0.280 0.000 0.269 0.000 0.242 0.000
Industry dummies Included – Included – Included – Included – Included –
Year dummies Included – Included – Included – Included – Included –
Adjusted R2 0.465 – 0.488 – 0.462 – 0.470 – 0.497 –
F-statistic 51.488 – 56.358 – 50.878 – 46.795 – 52.126 –
Prob (F-statistic) 0.000 – 0.000 – 0.000 – 0.000 – 0.000 –
Variable Model 1 Model 2 Model 3 Model 4
Coefficient Prob. Coefficient Prob. Coefficient Prob. Coefficient Prob.

Panel B: IV 2SLS
Constant -0.836 0.000 -0.829 0.000 -0.623 0.001 -0.774 0.000
BCAP 0.357 0.001 – – 0.062 0.012 – –
BCAPDUM – – 0.132 0.000 – – 0.030 0.055
CEOPWR – – – – -0.129 0.060 -0.096 0.032
BCAP*CEOPWR – – – – -0.396 0.033 – –
BCAPDUM*CEOPWR – – – – – – -0.288 0.038
BIND 0.217 0.002 0.273 0.000 0.329 – 0.313 0.000
BSIZE 0.016 0.000 0.010 0.000 0.019 – 0.013 0.000
FSIZE 0.038 0.000 0.040 0.000 0.028 0.001 0.037 0.000
LEV -0.021 0.007 -0.019 0.012 -0.026 0.000 -0.026 0.003
LAGE 0.004 0.000 0.004 0.000 0.004 0.003 0.004 0.000
Industry dummies Included – Included – Included – Included –
Year dummies Included – Included – Included – Included –
ROA 0.222 0.000 0.222 0.000 0.214 0.005 0.237 0.000
Adjusted R2 0.363 – 0.464 – 0.134 – 0.355 –
F-statistic 43.668 – 51.893 – 28.636 – 38.468 –
Prob (F-statistic) 0.000 – 0.000 – 0.000 – 0.000 –

In model 5, we replace BCAP by the BCAPDUM
variable and rerun the regression equation reported in
model 4. Under this model, the key variable is the inter-
action between BCAPDUM and CEOPWR (BCAP-
DUM*CEOPWR). Similar to the results for model 4, the
newly created interaction variable has a negative and sig-
nificant coefficient (at the 1 % level). In weak legal, fam-
ily-dominated environments, powerful CEOs are inclined,
on many occasions, to appoint outside directors based on
family and personal connections to ensure that their

123
The Effect of Board Capital and CEO Power on Corporate Social Responsibility Disclosures
interests remain intact. In firms where CEOs have a greater
level of power, there is a general tendency not only to
ignore corporate social activities but also to save on the
costs related to reporting CSR. Thus, a negative association
between board capital and CSR disclosures results. Overall,
it appears that in the presence of a higher degree of CEO
power, outside directors with the necessary skills and
experiences may not challenge the decisions made by
CEOs in relation to CSR activities, resulting in a lower
level of CSR disclosures. We also document that the signs
and significance levels of the coefficients of board capital
(BCAP) and CEO power (CEOPWR) are consistent with
our findings for models 1 and 3.
In relation to the control variables, our findings across
all four models suggest that larger firm size (FSIZE), older
firms (LAGE) and better performance (ROA) are signifi-
cantly related to a greater level of CSR disclosures.
However, we find a negative and significant effect of
leverage (LEV) on the level of CSR disclosures. Thus, it
appears that Bangladeshi companies with higher leverage
may have closer relationships with their creditors and use
other avenues to disclose social responsibility activities
(Purushothaman et al. 2000). We also document that board
independence (BIND) and board size (BSIZE) have posi-
tive effects on CSR disclosures. The results of our analysis
in relation to the control variables are consistent with the
previous studies (Roberts 1992; Haniffa and Cooke 2005).
A potential concern of our previous analysis is that
directors with more abilities or experience may choose to
sit on boards with greater CSR disclosure to minimise
reputation costs and litigation risks (see Panel A, Table 5).
Thus, causality may run in the other direction. To address
this concern, we use an IV regression (2 SLS) and predict
board capital using the firm’s location (the dummy variable
is equal to 1 if the firm is located in the capital city of the
country, and 0 otherwise) as an instrument along with other
variables. We chose a firm’s location as an instrument, as it
is expected that there will be a bigger pool of directors with
abilities and experience in a capital city; that is, firms
located in a capital city will be more attractive to directors
with high abilities because of the geographical proximity.
Panel B sets out the results of the IV regression. In
model 1, we document that the coefficient of board capital
(BCAP) variable is positive and significant (at the 1 %
level), implying that a greater proportion of outside
directors with skills, knowledge and experiences give a
greater level of CSR disclosures. In model 2, we use an
alternative definition of board capital variable (BCAP-
DUM) to determine whether the results remain qualita-
tively unchanged. In model 3, we explore the interaction
effect between the variables of board capital and CEO
power (BCAP*CEOPWR). We document a negative and
significant coefficient (at the 5 % level) for the interaction
51
variable. Thus, it appears that board capital has a negative
effect on the level of CSR disclosures in the presence of
greater CEO power. In model 4, we use an alternative
definition of the board capital variable (BCAPDUM);
however, the sign and significance of the interaction vari-
able remains qualitatively similar to that of the interaction
variable in model 3.
Further Analysis
We carried out additional tests in relation to the main
findings of the study. We examined the effects of board
capital and CEO power on CSR disclosures for different
categories/themes of CSR (see above). The results of these
analyses are set out in Table 6. In models 1 to 5, we
explored the effects of board capital (BCAP) and CEO
power (CEOPWR) on community-related disclosures
(COMDIS), environment-related disclosures (ENVDIS),
employee-related disclosures (EMPDIS), product-related
disclosures (PRODIS) and value addition-related disclo-
sures (VADIS), respectively. It should be noted that we ran
logit models for environment-related (ENVDIS) and value
addition-related disclosures (VADIS), as there was only
one item to consider under these two categories
The signs of the estimated coefficients of our key vari-
ables are broadly consistent with our previous findings and
provide further evidence that board capital (CEO power) is
positively (negatively) related and the interaction term
between board capital, and CEO power is negatively
related to the level of different categories of CSR-related
disclosures. It should be noted that none of the hypothe-
sised variables have any significant effect on community-
related disclosures (COMDIS). Additionally, the interac-
tion between board capital and CEO power (BCAP*-
CEOPWR) has no significant effect on product-related
disclosure. Further, CEO power does not influence the
likelihood of reporting value added statements to provide
value addition-related disclosures. Overall, our results
suggest that directors’ skills, knowledge and experiences
improve the level of different categories of CSR disclo-
sures; however, the level of CEO power reduces such
disclosures. Further, greater CEO power can reduce the
effectiveness of board capital and result in a lower level of
different categories of CSR disclosures.
We developed the CEO power index based on four
different dimensions, and explored the relationships
between each of these four dimensions and the level of
CSR disclosures (CSRD). In original model (ii), we
replaced the CEO power (CEOPWR) variable by four
power dimension variables: CEO duality (CEODU), CEO
ownership (CEOOWN), CEO tenure (CEOTEN) and CEO
family status (FCEO), and reran the regression accordingly.
The results are set out under model 1 in Table 7. Notably,
123
52 M. B. Muttakin et al.

Table 6 Regression results: board capital, CEO power and different categories of CSR disclosures
Variable Model 1 (COMDIS) Model 2 (ENVDIS) Model 3 (EMPDIS) Model 4 (PRODIS) Model 5 (VADIS)
Coefficient Prob. Coefficient Prob. Coefficient Prob. Coefficient Prob. Coefficient Prob.

Constant -1.050 0.000 -13.091 0.000 -1.070 0.000 -0.799 0.000 -11.497 0.000
BCAP 0.107 0.086 2.330 0.001 0.193 0.000 0.096 0.017 2.017 0.001
CEOPWR -0.038 0.229 -1.186 0.001 -0.061 0.006 -0.036 0.075 -0.402 0.234
BCAP*CEOPWR -0.180 0.154 -6.926 0.000 -0.282 0.001 -0.077 0.347 -1.918 0.025
BIND 0.255 0.024 0.337 0.798 0.125 0.110 0.213 0.004 2.855 0.018
BSIZE 0.023 0.000 -0.054 0.334 0.013 0.000 0.003 0.315 0.169 0.001
LEV -0.029 0.020 -1.098 0.003 -0.030 0.001 -0.021 0.009 -0.461 0.089
FSIZE 0.047 0.000 0.592 0.000 0.055 0.000 0.041 0.000 0.382 0.000
ROA 0.429 0.000 1.714 0.117 0.279 0.000 0.256 0.000 1.379 0.163
LAGE 0.008 0.000 0.024 0.005 0.004 0.000 0.004 0.000 0.019 0.017
Industry dummies Included – Included – Included – Included – Included –
Year dummies Included – Included – Included – Included – Included –
Adjusted R2 0.302 – – – 0.401 – 0.329 – – –
Pseudo R2 0.225 – 0.225 – – – – – 0.152
F-statistic 25.597 – – – 39.009 – 28.835 – – –
Prob (F-statistic) 0.000 – – – 0.000 – 0.000 – – –

Table 7 Regression results: board capital, different dimensions of

CEO power and CSR disclosures In model 2, we reran our original Eq. (3) replacing the
interaction variable (BCAP*CEOPWR) with four interac-
Variable Model 1 Model 2
tion variables: BACP*CEODU, BCAP*CEOOWN,
Coefficient Prob. Coefficient Prob. BCAP*CEOTEN and BCAP*FCEO. As expected, we find
Constant -0.941 0.000 -0.951 0.000 that board capital has a positive and significant coefficient.
BCAP 0.067 0.013 0.157 0.005 Further, CEO duality and CEO tenure have negative and
CEODU -0.036 0.010 -0.047 0.004
significant coefficients. These results also suggest that
CEOOWN 0.028 0.674 0.035 0.649
some important dimensions of CEO power such as CEO
duality, CEO ownership and CEO tenure negatively and
CEOTEN -0.002 0.013 -0.001 0.041
significantly affect the relationship between board capital
FCEO -0.009 0.528 -0.015 0.418
and the level of CSR disclosures (CSRD). The signs and
BIND 0.289 0.000 0.285 0.000
significance of the coefficients of control variables are
BSIZE 0.008 0.010 0.007 0.014
consistent with our original findings.
LEV -0.017 0.027 -0.018 0.021
We undertook a number of other tests to verify the
LAGE 0.004 0.000 0.004 0.000
robustness of our results (these test results are not reported
ROA 0.398 0.000 0.386 0.000
for the sake of brevity). First, we slightly changed the
FSIZE 0.048 0.000 0.048 0.000
definition of board capital and the focus (particularly on the
BCAP*CEODU – – -0.112 0.040
skills, expertise and experience of the outside independent
BCAP*CEOOWN – – -0.434 0.015
directors). Next, we reran original Eqs. (1) and (3). We
BCAP*CEOTEN – – -0.004 0.008
found that the new board capital variable (BCAP) has a
BCAP*FCEO – – 0.058 0.342 positive and significant effect on the level of CSR disclo-
Industry dummies Included – Included – sures in both Eqs. (1) and (3). In Eq. (3), the interaction
Year dummies Included – Included – between board capital and CEO power (BCAP*CEOPWR)
Adjusted R2 0.467 – 0.469 – has a negative and significant coefficient, suggesting that in
F-statistic 32.703 – 27.398 – the presence of powerful CEOs, Bangladeshi independent
directors are less likely to invest and disclose CSR-related
CEO duality (CEODU) and CEO tenure (CEOTEN) have activities. Second, we use an alternative definition of CEO
significant and negative effects on the level of CSR dis- power to capture the effect of high and low CEO power.
closures. Our results for the coefficients of the control Specifically, based on the CEO power index we used in our
variables are qualitatively similar to our original findings. main analysis, we created a dummy variable that equals 1 if

123
The Effect of Board Capital and CEO Power on Corporate Social Responsibility Disclosures
the CEO power index is above the median (i.e. high CEO
power) and is otherwise 0 (i.e. low CEO power). We then
reran original Eqs. (2) and (3). We found negative and
significant coefficients of CEO power (CEOPWR) for both
equations. Thus, it appears that powerful CEOs tend to
provide fewer CSR disclosures. Consistent with our main
findings, we also found a negative and significant coeffi-
cient of the interaction variable in Eq. (3). We therefore,
find a negative relationship between board capital and the
level of CSR disclosures for powerful CEOs. Third, an
OLS regression test was conducted using the natural log-
arithm value of the CSR disclosure scores as the dependent
variable. Each of the original equations was then rerun;
however, the results do not differ qualitatively from our
main findings. Finally, we have also used fixed effects
regressions to check the robustness of our results consistent
with the panel data analysis technique. These findings are
not significantly different from the key findings.
Conclusion
This study has explored the effects of board capital and CEO
power on the level of CSR disclosures in Bangladesh.
Findings show that CSR disclosures are positively (nega-
tively) associated with board capital (CEO power) and CEO
power negatively affects the relationship between board
capital and CSR disclosures. Thus, while board capital can
improve CSR practices, CEO power can also inhibit this
possible improvement. The findings can be used to inform
regulators and policymakers on two important issues. First,
powerful CEOs may be driven by self-interest and may not
be interested in investing in CSR initiatives. Second, since
powerful CEOs may pick directors for the board based on
family ties or other personal connections, the directors may
ultimately support the CEO’s preferences.
Table 8 Variable definition
Variable Definitions
name
CSRD Corporate social responsibility disclosures score/index
COMDIS Community-related disclosures
ENVDIS Environment-related disclosures
EMPDIS Employee-related disclosures
PRODIS Product-related disclosures
VADIS Disclosure of value added statements
BCAP Number of outside directors who also serve as CEOs or directors of the listed company or university professors or government
officers divided by the total number of directors on the board
BCAPDUM Board capital dummy is a dummy variable that equals one if there is any outside directors who also serve as CEOs or directors of
the listed company or university professors or government officers, otherwise it equals zero
53
The results also make an important contribution to
theory. This study draws on the conceptual link between
the two separate bodies of literature, that is, resource
dependency and agency theories, to develop hypotheses on
the effect of board capital and CEO power on CSR dis-
closures. Empirical evidence supports these hypotheses.
Thus, these results extend this area of research (e.g. Jermias
and Gani 2014; Reeb and Zhao 2013) on the role of board
capital in improving effective monitoring by boards of
directors.
This study has some limitations; however, these limi-
tations provide opportunities for further research. First,
we did not consider the quality of CSR disclosures, as
most of the sample companies have limited their volun-
tary CSR disclosures to CSR items and did not report
those items in measurable form. Thus, future research
should address this issue by focusing on CSR quality in
the context of a different jurisdiction. Second, while the
use of data from a single national context facilitates
access to homogeneous data, tests on other empirical
settings are needed to ensure the generalisability of the
conclusions of this study. Third, prior research has sug-
gested that age (Kim and Cannella 2008), functional
experience (Singh et al. 2008) and experience with
specific activities (Johnson et al. 2013) may serve as
proxies for directors’ human capital; however, the diffi-
culty of obtaining such data on Bangladeshi listed com-
panies represents a practical constraint that limited
additional analyses. Future studies should employ alter-
native research designs and data collection methods to
obtain data on directors’ characteristics.
Appendix
See Table 8.
123
54 M. B. Muttakin et al.

Table 8 continued
Variable Definitions
name

CEOPWR An index covering five different dimensions to test the influence of CEO power on the level of CSR disclosures. These
dimensions are CEO duality, CEO ownership, CEO tenure and the status of a CEO as a family CEO
BIND Proportion of independent directors in the board
CEODU CEO duality is a dummy variable that equals one if same person holds the positions of CEO and chairmanship in a firm,
otherwise it equals zero
CEOOWN CEO ownership is the ratio of the number of shares owned by the CEO to total shares outstanding
CEOTEN CEO tenure is the number of years since the CEO was appointed as the CEO
FCEO Family CEO is a dummy variable that equals one if the CEO is a family CEO, otherwise it equals zero
BIND Board independence is measured by the proportion of independent directors on the board
BSIZE Board size is measured by the number of directors sitting on the board
AGE Firm age is the number of years since a firm’s inception
LAGE Firm age is the natural log of the number of years since the firm’s inception
ROA Return on assets is the ratio of earnings before interest and taxes and total assets
LEV Leverage is measured by the ratio of total debt to total assets
SIZE Firm size is measured by the natural log of total assets

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