The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/1026-4116.htm

The effects of corporate Corporate

mechanisms in
governance mechanisms Bangladeshi
firms
on voluntary corporate carbon
disclosures: evidence from
the emerging economy Received 7 September 2022
Revised 24 January 2023
Accepted 7 April 2023
Rajib Chakraborty
Department of Business Administration, Port City International University,
Chattogram, Bangladesh, and
Sajal Kumar Dey
Faculty of Business and Law, University of Northampton - Park Campus,
Northampton, UK

Abstract
Purpose – This study examines the effects of corporate governance mechanisms on voluntary corporate
carbon disclosure in Bangladeshi firms.
Design/methodology/approach – To investigate the association between corporate governance
mechanisms and corporate carbon disclosures, this study employs ordinary least square (OLS) methods.
To mitigate the potential endogeneity concerns, the authors also introduce firm fixed effect (FE) and random
effect (RE). Primarily, the study sample includes 250 firm-year observations over the period 2015–2019 for
listed companies on the Dhaka Stock Exchange (DSE) in Bangladesh. Subsequently, corporate governance
mechanisms that influence voluntary carbon disclosure were examined using both univariate and OLS models.
Findings – The findings of this study suggest that firms with a larger board size and more independent
directors have a positive impact on the firm’s intensity to disclose carbon-related information. However,
no evidence has been found of the existence of an environmental committee, and the presence of female
directors on the board tends to be associated with a higher level of voluntary corporate carbon disclosure.
Originality/value – The study offers necessary evidence of the determinants of corporate carbon disclosures,
which will be useful for managers, senior executives, policymakers and regulatory bodies. To improve
corporate governance practices and formulate separate sets of regulations and reporting criteria, disclosing
extensive and holistic carbon-related information obligatory. Further, the outcomes of this study based on
Bangladeshi firms can be comprehensive for other developing countries to take precautions to tackle the effect
of global climate change.
Keywords Corporate governance, Board independence, Gender diversity, Carbon disclosure,
Environmental committee
Paper type Research paper

1. Introduction
Unprecedented ecological tragedies and intensified extreme weather have enhanced public
consciousness regarding the catastrophic repercussions of climate change on the planet’s
ecology and human life (Intergovernmental Panel on Climate Change (IPCC, 2018)). Further,
United Nations Environment Programme (UNEP) & World Resources Institute (WRI) (2015)
document that greenhouse gas (GHG) emission has a significant contribution to global
warming, thus creating substantial physical and economic risks to the firms coupled with
society and this global warming is mainly responsible for climate change (Varney et al., 2020).
Journal of Economic and
Administrative Sciences
Funding: This study received no external funding. © Emerald Publishing Limited
1026-4116
Conflicts of interest: The author declares no conflict of interest. DOI 10.1108/JEAS-09-2022-0209
JEAS The well-known Kyoto Protocol, an international treaty introduced in 1997, is probably the
driving force behind the change in corporate approaches toward global warming (Lee et al.,
2015) and has convinced various stakeholders that they should exert pressure on firms to
undertake emission reduction initiatives and disclose carbon information to the public
(Freedman and Jaggi, 2005). Consistent with the notion, The Institute of Chartered
Accountants in England and Wales (ICAEW) has also set the guideline that internal
management is motivated by shareholders and external bodies of organizations to monitor
and analyze information related to climate change. Furthermore, consumers,
environmentalists, policymakers, civil societies, regulators and investors across the world
are also extremely concerned regarding the consequences of carbon emissions on the
environment and corporate performance (Matsumura et al., 2014). Therefore, reducing carbon
emissions has been recognized as a top priority by most stakeholders in corporations
worldwide (Uyar et al., 2020). To uphold a good corporate image, stakeholders demand that
managers be proactive in participating in the carbon emission disclosure project and
developing strategies to build a net zero carbon economy for the future (Bose et al., 2021;
Carbon Disclosure Project (CDP), 2020; Daddi et al., 2018). Similarly, Fornaro et al. (2009)
document that investors, policymakers, government agencies, NGOs and carbon traders
exert pressure on USA firms to assess, surveil and oversee carbon emissions. Moreover,
managers should understand the financial consequences of climate change and disclose
carbon-related information in various channels, for example annual reports, Corporate Social
Responsibility (CSR) Reports, sustainability reports and CDP (Chapple et al., 2013; Griffin
et al., 2017; Griffin and Sun, 2013).
Prior studies suggest that voluntary disclosure reduces information asymmetry,
minimizes the cost of equity capital, increased firm-level analyst following and enhances
firm-level investment efficiency (Cheng et al., 2013; Dhaliwal et al., 2011, 2012, 2014; Diamond
and Verrecchia, 1991; Healy and Palepu, 2001; Leuz and Verrecchia, 2000; Verrecchia, 1983,
2001). However, Kolk et al. (2008), report that sometimes firms are criticized because
voluntary disclosure only provides supportive information and avoids negative information.
Therefore, investors are asking for climate change-related information because the physical
risk of carbon emissions is likely to affect firms’ financial performance, damage material
assets and enhance a higher level of operation cost (Busch, 2011; Matsumura et al., 2014;
Miller et al., 2020; Mills, 2009). Further, The Economist Intelligence Unit (2015) suggests that
the present value of the potential loss of manageable assets due to the direct impact of carbon
emission is about US $4.2 trillion. Consistent with this notion, Matsumura et al. (2014), the
document that firms are penalized for their higher level of carbon emission and a further
penalty is also enforced if they did not disclose any carbon emission. Furthermore, prior
studies suggest that corporate governance mechanisms play a significant role in influencing
a firm’s decision to commit to carbon reduction, climate change-related risks and voluntary
environmental disclosure and monitoring a firm commitment to minimize carbon-related
risks (Ben-Amar et al., 2017; Bui et al., 2020; Haque, 2017; Haque and Deegan, 2010; Peters and
Romi, 2014). Firms across the world are under pressure concerning the risks of climate
change and the potential financial consequence of climate risks (Bose et al., 2021; Matsumura
et al., 2014). Further, firms are also facing challenges to implement climate-related projects
and self-governing coupled with the representative board is likely to resolve the conflicts
(Haque, 2017; Liao et al., 2015). A firm’s voluntary carbon disclosure may depend on
its corporate governance structure and a more independent and diverse board tends to be
associated with a high level of disclosure (Liao et al., 2015). Consistent with this notion, Haque
(2017) documents that board independence and board gender diversity are positively
associated with carbon reduction initiatives. Further, Ben-Amar et al. (2017) report that
female directors are more concerned with corporate social practices and environmental
responsibilities, whereas male directors are more interested in financial performance. Firms
with an environmental committee on the board have a higher propensity to disclose GHG Corporate
information in the context of UK firms (Liao et al., 2015). Therefore, prior literature shows mechanisms in
unconvincing evidence that corporate governance mechanisms have any influence on firm-
level carbon disclosures. This study has examined this unexplored link.
Bangladeshi
The present study endeavors to focus on the listed firms on Dhaka Stock Exchange (DSE) firms
in Bangladesh. The study has chosen Bangladesh as an emerging economy because about
60% of the world’s gross domestic product (GDP) is coming from an emerging economy
(Lagarde, 2016). For the previous ten years, Bangladesh, an emerging economy, has
maintained a GDP growth rate of 6%–7% annually. Further, after China, Bangladesh is now
the second-largest exporter of ready-made clothing in the world (World Bank, 2017). Thus,
international buyers are one of the significant stakeholder groups and prominent aspects of
the Bangladeshi economy. To satisfy these international buyers, the Bangladesh
Government and Bangladesh Bank have taken significant initiatives; thus, Banks from
Bangladesh are spending a significant amount of money on CSR (Bose et al., 2017a, b).
According to United Nations Development Programme (UNDP) (2004), Bangladesh has
been ranked as the sixth most flood-prone country in the world and the country with the
greatest vulnerability to tropical cyclones. The reckless industrial pollution,
overpopulation and poor governance mechanism to monitor environmental activities
have worsened the situation. The climate change impacts could be substantial globally as a
changing climate affects human beings, as well as physical and natural capital (Woetzel
et al., 2020). It is also noted that the regulatory bodies of Bangladesh didn’t pay too much
attention to the effectiveness and implications of corporate governance practices until the
share market collapse in 1996 (Rashid, 2015). Afterward, through an amendment in 2012,
and in 2018, the Security Exchange Commission (SEC) of Bangladesh reformed corporate
governance guidelines by adding some significant issues including the number of directors
on the board, the proportion of independent directors, qualifications for independent
directors and chief executive officer (CEO) duality. Given the growing significance of
standard corporate governance mechanisms and environmental and climate change
issues, there is an emerging call for a corporate response and disclosure of all non-financial
and environmental disclosures as part of the firm’s corporate social responsibility.
Moreover, prior studies in the context of Bangladesh on social and environmental
reporting document that information provided by Bangladeshi firms in annual reports is
qualitative and the level of disclosure is very poor (Belal et al., 2010; Imam, 2000).
Conversely, studies in developing countries, for example, China (Huafang and Jianguo,
2007), Malaysia (Haniffa and Cooke, 2005) and Singapore (Cheng et al., 2014) have already
documented a few studies on the association between corporate governance mechanisms
and carbon disclosure, whereas there is lack of research has been identified how corporate
governance mechanisms to effect on corporate carbon disclosure in the context of
Bangladesh. This study attempts to address this research gap in the literature whether
corporate governance has an impact on corporate carbon disclosures in the context of
Bangladesh.
Using a sample of 250 firm-year observations from 2015 to 2019 for listed firms on the DSE
from Bangladesh, we report that firms with a larger board size and more independent
directors are positively associated with corporate carbon disclosure. However, no evidence
has been found of the existence of an environmental committee, and the presence of female
directors on the board tends to be associated with a higher level of voluntary carbon
disclosure. Specifically, this finding suggests that firms with large board sizes and more
independent directors have a higher level of propensity to disclose carbon-related
information for firms in Bangladesh. Further, environmental committees and female
directors have no significant impact on the propensity of disclosing carbon-related
information. To examine the association between corporate governance characteristics and
JEAS corporate carbon disclosures, this study employs ordinary least square (OLS) methods.
To mitigate the potential endogeneity concerns, we also introduce firm fixed effect (FE) and
random effect (RE). Subsequently, corporate governance characteristics that influence
voluntary carbon disclosure were examined using both univariate and OLS models.
This empirical study contributes to the literature in several ways. First, as a unique study,
it wants to examine how corporate governance characteristics and practices of Bangladeshi
firms create an impact on listed firms of Bangladesh to disclose as much carbon information.
Second, the study chose Bangladeshi firms because Bangladesh is more prone to being a
victim of natural calamity due to climate change and global warming. Thus, from the findings
of this study, firms will get directions regarding the standard environmental disclosure
practices and their applications at the societal level to create awareness against carbon
emissions. Also, advancement to the international market as a lower-middle-income country
ensures more business in Bangladesh from environment-friendly business groups
throughout the world. Consistent with this notion, Bangladeshi firms have to take
initiatives to control carbon emissions and also disclose as much environmental-related
information to the public interest. And this study will provide some suggestions to overcome
these drawbacks. Third, as carbon emission policies become a global issue for international
business entities, domestic firms may get a signal to improve ecology by reducing the carbon
footprint and also may improve their image and reputation by accompanying standard
regulations of carbon reduction strategies. Finally, the findings of the study can be
implemented in the related field of other developing countries as firms of the developing
countries are under serious threat as compared with countries in the developed world. This
study will help industry experts, practitioners and policymakers to formulate more operative
policies on the current corporate and carbon reporting practices.
The remainder of this paper is organized as follows. Section 2 provides an overview of the
corporate governance and corporate carbon disclosure performance in Bangladesh, Section 3
presents the literature review and hypothesis development, Section 4 describes the research
design, sample collection process and methodologies and Section 5 presents and discusses the
empirical findings and final section (Section 6) concludes the paper.

2. Corporate governance and corporate carbon disclosure performance in

Bangladesh
2.1 Corporate governance practice in Bangladesh
Prior research shows that diverse corporate governance mechanisms, such as board size,
more independent directors, environment committee and female directors on board have an
impact on firms’ CSR disclosure and their CSR value implications (Aguilera et al., 2006).
Bangladesh is a developing nation with distinct institutional and regulatory appearances.
The primary distinction between Bangladesh’s corporate governance procedures and
developing countries is that these procedures have primarily stayed only in regulations
(Khan, 2003). Even though Bangladesh is a developing country, the corporate governance
practice is mixed with some developing and developed countries (Rashid et al., 2020). For
example, although public limited firms in Bangladesh are listed on stock exchanges, their
shares are not extensively distributed, even though these firms are controlled by major
shareholder groups, unlike those in several developed countries (Rashid, 2015). To enhance
the governance practices, Bangladesh Security Exchange Commission (BSEC) announced a
corporate governance guideline in 2006 and demonstrated the strategies of corporate
governance practices, including the board size, independent directors and environmental
committee of registered firms. Despite the corporate governance revised announcement
declared in 2012, firms in Bangladesh do not appoint professional managers, unlike in the
advanced economy. Diverse powerful shareholders who own a significant portion of shares
appoint themselves as managers. Due to their ownership position, they implement their own Corporate
decision on the board (Rashid et al., 2020). Therefore, it is an empirical question of how mechanisms in
corporate governance mechanisms affect the corporate carbon disclosure decision in
Bangladesh.
Bangladeshi
firms
2.2 Corporate carbon disclosure practice in Bangladesh
To align with transparent corporate reporting practices, the maximum disclosure of all sorts
of corporate information is now highly encouraged by stakeholders to uphold the image and
goodwill of the firms (Bose et al., 2017a, b). In addition, technologically well-equipped
stakeholders who are connected to different world business forums are more interested to
learn not only mandatory corporate information but also information related to
environmental disclosure (Carbon Disclosure Project (CDP), 2020). Consistent with the
notion, Bose et al. (2018) document that green banking regulatory guidance not only exerts
pressure on firms to provide a higher level of environmental disclosure but also board size
coupled with institutional ownership has a significant positive impact on the level of
environmental disclosure. Subsequently, Sobhani et al. (2009) report that most of the firms
disclosed at least one item and concluded that the nature and range of environmental
disclosures seemed to be poor and that awareness was still lagging compared with that of
developed countries. Although the maximum concentration in the context of developing
countries made research findings sometimes irrelevant or unattainable due to unorganized
capital markets, the poor monitoring mechanism of the regulatory authorities of a country
and a lack of specific government policies (Haniffa and Cooke, 2005; Sobhani et al., 2009).
Despite the lack of government policy concerning corporate carbon disclosures and the
extreme demand of external investors, there has been limited study investigating the
relationship between corporate governance mechanisms and the level of disclosure of carbon
information in the context of Bangladesh.

3. Theory, literature review and hypothesis development

Several theories have been demonstrated for understanding the determinants of social and
environmental disclosures including legitimacy, agency and stakeholder theories (Carcello,
2009; Healy and Palepu, 2001). Legitimacy theory has become a widely accepted theory that
discusses social and environmental disclosure. It argues that legitimacy theory depends on a
social contract between the firms and members of the society in which it operates (Tang and
Luo, 2016). To maintain legitimacy, Deegan (2002) and O’Donovan (1999) argue that the
responsibility of entities is to disclose their social and environmental information to legitimize
business activities to become socially responsible firms. Deegan (2002) has also confirmed the
use of legitimacy theory in the context of social and environmental disclosure. Further,
agency theory explains the relationship between managers, shareholders and debt holders
(Akerlof, 1978; Healy and Palepu, 2001; Lambert et al., 2011). Generally, the owner of a firm
delegates strategic and decision-making powers to the manager. Firms’ managers are
responsible to maximize shareholders’ value and ensure that a firm’s debt will be duly repaid.
In this context, Graves and Waddock (1994) argue that managers are more responsible than
shareholders for corporate and social disclosure because they have no residual claim on firms’
economic output. Similarly, Healy and Palepu (2001) document that managers may be more
concerned about environmental disclosure and also think that climate change or
environmental disclosures are considered voluntary actions because they do not spend
their own money (Bui et al., 2020). Further, agents pursue more non-profit goals than the
principal by disclosing environmental and other disclosures to secure their position and
ensure corporate efficiency (Verrecchia, 1983, 2001). In addition to this, stakeholder theory
JEAS also provides strong justification for the need for corporate social and environmental
disclosure. The theory suggests that firms will require full support from their stakeholders to
continue business activities, which also implies that firms will have a fiduciary responsibility
to all stakeholders, including social and environmental responsibilities (Baalouch et al., 2019).
Prior studies have found relevant and explained the rationale behind environmental
disclosure, including GHG (Deegan and Rankin, 1996; Liao et al., 2015). The demand and
preferences of interested stakeholders disclose possible explanations of GHG disclosures in
response to climate change to meet the firm’s social and environmental responsibilities. To
recognize the rights and interests of stakeholders, firms intend to disclose more
environmental information (Liao et al., 2015).

3.1 Board size

A large board, comprising many members, is expected to contribute to firms with more
expertise and information (Cunha and Rodrigues, 2018). Firms with a huge of board members
have a positive impact on their environmental performance in the context of Bangladesh
(Bose et al., 2018). Consistent with the notion, prior studies by Mohamed Akhtaruddin et al.
(2009) based on listed Malaysian firms and by Allegrini and Greco (2013) based on Italian
listed firms document a positive relationship between a higher number of directors on the
board and disclosing a higher percentage of carbon information. However, considering the
developed country perspective based on Australia, Kathyayini and Carol (2012) document
that there is a positive correlation between environmental disclosure and board size,
according to research on the association between environmental reporting and corporate
governance practices of the largest 100 Australian firms listed on the Australian Stock
Exchange. Considering the above understanding coupled with empirical evidence and
following theoretical underpinnings (agency and legitimacy), the subsequent hypothesis is
articulated:
H1. Firms with larger board sizes are more likely to disclose carbon-related information

3.2 Board composition

Firms having a significant number of independent directors are more encouraged than firms
with executive directors to improve transparency, enhance board independence and improve
the productivity and efficiency of the firm (The UK Corporate Governance Code, 2018;
Katmon et al., 2019). Along with financial matters, this monitoring includes a diverse range of
issues such as climate change and environmental issues. Hussain et al. (2018) argued that,
according to stakeholder theory, a board with independent directors is associated with
sustainability reporting. In another study, Yunus et al. (2016) find a similar outcome
regarding the relationship between board composition and the propensity to disclose carbon
information. The following hypothesis based on the subsequent theoretical underpinnings
(agency and stakeholder theory) is put out in light of the discussion above:
H2. Firms with more independent directors on boards are more likely to disclose carbon
information.

3.3 Board diversity

It is widely accepted that diversified boards with several characteristics, such as education,
age, background and board of directors personalities manage business complexities more
systematically (Bose et al., 2018; Katmon et al., 2019). It is also known that diversity on the
board of directors promotes problem-solving attitudes, increases the effectiveness of
leadership and emphasizes global communication from a broader perspective (Naciti et al.,
2021). And, out of the other board characteristics, gender diversity is now considered one of Corporate
the most debatable characteristics of board diversity (Haque, 2017; Hollindale et al., 2019). mechanisms in
Furthermore, prior studies noted that female directors and managers are comparatively more
concerned than male executives and prefer to join various environmentally friendly corporate
Bangladeshi
issues that evoke them to contribute to the environment and sustainable development firms
(Hollindale et al., 2019; Konrad et al., 2008; Liao et al., 2015). A study by Ben-Amar et al. (2017)
based on listed Canadian firms over the period–of 2008–2014, reports that the propensity for
GHG emission disclosures increases with a higher percentage of women on the board. The
above literature and agency theory coupled with stakeholder theory leads to the following
hypotheses:
H3. Firms with more gender-diverse boards are more likely to disclose carbon-related
information

3.4 Environmental committee

In their study, Peters and Romi (2014) defined voluntary dissemination of carbon emission
information as constituting a greater risk. It is believed that information related to carbon
emission disclosure is riskier than other corporate information because of its ill-defined
nature and measurement procedures (Broadstock et al., 2019; Umar and Chunwe, 2019). It has
also been argued that firms are now forming specific committees to address different
financial, social, political and environmental issues with utmost care and provide information
to stakeholders. The purpose of the environmental committee was to prepare plans and
formulate guidelines related to sustainable policies. Finding different alternatives to reduce
the use of fossil fuels should be the main aim of firms to minimize carbon emissions. Similarly,
Lam and Li (2008) document that an environmental committee on the board performs
environmental activities more actively for highly polluting firms. Prior studies have also
focused on the fact that firm-level environmental committees may also create awareness
among employees about the environmental aspects of job responsibilities to minimize the
effect of carbon emissions (Clarkson et al., 2011). From this above discussion and agency
coupled with the legitimacy theory perspective, we articulate the following hypotheses:
H4. Firms with an environmental committee on the board are more likely to disclose
carbon information.

4. Research design and methodology

This study considers content analysis procedures for analyzing the annual reports of firms,
as they are widely considered reliable (Belal et al., 2010; Bose et al., 2017a, b). The sample for
the analysis includes 250 firm-year observations over the period 2015–2019 for the listed
firms of the DSE in Bangladesh. Based on prior research studies quantifying voluntary
disclosure data, a content analysis framework has been developed (Belal et al., 2010). The
researcher employed an unweighted approach to measure and quantify these disclosure
items. After preparing a disclosure index, a scoring spreadsheet was developed to assess the
extent of carbon disclosure. Some of the codified keywords that made it possible to analyze
the annual reports and the information about carbon disclosure released in the reports are
“carbon”, “emissions”, “climate change”, “Greenhouse gas (GHG)”, “environmental policy”,
“sustainability”, “global warming”, etc. If a firm discloses an item concerning carbon
information included in the index, it receives a score of one and zeroes otherwise (Belal et al.,
2010). The total population of this study is 64 firms and 14 firms are excluded due to the lack
of availability of financial data. Finally, we acquire an initial sample of 250 firm-year
JEAS observations from 50 different firms after combining all databases and eliminating all
unfinished observations. The method for selecting samples is displayed in Table 1.
This study employs the OLS model to examine the relationships between corporate
governance characteristics – board size (BSIZE), board composition (BCOMP), board gender
diversity (BGENDER), environmental committee (ENVCOM), board meeting (BMEE), role
duality (BDUA) and carbon disclosure (CAR_DISC). The OLS model is as follows:
CAR DISCi;t ¼ β0 þ β1 BSIZEi;t þ β2 BCOMPi;t þ β3 BGENDERi;t þ β4 ENVCOMi;t
þ β5 BMEEi;t þ β6 BDUAi;t þ β7 FSIZEi;t þ β8 ROAi;t þ εi;t (1)

4.1 Variable definitions

Based on these hypotheses, this study focused on six main variables. The variable board size
is measured for the total directors in the firm (Elmagrhi et al., 2019; Lu and Herremans, 2019),
board composition is incorporated to measure the number of independent directors on the
board (Galletta et al., 2021; Rashid et al., 2020) and gender diversity is castoff to determine the
number of female directors on the board (Al-Shaer and Zaman, 2016; Issa and Zaid, 2021;
Katmon et al., 2019; Liao et al., 2015) and the environmental committee is measured whether
the firm has such an internal environment committee or not (Liao et al., 2015). Board meetings
are measured as the total number of meetings held in a financial year within the firm and are a
proxy for the level of a firm’s activity (Walters et al., 2007).

4.2 Control variables

This study controls for the effects of other corporate governance indicators, such as firm size
and profitability as control variables (Bose et al., 2017a, b). It is also argued that a larger board
comprising many directors from stakeholders increases a firm’s monitoring capacity and
reduces environmental uncertainty. Larger-sized entities are always under external pressure
to disclose their environment-related business practices because of their greater visibility and
public inquiry (Yunus et al., 2016). Profitability is measured by Return on Assets (ROA)
(Bose et al., 2017a, b).

5. Results and discussion

From the descriptive analysis in Table 2, a substantial variation (minimum of 2% to 45%) in
the sample was observed. With an average mean of 13.99, the disclosure of carbon-related
information by the firms was very low. The board size expresses great variation in the sample
firms, with a minimum of 1 and a maximum of 29. The average board size was 7.20 directors
with a standard deviation of 0.49. Many firms have fulfilled the minimum requirements of
independent directors on a board. In the case of gender diversity, the score was just 0.13. On

Panel A: Sample selection

Corporate carbon disclosure data coverage for the year 2015–2019 328
Less: Firm-year observations did not match with other archives 38
Firm-year observations available with corporate carbon disclosure data 290
Table 1. Less: Firm-year observations plunged due to inadequate control variables 40
Sample selection Final Test Sample for carbon disclosure for the year 2015–2019 250
and distribution Source(s): Created by authors
Variable Mean SD Minimum Maximum
Corporate
mechanisms in
CAR_DISC 13.99 2.9 2.00 0.45 Bangladeshi
BSIZE 7.20 0.49 1.00 0.29
BCOMP 0.22 0.15 0.00 0.15 firms
BGENDER 0.13 0.47 0.00 1.00
ENVCOM 0.11 0.41 0.17 0.72
BMEE 5.72 0.41 0 0.70
BDUA 0.81 0.39 0.00 0.19
FSIZE 0.63 0.48 0.43 0.76
ROA 0.09 0.72 0 1.00 Table 2.
Source(s): Created by authors Descriptive statistics

average, yearly 5.72 board meetings are held at the firm level. In the case of the in-house
environmental committee, only 11% of the sample firms have their environmental committee.

5.1 Correlation matrix and bivariate analysis

Table 3 discusses the bivariate relationships among the variables related to voluntary carbon
disclosure, corporate governance variables and control variables. The Pearson correlation
matrix shows a positive relationship between CAR_DISC, BSIZE and BCOMP.
The relationship between CAR_DISC, BGENDER and ENVCOM was insignificant.
Moreover, no relationships have been found between CAR_DISC and the control variables
FSIZE and ROA. This study also used the Variance Inflation Factor (VIF) to test the
multicollinearity. Multicollinearity may be a problem when the correlation between the
independent variables is 0.90 or above (Gujarati and Porter, 2009). The VIF is less than two for
each variable, indicating that multicollinearity is not a severe problem.

5.2 Multivariate analysis and additional tests

Panel data for five consecutive years (2015–2019) collected from listed Bangladeshi firms
were used to reduce multicollinearity problems, estimation bias and time-variant associations
between the dependent and independent variables (Baltagi and Baltagi, 2008). The OLS is
considered a suitable approach that properly considers heteroscedasticity and endogeneity
issues (Rashid, 2015). Several prior studies in the areas of corporate governance, voluntary
disclosure and firm performance also used this statistical method (Qiu et al., 2016). Table 4
presents the result of the regression analysis and shows whether there is any association
between the voluntary disclosure index and the experimental variables. From the value of the
coefficient of coordination R-square of 0.4617, F value of 17.84 and summarizing the results of
the dependent variable on the explanatory variables, the output of this test is found to be
significant at the 0.001 level. Regarding the relationship between dependent and independent
variables of corporate governance and carbon disclosure, it is seen that BSIZE positively
impacts voluntary disclosure at the 5% level of significance. This result is similar to the study
reported by Akhtaruddin et al. (2009). These findings are also consistent with the study
results of (Al-Bassam et al., 2018; Rodrigues et al., 2017) proving a positive and significant
relationship between the concept of larger boards and more likeness to disclose to involve in
increased disclosures of environmental information. As per the rules of the SEC, a listed
company should have a minimum of 5 to a maximum of 20 directors on the board and this
study reports that the firms that have more directors are more willing to express their free
opinions on different issues including voluntary disclosures. Concerning the board
composition, the study finds that BCOMP positively affects carbon disclosure at the 10%
 JEAS

Table 3.

analysis results
Pearson Correlation
Variables CAR_DISC BSIZE BCOMP BGENDER ENVCOM BMEE BDUA FSIZE ROA VIF

CAR_DISC 1 1.51
BSIZE 0.4517 (0.0002) * 1 1.10
BCOMP 0.4223 (0.0004) * 0.5883 (0.0000) * 1 1.45
BGENDER 0.5666 (0.1200) 0.4932 (0.2100) 0.5616 (0.1110) 1 1.75
ENVCOM 0.5035 (0.3290) 0.3782 (0.1100) 0.2730 (0.1110) 0.4285 (0.2110) 1 1.85
BMEE 0.0981 (0.1422) 0.0744 (0.2413) 0.0209 (0.7418) 0.0594 (0.3500) 0.0256 (0.6866) 1 1.70
BDUA 0.0871 (0.1943) 0.0431 (0.4979) 0.0519 (0.4151) 0.0442 (0.4871) 0.0342 (0.5914) 0.7327 (0.0000) 1 1.11
FSIZE 0.2150 (0.0112) 0.2507 (0.1101) 0.2839 (0.2100) 0.3256 (0.0120) 0.1249 (0.1485) 0.3556 (0.1150) 0.3324 (0.2010) 1 1.69
ROA 0.2841 (0.1200) 0.3394 (0.3210) 0.3324 (0.1100) 0.4426 (0.3410) 0.1837 (0.0038) 0.0417 (0.5144) 0.0273 (0.6696) 0.0322 (0.2311) 1 1.81
Note(s): Superscript asterisks ***, **, and * represent statistical significance at the 1%, 5%, and 10% levels, respectively; variable definitions are provided in Appendix
Source(s): Created by authors
CAR_DISC Coef Std. Err t p-value
Corporate
mechanisms in
BSIZE 0.8237 0.4184 1.97 0.040* Bangladeshi
BCOMP 0.6106 0.4150 1.47 0.010*
BGENDER 1.174 0.4449 4.89 0.451 firms
ENVCOM 2.4825 0.4340 5.72 0.231
BMEE 0.0951 0.5951 0.16 0.873
BDUA 0.0752 0.6334 0.12 0.906
FSIZE 0.0078 0.4674 0.02 0.987
ROA 0.1169 0.4315 0.27 0.787
R-square 0.4617
Adjusted R-square 0.4358
F value 17.84
Table 4.
F significance 0.001
Association between
Note(s): Superscript asterisks ***, **, and * represent statistical significance at the 1%, 5%, and 10% levels, corporate governance
respectively; coefficient values (robust t-statistics) are shown with standard errors clustered at the firm level; mechanisms and
variable definitions are provided in Appendix voluntary corporate
Source(s): Created by authors carbon disclosure

level of significance, which is consistent with our expectations and prior studies (Liao et al.,
2015). Although Akhtaruddin et al. (2012) and Bhuyan (2018) did not find any association,
some other prior studies in Bangladesh find a positive association between board
composition and voluntary disclosure (Muttakin et al., 2018) and this study again
established consistency with prior studies. Thus, the second hypothesis of this study is
supported. From the findings of the study, the following implications have been observed;
first, firms with more independent, non-executive or outside directors are involved in greater
compliance with and disclosure of corporate governance (CG) practices and non-financial
information that provides empirical support to the findings of the prior studies (Rodrigues
et al., 2017). Second, due to the increase in the negative impact of global warming on firms’
productive activities, firms are now trying to safe their goodwill and reputation by revealing
as much environmental information. This finding is also similar to the other findings reported
by (Bose et al., 2018). Turning to gender diversity, the regression coefficient for the variable
was 1.17, which was not significant and found no association between the propensity to
corporate carbon disclosure and board gender diversity. These findings are also supported
by Konrad et al. (2008), where it has been argued that one or two women may not be able to
convey a huge changes in corporate cultures and firm’s corporate governance policies.
However, Liao et al. (2015) and Baalouch et al. (2019) contradict the results and suggest that
women are more responsible and concerned about environmental disclosures to attract
resources from powerful stakeholders and find a positive relationship between the propensity
for carbon disclosure and the presence of female members on the board. Moreover, the
number of female directors in Bangladeshi firms is much lower than that of their male
directors. This may be another important reason in the context of Bangladesh where firms lag
against their foreign counterparts. Thus, the third hypothesis is rejected. In the case of the
fourth hypothesis, the environmental committee, the results do not agree with our perception.
If the independent variable is one unit increased then this situation the dependent variable is
decreased 2.482 with standard error (SE) 5 0.4340, t value 5 5.72 and significance at the
0.231. This result opines that there is no association between the environmental committee
and likeness to disclose carbon information. It is also argued that the existence of the
environmental committee may be only for the image improvement of the company, rather
than showing carbon reduction commitment. Although Peters and Romi (2014) found a
positive relationship in prior studies, Rupley et al. (2012) did not find any association between
JEAS the existence of an environmental (CSR) committee and the likelihood of disclosing carbon
information. In the case of BDUA, although the result was positive, it was not significant.
Akhtaruddin et al. (2012) also found similar results from the Bangladesh perspective that
there is no association between the extent of voluntary disclosure and a dual leadership
structure. The frequency of board meetings is also an indicator of a firm’s CG practices. In our
study, BMEE showed a positive but insignificant result. This indicates that board meetings
have no impact on the disclosure of carbon information by Bangladeshi firms. Liao et al.
(2015) find that increasing board meetings has no positive impact on corporate disclosure.
Regarding the control variables, FSIZE was not significantly associated with CAR_DISC.
This result contradicts many prior studies (for example, Muttakin et al., 2018; Steenkamp
et al., 2019). There is an indication that larger firms disclose more environmental-related
information willingly than small firms to attract external funding (Matsumura et al., 2014).
Likewise, profitability was found to have an insignificant relationship with corporate
governance disclosures. Thus, no significant differences exist between profitable and
unprofitable concerns in the case of disclosing carbon disclosure information, though this
finding is consistent with the prior study by suggesting that larger and more profitable firms
are more interested in disclosing more environmental information (Al-Bassam et al., 2018;
Giannarakis et al., 2020).

5.3 Results of endogeneity test

A study can be subject to statistical limitations, including endogeneity due to the missing
variables from the model and endogeneity problems and a study cannot make correct statistical
inferences. In another way, in this study, it can be assumed that BSIZE, BCOMP, BGENDER and
ENVCOM might be influenced by the FSIZE and ROA. To check this problem, a two-stage least
squares regression is implemented by employing instrumental variables and the researcher
regresses BSIZE, BCOMP, FSIZE and ROA and then stores the residuals. In the second stage, the
residuals are used in the main regression models instead of the actual values of the independent
variables. The results of the endogeneity test shown in Table 5 reveal that the coefficients of
BSIZE and BCOMP are still positive and statistically significant at the 5% level.

5.4 Robustness check

To verify the findings of the study from the main results, the main results were tested further.
Initially, a further test considering an alternative measurement with some corporate
governance characteristics including BSIZE, BCOMP, BGENDER and ENVCOM, FSIZE has

CAR_DISC Coef std. Err t p-value

BSIZE 0.2144 0.4322 2.21 0.001*

BCOMP 0.4231 0.4431 2.01 0.010*
BGENDER 0.3353 0.1121 1.92 0.060
ENVCOM 0.0522 0.6131 0.41 0.231
BMEE 0.0411 0.1415 0.12 0.081
BDUA 0.2422 0.4323 0.80 0.211
FSIZE 0.0112 0.2112 0.81 0.450
ROA 0.0540 0.4323 0.50 0.211
Note(s): Superscript asterisks ***, **, and * represent statistical significance at the 1%, 5%, and 10% levels,
Table 5. respectively; coefficient values (robust t-statistics) are shown with standard errors clustered at the firm level;
Result of variable definitions are provided in Appendix
endogeneity test Source(s): Created by authors
been applied. As for Table 6, BSIZE, (the regression coefficient is 0.8610 and the p-value is Corporate
0.006) and BCOMP (the regression coefficient is 0.0751 and the p-value is 0.031) have a mechanisms in
significant relationship with voluntary carbon disclosure. In contrast, BGENDER and
ENVCOM are not statistically significant.
Bangladeshi
firms
5.5 The choice between fixed effects and random effects model
In the pooled OLS, all observations were pooled together. It sometimes ignores the
time-series nature of data that camouflages heterogeneity. Therefore, to determine the right
estimation model, RE and FE models were also applied to avoid possible unobserved
firm-level heterogeneities. Statistically, the F-test is used to choose between the pooled OLS
and fixed effects models, whereas the Breusche and Pagan Lagrange multiplier is applied to
choose between RE and pooled OLS models. Finally, a Hausman test was applied to
determine the difference between the FE and RE models. In the case of fixed effect, Table 7
reveals that there is a positive relationship between CAR-DIS and board size, with a 5%
significance level represented by a coefficient of 0.242. The other independent variable,
such as BCOMP, also has a statistically significant impact on CAR-DIS at a 5% significance
level. No relationship was observed between the environmental committee and gender
diversity. In testing the relationship between corporate governance determinants and
carbon disclosure, the RE model shows that BSIZE has a significant impact on CAR_DISC
at the 5% significance level and BCOMP also reveals the existence of a relationship with
CAR_DISC.

CAR_DISC Coef std. Err t p-value

BSIZE 0.8610 0.0554 1.11 0.006

BCOMP 0.0751 0.1712 1.50 0.031
BGENDER 0.2133 0.2135 3.10 0.451
ENVCOM 0.4101 0.4111 0.65 0.590
BMEE 0.0624 0.2101 0.52 0.650 Table 6.
BDUA 0.0461 0.1721 0.54 0.521 Association between
corporate governance
FSIZE 0.0845 0.0211 0.12 0.750 mechanisms and
ROA 0.05451 0.5400 0.50 0.550 corporate carbon
R-square 0.5425 disclosure from
adjusted R-square 0.3095 alternative
Source(s): Created by authors measurement

FE RE
CAR_DISC Coefficient t-statistics Coefficient z-statistics

BSIZE 0.2423 2.08 0.4477 1.87

BCOMP 0.6176 1.98 0.3120 1.68
BGENDER 0.6925 2.92 0.0595 3.18
ENVCOM 0.0891 0.51 0.0873 0.68
BMEE 0.0616 0.41 0.3190 0.35 Table 7.
BDUA 0.2171 0.79 0.2656 0.74 Fixed effects and
SIZE 0.1297 0.18 0.8623 0.13 random effects model
ROA 0.0860 0.35 0.0841 0.30 for corporate carbon
Source(s): Created by authors disclosure
JEAS To decide between the FE and RE models, the Hausman test was applied. The following test
(Table 8) emphasizes the use of the fixed effects model, as prob > χ 2 5 0.6126 is greater than
0.05, leading to the acceptance of the null hypothesis. This means that the RE model cannot be
rejected, which justifies the use of this model to test the hypothesis of this study instead of the
fixed effects model.
We know from the attributes of RE that the behavior of individuals over time and long
periods is unknown and cannot be measured and to control the individual character of each
unit, the RE model suggests that each unit has a different intercept.
Yi;t ¼ α þ β1 X1i;t þ ei;t (2)
Yi;t ¼ α þ β1 X1i;t þ μi;t þ ei;t (3)

From both equations, it can be observed that if the variance is equal to zero, then there will be
no difference between Equations (2) and (3). To confirm whether the RE model is more
suitable, the Breusch and Pagan test was applied and the null hypothesis was that if the test
was rejected, then there would be a difference between equations (2) and (3); thus, it would be
preferable to consider the RE model over the FE model. Table 9 shows that the p-value is
0.000, which is less than 0.05 and the null hypothesis is rejected. Therefore, it proves that
there is a significant difference between equations (2) and (3), which confirms the use of the
RE model.
From the RE generalized least squares (GLS) regression in Table 10, it is seen that 45%
of the disclosure variations are explained by the variation in the independent variables
(which also helps increase the acceptability of this model). Among the independent
variables, BSIZE and BCOMP with a p value of 0.000 and 0.020 and coefficients of 0.421
and 0.310 confirm hypotheses H1 and H2.

(b) (B) b-B

CAR_DISC Fixed Random Difference

BSIZE 0.3143 0.3177 0.003

BCOMP 0.3176 0.3020 0.015
BGENDER 0.4325 0.5295 0.096
ENVCOM 0.0991 0.1473 0.246
BMEE 0.0716 0.0690 0.002
Table 8. BDUA 0.1471 0.1556 0.008
Hausman test for BSIZE 0.0259 0.0213 0.004
corporate carbon ROA 0.0460 0.0441 0.001
disclosure Source(s): Created by authors

Var sd 5 sqrt (Var)

CAR_DISC 9.197 3.032

e 0.358 0.5986
u 3.018 1.737
Table 9. Note(s): Breusch and Pagan Lagrangian multiplier test for random effects Test: Var(u) 5 0, x¯ 2(01) 5 200.21
Result of the Breusch and p > x¯ 2 5 0.000
and Pagan test Source(s): Created by authors
CAR_DISC Coef Std. Err z p-value
Corporate
mechanisms in
BSIZE 0.4213 0.0642 2.21 0.001 Bangladeshi
BCOMP 0.3101 0.1802 1.50 0.020
BGENDER 0.3112 0.1523 2.19 0.561 firms
ENVCOM 0.5104 0.3111 0.58 0.490
BMEE 0.0725 0.1805 0.25 0.720
BDUA 0.2612 0.1921 0.64 0.455
FSIZE 0.3101 0.2650 0.21 0.890
ROA 0.0214 0.4502 0.40 0.761
R-square 0.4510
adjusted R-square 0.4210
F value 111.81 Table 10.
F significance 0.000 Random-effects GLS
Source(s): Created by authors regression

6. Conclusion
This study investigated the association between corporate governance characteristics and
voluntary carbon disclosures by Bangladeshi firms. It was based on both univariate and
multivariate analyses using 250 firm-year observations over the period 2015–2019. The
results show that firms with larger board sizes positively impact their propensity to disclose
information related to carbon disclosure. The other variable, board composition, proves that
firms with many independent directors on the board are more interested in formulating
environment-friendly policies and disclosing carbon information. In the case of gender
diversity, a noticeable matter is that the majority of female directors of domestic firms in
Bangladesh are from their family businesses, which does not ensure efficient monitoring of
firms’ activities. As the number of female directors on the board is much lower than that of
their male counterparts, this study did not find a significant association between these two
factors. Likewise, this study didn’t find any linkage between the environmental committee
and the likelihood of disclosing carbon information. Also, firms didn’t disclose or are reluctant
to reveal sufficient data in annual reports related to the existence of any such committee
exclusively for measuring and monitoring carbon information. Finally, we interpret our
findings by incorporating several theories including legitimacy theory, agency theory and
stakeholder theory to provide better insights into the association between corporate
governance mechanisms and carbon disclosure from the Bangladesh perspective.
The research findings present implications for policymakers, regulatory bodies, external
capital providers and corporate practices. In this modern business world, corporate clients,
shareholders/external capital providers, social workers, policymakers, green groups, capital
market participants and the public are urging business firms to take on environment-friendly
projects. As firms performing extensively even in the developed world depend on fossil fuels
directly or indirectly, there are still doubts as to whether or to what extent firms will agree to
reduce their carbon emissions and disclose their carbon-related information. The findings of this
study reveal that the extent and level of carbon disclosures in the different financial and annual
reports of Bangladeshi firms are unsatisfactory and very low. So, there is huge scope left to
improve the awareness of Bangladeshi firms regarding environmental issues, such as climate
change, global warming and GHG emissions. Consistent with this notion, regulators and
policymakers may consider this research informative when constructing carbon disclosure
guidelines to improve the quality of carbon-related information in the market. The findings of
this research suggest that better corporate governance mechanisms can potentially improve
firms’ propensity to disclose carbon-related information. The findings also provide insights into
JEAS the importance of improving the carbon disclosure measurement system to increase external
capital providers’ capability to assess and monitor a firm’s corporate governance practice.
Currently, no specific Bangladesh Financial Reporting Standard (BFRS) and corporate
governance guidelines exist for disclosures in Bangladesh. The International Financial
Reporting Standard (IFRS) Foundation and the Financial Reporting Council (FRC) Bangladesh
could consider the findings of the current research useful for formulating and implementing
new corporate governance guidelines concerning climate change-related financial risks.
Moreover, the findings may assist the Taskforce for Climate change-Related Financial
Disclosure (TCFD) in developing a new framework concerning climate change-related financial
disclosure guidelines. Therefore, regulatory bodies, policymakers and other stakeholders
should take the initiatives to require business firms to follow global warming-related policies
and fix-up yearly carbon emission targets by obliging the environmental issues.
Although the outcomes of this study are robust across various econometric analyses, this
study also has several limitations. This study concludes based only on the data collected from
the annual reports of the firms from Bangladesh by ignoring other communication channels.
The researcher limits the analysis to solely carbon emission information provided by the
listed firms of the DSE of Bangladesh and does not include the other elements of
environmental disclosures. In addition, a self-constructed carbon disclosure index was used
in the study, which may have affected the results of its improper use in another study. Future
research may introduce a different proxy to measure carbon disclosure including the CDP
climate change performance ratings (formerly known as Carbon Disclosure Project).
Furthermore, this study examines the association between corporate governance
mechanisms and carbon disclosure based on archival/quantitative data. Therefore, the
nature of the archival research is to use several proxies to measure the variables. In this study,
we also incorporate proxies to measure our variables including, the board size, independent
directors, the environmental committee and the presence of a female director on the board.
Consistent with the notion, the measurement process of variables in our study is (is not) likely
to reflect the actual practice of the business across the world. Therefore, face-to-face
interviews, incorporating case studies, utilizing management reports and managers’
influence on board diversity and executives’ intensity of disclosing carbon-related
information may consider conducting further research. In addition, although this study
focuses on the legitimacy, agency and stakeholders’ theory, future research is likely to
incorporate several theories including resource-based theory, stewardship theory and
voluntary disclosure theory to investigate the association. Further, due to the lack of
availability of data in the financial reports of Bangladeshi firms, we measured the board size
by the total directors of the firm and gender diversity by the presence of female directors.
Further research may offer new insights by employing several other characteristics of board
size such as the educational background and business experience of the board members.
Similarly, future research is likely to incorporate several characteristics to measure board
diversity including the age of the female directors, experience, institutional background and
ethnicity. Finally, our study is only focusing on Bangladeshi financial firms; thus, future
research may incorporate more industries and more firms in the corporate governance
mechanisms and carbon disclosure nexus. Further studies may also offer new insights into
the association between corporate governance mechanisms and carbon disclosure by
incorporating several developing and developed countries.

References
Aguilera, R.V., Williams, C.A., Conley, J.M. and Rupp, D.E. (2006), “Corporate governance and social
responsibility: a comparative analysis of the UK and the US”, Corporate Governance: An
International Review, Vol. 14 No. 3, pp. 147-158.
Akerlof, G.A. (1978), “The market for ‘lemons’: quality uncertainty and the market mechanism”, Corporate
Uncertainty in Economics, Elsevier, pp. 235-251.
mechanisms in
Akhtaruddin, M., Hossain, M.A., Hossain, M. and Yao, L. (2009), “Corporate governance and voluntary
disclosure in corporate annual reports of Malaysian listed firms”, Journal of Applied
Bangladeshi
Management Accounting Research, Vol. 7 No. 1, p. 1. firms
Akhtaruddin, M., Rouf, D. and Abdur, M. (2012), “Corporate governance, cultural factors and
voluntary disclosure: evidence from selected companies in Bangladesh”, Corporate Governance,
Cultural Factors and Voluntary Disclosure: Evidence from Selected Companies in Bangladesh
(June 1, 2012). Corporate Board: Role, Duties and Composition, Vol. 8 No. 1, pp. 46-58.
Al-Bassam, W.M., Ntim, C.G., Opong, K.K. and Downs, Y. (2018), “Corporate boards and ownership
structure as antecedents of corporate governance disclosure in Saudi Arabian publicly listed
corporations”, Business and Society, Vol. 57 No. 2, pp. 335-377.
Al-Shaer, H. and Zaman, M. (2016), “Board gender diversity and sustainability reporting quality”,
Journal of Contemporary Accounting and Economics, Vol. 12 No. 3, pp. 210-222.
Allegrini, M. and Greco, G. (2013), “Corporate boards, audit committees and voluntary disclosure: evidence
from Italian listed companies”, Journal of Management and Governance, Vol. 17 No. 1, pp. 187-216.
Baalouch, F., Ayadi, S.D. and Hussainey, K. (2019), “A study of the determinants of environmental
disclosure quality: evidence from French listed companies”, Journal of Management and
Governance, Vol. 23 No. 4, pp. 939-971.
Baltagi, B.H. and Baltagi, B.H. (2008), Econometric Analysis of Panel Data, Vol. 4, Springer.
Belal, A.R., Kabir, M.R., Cooper, S., Dey, P., Khan, N.A., Rahman, T. and Ali, M. (2010), “Corporate
environmental and climate change disclosures: empirical evidence from Bangladesh”,
Research in Accounting in Emerging Economies, Emerald Group Publishing.
Ben-Amar, W., Chang, M. and McIlkenny, P. (2017), “Board gender diversity and corporate response
to sustainability initiatives: evidence from the carbon disclosure project”, Journal of Business
Ethics, Vol. 142 No. 2, pp. 369-383.
Bhuyan, M.S.S. (2018), “Determinants and effects of voluntary disclosure with a focus on corporate
governance and firm performance: evidence from Bangladesh”, available at: https://ro.uow.edu.
au/theses1/369/
Bose, S., Saha, A., Khan, H.Z. and Islam, S. (2017a), “Non-financial disclosure and market-based firm
performance: the initiation of financial inclusion”, Journal of Contemporary Accounting and
Economics, Vol. 13 No. 3, pp. 263-281.
Bose, S., Podder, J. and Biswas, K. (2017b), “Philanthropic giving, market-based performance and
institutional ownership: evidence from an emerging economy”, British Accounting Review,
Vol. 49 No. 4, pp. 429-444.
Bose, S., Khan, H.Z., Rashid, A. and Islam, S. (2018), “What drives green banking disclosure? An
institutional and corporate governance perspective”, Asia Pacific Journal of Management,
Vol. 35 No. 2, pp. 501-527.
Bose, S., Minnick, K. and Shams, S. (2021), “Does carbon risk matter for corporate acquisition
decisions?”, Journal of Corporate Finance, Vol. 70, 102058.
Broadstock, D.C., Managi, S., Matousek, R. and Tzeremes, N.G. (2019), “Does doing ‘good’ always
translate into doing ‘well’? An eco-efficiency perspective”, Business Strategy and the
Environment, Vol. 28 No. 6, pp. 1199-1217.
Bui, B., Houqe, M.N. and Zaman, M. (2020), “Climate governance effects on carbon disclosure and
performance”, The British Accounting Review, Vol. 52 No. 2, 100880.
Busch, T. (2011), “Organizational adaptation to disruptions in the natural environment: the case of
climate change”, Scandinavian Journal of Management, Vol. 27 No. 4, pp. 389-404.
Carbon Disclosure Project (CDP) (2020), “Disclosing through CDP: the business benefits”, available at:
https://www.cdp.net/en/companies-discloser (accessed 10 May 2022).
JEAS Carcello, J.V. (2009), “Governance and the common good”, Journal of Business Ethics, Vol. 89 No. 1,
pp. 11-18.
Chapple, L., Clarkson, P.M. and Gold, D.L. (2013), “The cost of carbon: capital market effects of the
proposed emission trading scheme (ETS)”, Abacus, Vol. 49 No. 1, pp. 1-33.
Cheng, M., Dhaliwal, D. and Zhang, Y. (2013), “Does investment efficiency improve after the disclosure
of material weaknesses in internal control over financial reporting?”, Journal of Accounting and
Economics, Vol. 56 No. 1, pp. 1-18.
Cheng, B., Ioannou, I. and Serafeim, G. (2014), “Corporate social responsibility and access to finance”,
Strategic Management Journal, Vol. 35 No. 1, pp. 1-23.
Clarkson, P.M., Overell, M.B. and Chapple, L. (2011), “Environmental reporting and its relation to
corporate environmental performance”, Abacus, Vol. 47 No. 1, pp. 27-60.
Cunha, V. and Rodrigues, L.L. (2018), “Determinants of structure of corporate governance disclosure
in Portugal”, Revista Brasileira de Gest~ao de Negocios, Vol. 20, pp. 338-360.
Daddi, T., Todaro, N.M., De Giacomo, M.R. and Frey, M. (2018), “A systematic review of the use of
organization and management theories in climate change studies”, Business Strategy and the
Environment, Vol. 27 No. 4, pp. 456-474.
Deegan, C. (2002), “Introduction: the legitimising effect of social and environmental disclosures–a
theoretical foundation”, Accounting, Auditing and Accountability Journal, Vol. 15 No. 3, pp. 282-311.
Deegan, C. and Rankin, M. (1996), “Do Australian companies report environmental news objectively? An
analysis of environmental disclosures by firms prosecuted successfully by the Environmental
Protection Authority”, Accounting, Auditing and Accountability Journal, Vol. 9 No. 2, pp. 50-67.
Dhaliwal, D.S., Li, O.Z., Tsang, A. and Yang, Y.G. (2011), “Voluntary nonfinancial disclosure and the
cost of equity capital: the initiation of corporate social responsibility reporting”, Accounting
Review, Vol. 86 No. 1, pp. 59-100.
Dhaliwal, D.S., Radhakrishnan, S., Tsang, A. and Yang, Y.G. (2012), “Nonfinancial disclosure and
analyst forecast accuracy: international evidence on corporate social responsibility disclosure”,
Accounting Review, Vol. 87 No. 3, pp. 723-759.
Dhaliwal, D., Li, O.Z., Tsang, A. and Yang, Y.G. (2014), “Corporate social responsibility disclosure and
the cost of equity capital: the roles of stakeholder orientation and financial transparency”,
Journal of Accounting and Public Policy, Vol. 33 No. 4, pp. 328-355.
Diamond, D.W. and Verrecchia, R.E. (1991), “Disclosure, liquidity, and the cost of capital”, The Journal
of Finance, Vol. XLVI.
Economist Intelligence Unit (2015), “The cost of inaction: recognising the value at risk from climate
change”, available at: https://eiuperspectives.economist.com/sustainability/cost-inaction
(accessed 10 May 2022).
Elmagrhi, M.H., Ntim, C.G., Elamer, A.A. and Zhang, Q. (2019), “A study of environmental policies and
regulations, governance structures, and environmental performance: the role of female
directors”, Business Strategy and the Environment, Vol. 28 No. 1, pp. 206-220.
Fornaro, J.M., Winkelman, K.A. and Glodstein, D. (2009), “Accounting for emissions”, Journal of
Accountancy, Vol. 208 No. 1, p. 40.
Freedman, M. and Jaggi, B. (2005), “Global warming, commitment to the Kyoto protocol, and
accounting disclosures by the largest global public firms from polluting industries”,
The International Journal of Accounting, Vol. 40 No. 3, pp. 215-232.
Galletta, S., Mazz u, S. and Naciti, V. (2021), “Banks’ business strategy and environmental
effectiveness: the monitoring role of the board of directors and the managerial incentives”,
Business Strategy and the Environment, Vol. 30 No. 5, pp. 2656-2670.
Giannarakis, G., Andronikidis, A. and Sariannidis, N. (2020), “Determinants of environmental
disclosure: investigating new and conventional corporate governance characteristics”, Annals
of Operations Research, Vol. 294 No. 1, pp. 87-105.
Graves, S.B. and Waddock, S.A. (1994), “Institutional owners and corporate social performance”, Corporate
Academy of Management Journal, Vol. 37 No. 4, pp. 1034-1046.
mechanisms in
Griffin, P.A. and Sun, Y. (2013), “Going green: market reaction to CSRwire news releases”, Journal of
Accounting and Public Policy, Vol. 32 No. 2, pp. 93-113.
Bangladeshi
Griffin, P.A., Lont, D.H. and Sun, E.Y. (2017), “The relevance to investors of greenhouse gas emission
firms
disclosures”, Contemporary Accounting Research, Vol. 34 No. 2, pp. 1265-1297.
Gujarati, D.N. and Porter, D. (2009), Basic Econometrics, Mc Graw-Hill International Edition.
Haniffa, R.M. and Cooke, T.E. (2005), “The impact of culture and governance on corporate social
reporting”, Journal of Accounting and Public Policy, Vol. 24 No. 5, pp. 391-430.
Haque, F. (2017), “The effects of board characteristics and sustainable compensation policy on carbon
performance of UK firms”, The British Accounting Review, Vol. 49 No. 3, pp. 347-364.
Haque, S. and Deegan, C. (2010), “Corporate climate change-related governance practices and related
disclosures: evidence from Australia”, Australian Accounting Review, Vol. 20 No. 4, pp. 317-333.
Healy, P.M. and Palepu, K.G. (2001), “Information asymmetry, corporate disclosure, and the capital
markets: a review of the empirical disclosure literature”, Journal of Accounting and Economics,
Vol. 31 Nos 1-3, pp. 405-440.
Hollindale, J., Kent, P., Routledge, J. and Chapple, L. (2019), “Women on boards and greenhouse gas
emission disclosures”, Accounting and Finance, Vol. 59 No. 1, pp. 277-308.
Huafang, X. and Jianguo, Y. (2007), “Ownership structure, board composition and corporate voluntary
disclosure: evidence from listed companies in China”, Managerial Auditing Journal.
Hussain, N., Rigoni, U. and Orij, R.P. (2018), “Corporate governance and sustainability performance:
analysis of triple bottom line performance”, Journal of Business Ethics, Vol. 149 No. 2,
pp. 411-432.
Imam, S. (2000), “Corporate social performance reporting in Bangladesh”, Managerial Auditing Journal.
Intergovernmental Panel on Climate Change (IPCC) (2018), “Special report on global warming of
1.58C”, available at: http://ipcc.ch/report/sr15/pdf (accessed 10 May 2021).
Issa, A. and Zaid, M.A.A. (2021), “Boardroom gender diversity and corporate environmental
performance: a multi-theoretical perspective in the MENA region”, International Journal of
Accounting and Information Management, Vol. 29 No. 4, pp. 603-630.
Kathyayini, K. and Carol, A. (2012), Corporate Governance and Corporate Social Responsibility:
A Critical Review, Journal of Flinders Business School, Adelaide.
Katmon, N., Mohamad, Z.Z., Norwani, N.M. and Farooque, O.A. (2019), “Comprehensive board
diversity and quality of corporate social responsibility disclosure: evidence from an emerging
market”, Journal of Business Ethics, Vol. 157 No. 2, pp. 447-481.
Khan, M.M. (2003), “State of governance in Bangladesh”, The Round Table, Vol. 92 No. 370,
pp. 391-405.
Kolk, A., Levy, D. and Pinkse, J. (2008), “Corporate responses in an emerging climate regime: the
institutionalization and commensuration of carbon disclosure”, European Accounting Review,
Vol. 17 No. 4, pp. 719-745.
Konrad, A.M., Kramer, V. and Erkut, S. (2008), “The impact of three or more women on corporate
boards”, Organizational Dynamics, Vol. 37 No. 2, pp. 145-164.
Lagarde, C. (2016), “The role of emerging markets in a new global partnership for growth”,
International Monetary Fund (IMF). University of Maryland Speech.
Lam, K. and Li, Y. (2008), “Does corporate governance matter?: the case of environmental and social
responsibility committees in the board”, Paper presented at the Canadian Academic Accounting
Association conference, Halifax.
Lambert, R.A., Leuz, C. and Verrecchia, R.E. (2011), “Information asymmetry, information precision,
and the cost of capital”, Review of Finance, Vol. 16 No. 1, pp. 1-29.
JEAS Lee, S.-Y., Park, Y.-S. and Klassen, R.D. (2015), “Market responses to firms’ voluntary climate change
information disclosure and carbon communication”, Corporate Social Responsibility and
Environmental Management, Vol. 22 No. 1, pp. 1-12.
Leuz, C. and Verrecchia, R.E. (2000), “The economic consequences of increased disclosure”, Journal of
Accounting Research, Vol. 38.
Liao, L., Luo, L. and Tang, Q. (2015), “Gender diversity, board independence, environmental committee
and greenhouse gas disclosure”, The British Accounting Review, Vol. 47 No. 4, pp. 409-424.
Lu, J. and Herremans, I.M. (2019), “Board gender diversity and environmental performance: an
industries perspective”, Business Strategy and the Environment, Vol. 28 No. 7,
pp. 1449-1464.
Matsumura, E.M., Prakash, R. and Vera-Mu~noz, S.C. (2014), “Firm-value effects of carbon emissions
and carbon disclosures”, The Accounting Review, Vol. 89 No. 2, pp. 695-724.
Miller, S.R., Eden, L. and Li, D. (2020), “CSR reputation and firm performance: a dynamic approach”,
Journal of Business Ethics, Vol. 163 No. 3, pp. 619-636.
Mills, E. (2009), “A global review of insurance industry responses to climate change”, Geneva Papers
on Risk and Insurance: Issues and Practice, Vol. 34 No. 3, pp. 323-359.
Muttakin, M.B., Khan, A. and Mihret, D.G. (2018), “The effect of board capital and CEO power on
corporate social responsibility disclosures”, Journal of Business Ethics, Vol. 150 No. 1, pp. 41-56.
Naciti, V., Cesaroni, F. and Pulejo, L. (2021), “Corporate governance and sustainability: a review of the
existing literature”, Journal of Management and Governance, pp. 1-20.
O’Donovan, G. (1999), “Managing legitimacy through increased corporate environmental reporting: an
exploratory study”, Interdisciplinary Environmental Review, Vol. 1 No. 1, pp. 63-99.
Peters, G.F. and Romi, A.M. (2014), “Does the voluntary adoption of corporate governance
mechanisms improve environmental risk disclosures? Evidence from greenhouse gas emission
accounting”, Journal of Business Ethics, Vol. 125 No. 4, pp. 637-666.
Qiu, Y., Shaukat, A. and Tharyan, R. (2016), “Environmental and social disclosures: link with
corporate financial performance”, The British Accounting Review, Vol. 48 No. 1, pp. 102-116.
Rashid, A. (2015), “Revisiting agency theory: evidence of board independence and agency cost from
Bangladesh”, Journal of Business Ethics, Vol. 130 No. 1, pp. 181-198.
Rashid, A., Shams, S., Bose, S. and Khan, H. (2020), “CEO power and corporate social responsibility
(CSR) disclosure: does stakeholder influence matter?”, Managerial Auditing Journal.
Rodrigues, L.L., Tejedo-Romero, F. and Craig, R. (2017), “Corporate governance and intellectual capital
reporting in a period of financial crisis: evidence from Portugal”, International Journal of
Disclosure and Governance, Vol. 14 No. 1, pp. 1-29.
Rupley, K.H., Brown, D. and Marshall, R.S. (2012), “Governance, media and the quality of
environmental disclosure”, Journal of Accounting and Public Policy, Vol. 31 No. 6, pp. 610-640.
Sobhani, F.A., Amran, A. and Zainuddin, Y. (2009), “Revisiting the practices of corporate social and
environmental disclosure in Bangladesh”, Corporate Social Responsibility and Environmental
Management, Vol. 16 No. 3, pp. 167-183.
Steenkamp, G., Dippenaar, M., Fourie, C. and Franken, D. (2019), “Share-based remuneration: per-
director disclosure practices of selected listed South African companies”, Journal of Economic
and Financial Sciences, Vol. 12 No. 1, pp. 1-12.
Tang, Q. and Luo, L. (2016), “Corporate ecological transparency: theories and empirical evidence”,
Asian Review of Accounting.
The Institute of Chartered Accountants in England and Wales (ICAEW) “Addressing climate change:
views from ICAEW international members”, available at: https://www.icaew.com/technical/
sustainability/resources-collection/addressing-climate-change-views-from-icaew-international-
members (accessed 29 August 2022).
The UK Corporate Governance Code (2018), “The UK corporate governance code”, available at: https:// Corporate
www.frc.org.uk/getattachment/88bd8c45-50ea-4841-95b0-d2f4f48069a2/2018-UK-Corporate-
Governance-Code-FINAL.PDF (accessed 29 August 2022). mechanisms in
Umar, S. and Chunwe, G.N. (2019), “Advancing environmental productivity: organizational
Bangladeshi
mindfulness and strategies”, Business Strategy and the Environment, Vol. 28 No. 3, pp. 447-456. firms
United Nations Development Programme (UNDP) (2004), Reducing Disaster Risk: A Challenge for
Development, United Nations Development Programme (UNDP), New York.
United Nations Environment Programme (UNEP) & World Resources Institute (WRI) (2015), “Climate
strategies and metrics: exploring options for institutional investors”, available at: www.unepfi.
org/publications/climate-change-publications/portfolio-carbon-initiative-publications/
climatestrategies-and-metrics-2/pdf (accessed 10 May 2021).
Uyar, A., Karaman, A.S. and Kilic, M. (2020), “Is corporate social responsibility reporting a tool of
signaling or greenwashing? Evidence from the worldwide logistics sector”, Journal of Cleaner
Production, Vol. 253, 119997.
Varney, R.M., Chadburn, S.E., Friedlingstein, P., Burke, E.J., Koven, C.D., Hugelius, G. and Cox, P.M.
(2020), “A spatial emergent constraint on the sensitivity of soil carbon turnover to global
warming”, Nature Communications, Vol. 11 No. 1, pp. 1-8.
Verrecchia, R. (1983), “Discretionary disclosure”, Journal of Accounting and Economics, Vol. 5,
pp. 179-194.
Verrecchia, R. (2001), “Essays on disclosure”, Journal of Accounting and Economics, Vol. 32 No. 1-3,
pp. 97-180, doi: 10.1016/S0165-4101(01)00025-8.
Walters, B.A., Kroll, M.J. and Wright, P. (2007), “CEO tenure, boards of directors, and acquisition
performance”, Journal of Business Research, Vol. 60 No. 4, pp. 331-338.
Woetzel, J., Pinner, D. and Samandari, H. (2020), “Climate risk and response: physical hazards and
socioeconomic impacts”.
World Bank (2017), “Overview of Bangladesh”, available at: www.worldbank.org/en/country/
bangladesh/overview (accessed 10 December 2022).
Yunus, S., Elijido-Ten, E. and Abhayawansa, S. (2016), “Determinants of carbon management strategy
adoption: evidence from Australia’s top 200 publicly listed firms”, Managerial Auditing Journal.

(The Appendix follows overleaf)

JEAS Appendix

Variables Operational definition

CAR_DISC Voluntary disclosure score received from each company

Board size (BSIZE)
Board composition (BCOMP)
Board gender diversity
(BGENDER)
Environmental Committee
(ENVCOM)
Board meeting (BMEE)
Role duality (BDUA)
Firm size (SIZE)
Table A1. Return on assets (ROA)
Variable definitions Source(s): Created by authors
Total number of directors serving on board
The percentage of independent directors on the board
The percentage of female directors on the board
1 if the firm has board level environmental committee 0 otherwise
The number of the board meeting held in a financial year
1 if the chief executive officer (CEO)and the chairman of the board are
different and 0 otherwise
The natural logarithm of total assets
The percentage of net income to total assets

Corresponding author
Rajib Chakraborty can be contacted at: keralamphil@gmail.com

For instructions on how to order reprints of this article, please visit our website:
www.emeraldgrouppublishing.com/licensing/reprints.htm
Or contact us for further details: permissions@emeraldinsight.com