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Corporate Governance and Corporate Social Responsibility Disclosure: Evidence from the US Banking Sector

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  • Mohammad Jizi

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  • Aly Salama

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  • Robert Dixon

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  • Rebecca Stratling

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Abstract

There is a distinct lack of research into the relationship between corporate governance and corporate social responsibility (CSR) in the banking sector. This paper fills the gap in the literature by examining the impact of corporate governance, with particular reference to the role of board of directors, on the quality of CSR disclosure in US listed banks’ annual reports after the US sub-prime mortgage crisis. Using a sample of large US commercial banks for the period 2009–2011 and controlling for audit committee characteristics, board meeting frequency, and banks’ profitability, size and risk, we find evidence that board independence and board size, the two board characteristics usually associated with the protection of shareholder interests, are positively related to CSR disclosure. This indicates that, with regard to CSR disclosure, more independent boards of directors and larger boards are the internal corporate governance mechanisms which promote both shareholders’ and other stakeholders’ interests. Contrary to our expectations, CEO duality also impacts positively on CSR disclosure. From an agency-theoretical viewpoint, this suggests that powerful CEOs may promote transparency about banks’ CSR activities for their private benefits. While this could indicate that powerful CEOs are under particular pressure to appease stakeholders’ concerns that they might abuse their power by providing a high degree of CSR disclosure, it could also be a sign of managerial risk aversion or managers’ private reputational concerns. Copyright Springer Science+Business Media Dordrecht 2014

Suggested Citation

  • Mohammad Jizi & Aly Salama & Robert Dixon & Rebecca Stratling, 2014. "Corporate Governance and Corporate Social Responsibility Disclosure: Evidence from the US Banking Sector," Journal of Business Ethics, Springer, vol. 125(4), pages 601-615, December.
  • Handle: RePEc:kap:jbuset:v:125:y:2014:i:4:p:601-615
    DOI: 10.1007/s10551-013-1929-2
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    References listed on IDEAS

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    Cited by:

    1. Choon-Yin SAM & Paul N. C. TIONG, 2015. "An investigation of the corporate responsibility report assurance statements of the Big Four banks in Australia," Journal of Economics Library, KSP Journals, vol. 2(1), pages 3-14, March.
    2. repec:gam:jsusta:v:10:y:2018:i:1:p:207-:d:127138 is not listed on IDEAS
    3. repec:kap:jbuset:v:148:y:2018:i:3:d:10.1007_s10551-015-2949-x is not listed on IDEAS
    4. repec:gam:jsusta:v:10:y:2018:i:2:p:556-:d:132803 is not listed on IDEAS
    5. repec:gam:jsusta:v:9:y:2017:i:6:p:1006-:d:101100 is not listed on IDEAS
    6. Sam, Choon-Yin & Tiong, Paul N. C., 2015. "An investigation of the corporate responsibility report assurance statements of the Big Four banks in Australia," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 3-14.
    7. repec:kap:jbuset:v:145:y:2017:i:2:d:10.1007_s10551-015-2902-z is not listed on IDEAS
    8. Young Kyun Chang & Won-Yong Oh & Jee Hyun Park & Myoung Gyun Jang, 2017. "Exploring the Relationship Between Board Characteristics and CSR: Empirical Evidence from Korea," Journal of Business Ethics, Springer, vol. 140(2), pages 225-242, January.
    9. Dina Patrisia & Shabbir Dastgir, 2017. "Diversification and corporate social performance in manufacturing companies," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 7(1), pages 121-139, April.
    10. repec:gam:jsusta:v:10:y:2018:i:3:p:582-:d:133355 is not listed on IDEAS
    11. repec:ehu:cuader:21772 is not listed on IDEAS

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